What is Pre-Authorization in Health Insurance?
When it comes to health insurance, understanding key terms like pre-authorization is essential for streamlining the coverage process. Not only does it help prevent delays in care, but it also ensures you aren’t forced to pay out-of-pocket. In this article, we’ll cover exactly what pre-authorization is in a health insurance context and how it works.
Health Insurance Pre-Authorization: What it Means
Pre-authorization requires healthcare providers to obtain approval from a health insurance company before providing specific services, tests, or medications to a patient. Health service providers may also refer to it as prior authorization or pre-approval.
This process is primarily designed to ensure that the proposed treatment is:
Medically necessary
Appropriate for the patient's condition
Eligible for full or partial coverage
Pre-authorization is most often requested for private health insurance, but it’s also occasionally needed in public health settings. Providers typically request pre-authorization for services that are expensive or may not always be considered medically necessary.
A popular example of a procedure that generally needs pre-authorization is breast reduction surgery. While some want breast reduction surgery for aesthetic reasons, many individuals need it to reduce chronic back pain, which makes it a medical necessity. In most cases, the medical necessity of a breast reduction procedure needs to be confirmed before it can be covered by public or private insurance.
Why is Pre-Authorization Important?
Cost Management: Insurers use pre-authorization to control costs. By reviewing the medical necessity of a treatment in advance, insurance companies avoid paying for unnecessary services. This ensures premiums stay low and don’t need to be increased.
Ensuring Quality Care: Pre-authorization helps ensure that patients receive treatments that are appropriate for their specific health situations. It encourages healthcare providers to assess whether the proposed service aligns with best practices and clinical guidelines.
Reducing Unnecessary Procedures: By requiring pre-authorization, insurers can help prevent patients from undergoing unnecessary tests or treatments that may not improve their health outcomes.
How the Pre-Authorization Process Works
The patient doesn’t usually need to initiate the pre-authorization process. Instead, the process will usually go like this:
The healthcare provider determines that a certain treatment is necessary and initiates the pre-authorization process by submitting a request to the insurance company.
Once the request is received, the insurance company reviews the information provided, such as details about your current health, medical history, and the recommended treatment.
After review, the insurance company will either approve or deny the request. If approved, the healthcare provider can proceed with the treatment, and the insurance company will cover the associated costs as per the policy. If denied, the patient and provider will receive an explanation as to why. The decision can be appealed if necessary.
If the treatment is time-sensitive, pre-authorization should be requested as soon as possible.
Pre-Authorization Constantly Being Denied?
Whether you’re depending on public health coverage or a private plan, constant denials mean that you’re not under a plan that meets your unique health needs!
Unfortunately, this isn’t uncommon. Canada’s public health insurance is valuable but incredibly limiting. Similarly, many private health plans lack the flexibility needed to treat complex health issues.
If you’re repeatedly failing to get pre-authorization and reimbursement, it’s time for better coverage. Don’t pay out-of-pocket for treatments that make your life better! Our HealthQuotes brokers can work with you 1-on-1 to find a plan that suits your specific needs.