What is Preauthorization

What does "preauthorization" mean?

Preauthorization, sometimes referred to as "pre-certification," is the process used to confirm if a proposed service or procedure is medically necessary. Whenever possible, preauthorization should occur before treatment is received. 

The physician who schedules an admission or orders the procedure or service is responsible for obtaining preauthorization. Providers should contact the Provider Authorization number on the back of the health plan ID card to confirm if preauthorization is required. 

You may also contact Customer Service at the number on the back of your health plan ID card to determine if a proposed test, equipment, service, or procedure requires preauthorization. 

It is important to know if your provider has obtained preauthorization, particularly when visiting an out-of-network provider who may or may not be familiar with your Insurance

WHEN YOU DON’T GET THE NECESSARY PREAUTHORIZATION

Who gets stuck with footing the bill when preauthorizations don’t pan out? It depends. The determination as to who is responsible is often defined by the patient’s insurance plan.

If the plan benefits outline specific services that are not covered and the patient seeks those services, the responsibility for payment falls to the patient. If a provider fails to authorize treatment prior to providing services to a patient and payment is denied by the insurance company, then the provider may be obligated to absorb the cost of treatment, and no payment is due from the patient.

Some payers may assign full financial responsibility for a procedure that didn’t get the necessary preauthorization to the patient.

In this case, the provider has to make a decision about whether to pursue collecting the payment from the patient. Some swallow the loss. Others send the unpaid bill to the patient, but doing so is bad business. Patients are both unaware of the process and not in any sort of position to guess what CPT code should be submitted to the insurance company.