Category: Health & Safety

Understanding Health Insurance, Referrals & Prior Authorization

Health insurance can reduce the amount you pay for healthcare, but it does not automatically make every provider, medication, test, or treatment free. Plans have networks, coverage rules, deductibles, copayments, referral requirements, and approval processes that affect where you can receive care and how much you may owe.

The rules are different for every plan. Two people with insurance from the same company may have completely different benefits.

Before receiving non-emergency care, confirm what your specific plan covers and what steps you must complete. A few phone calls can help prevent delays and unexpected bills.

Start With Your Insurance Card

Your insurance card usually includes:

• Your name
• Member identification number
• Group number
• Plan name
• Plan type
• Customer-service number
• Pharmacy-benefit information
• Copayment information
• Claims address
• Website or application information

Keep the card with you and provide updated information whenever you visit a healthcare provider or pharmacy.

If you receive a new card:

• Replace the old card in your wallet.
• Update the information with your providers.
• Give the new information to your pharmacy.
• Check whether your member number changed.
• Confirm that your regular providers remain in network.

Having an insurance card does not prove that coverage is currently active. Contact the insurer if you are unsure.

Learn Your Plan Type

The plan type can affect which providers you may see and whether you need referrals.

Common plan types include:

Health Maintenance Organization

An HMO generally requires you to use providers and facilities in its network, except for emergencies and certain other situations. You may need to choose a primary care provider and obtain referrals before seeing specialists.

Preferred Provider Organization

A PPO usually allows more flexibility. You may be able to see providers outside the network, but you will generally pay more.

Exclusive Provider Organization

An EPO generally covers in-network care and may not cover non-emergency out-of-network care.

Point-of-Service Plan

A POS plan may combine features of HMOs and PPOs. You may need a primary care provider and referrals, but some out-of-network care may be covered at a higher cost.

High-Deductible Health Plan

A high-deductible plan generally requires you to pay more of your initial healthcare costs before the plan begins paying for many covered services. Certain preventive services may be covered before the deductible.

Medicare, Medicaid, military coverage, employer plans, union plans, and Marketplace plans may have their own rules and variations.

Do not rely only on the plan-type label. Read your plan documents or call member services.

Important Insurance Terms

Premium

The premium is the amount paid to keep the insurance coverage active. It may be paid by you, an employer, the government, or a combination.

Deductible

The deductible is the amount you may need to pay for covered care before the plan begins paying its share.

Some services may be covered before you meet the deductible.

Copayment

A copayment is a set amount you pay for a service or medication.

For example, you might have one copayment for primary care and another for a specialist.

Coinsurance

Coinsurance is a percentage of the allowed cost that you pay.

For example, if your coinsurance is 20 percent, you may owe 20 percent of the plan’s allowed amount after applicable requirements are met.

Out-of-Pocket Maximum

This is the maximum amount you are generally required to pay during the plan year for covered, in-network services subject to the limit. Premiums and certain other costs may not count toward it.

Allowed Amount

The allowed amount is the price the insurance plan recognizes for a covered service. It may be different from the amount the provider charges.

Claim

A claim is a request sent to the insurance company for payment or coverage of a healthcare service.

Formulary

A formulary is the list of medications covered by the plan. Medications may be placed into different cost levels or tiers.

What Does “In Network” Mean?

A network is the group of providers, facilities, laboratories, pharmacies, and other healthcare organizations that have agreements with your insurance plan.

In-network care usually costs less.

Out-of-network care may:

• Cost more
• Require a larger deductible
• Have higher coinsurance
• Not be covered
• Lead to additional billing
• Require special approval

A medical office may accept your insurance company without participating in your exact plan.

Always ask:

“Are you in network with my exact plan?”

Do not ask only:

“Do you take my insurance?”

Verify the Provider in Two Places

Before scheduling non-emergency care:

1. Check the insurer’s directory.
2. Call the insurance company.
3. Call the medical office.
4. Confirm the provider’s name and location.
5. Document whom you spoke with and when.

Directories can become outdated. A provider may participate at one office location but not another.

Also confirm the network status of:

• The facility
• The laboratory
• The imaging center
• The anesthesiologist
• Other professionals involved in a procedure

You may not always be able to choose every person involved, especially during emergencies. Ask the insurance company about your protections and possible costs.

Confirm Whether the Service Is Covered

A provider being in network does not automatically mean every service they recommend is covered.

Ask the insurance company:

• Is this specific service covered?
• Does the plan limit how often it is covered?
• Do I need a referral?
• Do I need prior authorization?
• Must I use a specific facility?
• Does the deductible apply?
• What copayment or coinsurance should I expect?
• Are there exclusions?
• Is there a limit on visits?
• Is the provider required to use a particular diagnosis or procedure code?
• Can you give me a reference number for this call?

When possible, obtain the medical billing or procedure codes from the provider and give them to the insurer.

An insurance representative’s estimate is not always a guarantee of final payment, but it can help you understand the likely cost.

What Is a Referral?

A referral is an order or recommendation from one healthcare provider for you to receive care from another provider, usually a specialist.

A primary care provider might refer you to:

• A cardiologist
• A dermatologist
• A neurologist
• A physical therapist
• A mental health professional
• A surgeon
• Another specialist

A referral may be medically recommended even when insurance does not require one.

When Insurance Requires a Referral

Some plans require a formal referral before they will cover specialist care.

The process may involve:

1. Visiting your primary care provider.
2. Discussing the concern.
3. Receiving the referral.
4. Having the referral submitted to insurance or the specialist.
5. Scheduling with an approved provider.
6. Confirming that the referral remains valid.

A referral may be limited by:

• Provider
• Location
• Number of visits
• Type of service
• Time period
• Specific diagnosis

Do not assume that a referral remains valid indefinitely.

Questions to Ask About a Referral

Ask the referring office:

• Which specialist am I being referred to?
• Why do I need the referral?
• Has it been submitted?
• Does insurance need to approve it?
• Should I call the specialist?
• How soon should I be seen?
• How many visits are included?
• When does the referral expire?
• What should I do if the specialist is unavailable?
• Will the specialist receive my records?

Ask the specialist:

• Did you receive the referral?
• Are you in network with my exact plan?
• Is the referral valid for this location?
• Do you need additional records?
• Will I need authorization for tests or procedures?

Keep a copy of the referral or its reference number when possible.

What to Do if a Referral Is Delayed

If the specialist has not received the referral:

1. Call the primary care office.
2. Confirm that it was submitted.
3. Verify the specialist’s name and contact information.
4. Ask whether insurance approval is pending.
5. Call the specialist again.
6. Document each contact.
7. Ask what to do if your symptoms worsen.

Do not assume the offices will resolve the problem without your follow-up.

If the referral is urgent, make sure every office understands the medical urgency.

What Is Prior Authorization?

Prior authorization, sometimes called preauthorization, precertification, or prior approval, means the insurance company must review a request before deciding whether it will cover the service, medication, equipment, or treatment.

Prior authorization may be required for:

• Certain prescription medications
• Imaging such as CT or MRI scans
• Surgery
• Medical procedures
• Physical or occupational therapy
• Durable medical equipment
• Specialty care
• Home healthcare
• Hospital admissions
• Certain laboratory tests
• Ongoing treatment beyond a visit limit

Prior authorization is not the same as a referral.

You may need:

• A referral
• Prior authorization
• Both
• Neither

Ask about each requirement separately.

How Prior Authorization Works

The general process may include:

1. A provider recommends care.
2. The provider submits medical information to the insurance company.
3. The insurance company reviews the request.
4. The insurer approves it, denies it, or requests more information.
5. The provider and patient receive a decision.
6. The care is scheduled if approved.
7. An appeal may be filed if denied.

The provider usually submits the clinical information, but you should still track the process.

Questions to Ask About Prior Authorization

Ask the provider:

• Has the request been submitted?
• On what date?
• What service or medication was requested?
• Which insurance company or benefit manager received it?
• Is additional information needed?
• When should I follow up?
• Who in the office handles authorizations?
• What happens if it is denied?
• Is there another covered option?
• What should I do if my condition worsens?

Ask the insurer:

• Did you receive the request?
• Is it complete?
• What is the current status?
• What information is missing?
• When should a decision be made?
• How will I be notified?
• What is the authorization number?
• What dates does the approval cover?
• Which provider and facility are approved?
• How many visits or units are covered?

Write down the representative’s name, the date, and the call-reference number.

Approval Does Not Always Guarantee Full Payment

Prior authorization means the plan approved the request under certain conditions. It may not guarantee that the entire bill will be paid.

Final payment can still depend on:

• Active coverage
• Network status
• Deductible
• Copayment
• Coinsurance
• Medical billing codes
• Whether the approved service matches what was performed
• Whether the authorization expired
• Whether the provider followed the plan’s requirements
• Whether plan benefits changed

Before receiving care, ask for a written cost estimate when possible.

Read the Authorization Carefully

When approval is issued, check:

• Your name
• The approved service
• Provider
• Facility
• Number of visits
• Medication and dose, if applicable
• Start date
• End date
• Authorization number
• Any special conditions

An approval for one facility may not apply at another facility. An approval for one test may not cover a related but different test.

Keep a copy.

Why Prior Authorization May Be Denied

Common reasons include:

• The request is incomplete
• Records were not submitted
• The plan considers the service medically unnecessary
• The provider is out of network
• Another treatment must be tried first
• The requested quantity exceeds a limit
• The plan prefers another medication
• The service is excluded
• The authorization was requested after care occurred
• The coverage is inactive
• A coding error occurred
• The plan needs additional documentation

A denial does not always mean the treatment is inappropriate. It means the request did not meet the plan’s coverage requirements as reviewed.

What to Do After a Denial

Do not rely only on a verbal explanation. Obtain the written denial.

The notice should explain:

• What was denied
• Why it was denied
• Which plan rule was used
• Whether information was missing
• How to appeal
• The deadline
• Where to submit the appeal
• Whether an expedited review is available

Then:

1. Read the denial carefully.
2. Contact the provider.
3. Ask whether the request can be corrected or resubmitted.
4. Ask whether the provider will complete a peer-to-peer review.
5. Gather supporting records.
6. Check the appeal deadline.
7. File the appeal in the required way.
8. Keep copies of everything.
9. Confirm that the appeal was received.
10. Track the expected decision date.

What Is an Appeal?

An appeal is a formal request asking the insurance plan to reconsider a denial or payment decision.

You may be able to appeal when the plan refuses to:

• Cover a service
• Pay a claim
• Cover a medication
• Approve medical equipment
• Continue treatment
• Pay the amount you believe it should
• Recognize the care as medically necessary

Appeal rules and deadlines differ by type of insurance and decision.

Follow the instructions on the denial notice rather than relying on a general deadline found elsewhere.

HealthCare.gov explains that many plans provide an internal appeal followed, when eligible, by an external review conducted by an independent party. HealthCare.gov

Strengthening an Appeal

Helpful documentation may include:

• The denial letter
• Relevant medical records
• Test results
• A letter from the provider
• A description of previous treatments
• Evidence that preferred treatments failed
• Medical guidelines
• Information about why alternatives are inappropriate
• Notes about worsening symptoms
• Proof of network availability problems
• Copies of previous approvals
• Relevant bills and Explanation of Benefits forms

Your provider may need to explain why the requested care is medically necessary.

Submit copies unless the instructions specifically require originals. Keep your own complete file.

Expedited Appeals

A faster review may be available when waiting for the standard process could seriously harm your health or your ability to regain function.

Ask:

• Does my situation qualify for an expedited appeal?
• Does my provider need to certify the urgency?
• Can internal and external review happen at the same time?
• When should a decision be issued?
• What should I do while waiting?

If your condition is rapidly worsening or potentially life-threatening, seek appropriate medical care. Do not allow an insurance dispute to delay calling 911 during an emergency.

External Review

If an internal appeal is denied, you may be eligible for external review by an independent organization.

The denial letter should explain:

• Whether external review is available
• How to request it
• The deadline
• Where to send it
• Whether faster review is possible

For eligible cases, the insurer generally must follow the external reviewer’s decision. HealthCare.gov

Understanding an Explanation of Benefits

An Explanation of Benefits, commonly called an EOB, is a statement from the insurance company describing how a claim was processed.

It may show:

• Provider charges
• Allowed amount
• Amount paid by insurance
• Amount applied to your deductible
• Copayment or coinsurance
• Amount you may owe
• Services that were denied
• Reason codes
• Appeal information

An EOB is usually not a bill.

Compare it with the provider’s bill. If the amounts do not match or you do not understand the decision, call the insurance company and provider.

Common Billing Problems

Problems may occur because:

• The provider used incorrect insurance information
• The claim was submitted with the wrong code
• A referral was missing
• Authorization was not connected to the claim
• The provider was processed as out of network
• The insurance company needs more information
• The claim was submitted late
• The service was billed by several organizations
• The deductible had not been met
• Coverage was inactive on the service date

Do not immediately pay a bill you believe is incorrect.

Ask:

• Has the claim been submitted?
• Was it processed?
• What does the EOB say?
• Can the provider correct and resubmit it?
• Does the authorization number need to be added?
• Is an appeal required?
• Can billing be paused while the issue is reviewed?

Keep an Insurance Record

Create a folder or digital record containing:

• Insurance cards
• Plan documents
• Referrals
• Authorization letters
• Denial notices
• Appeal documents
• EOBs
• Medical bills
• Cost estimates
• Call notes
• Reference numbers
• Names of representatives
• Dates and deadlines

For each call, write down:

• Date and time
• Phone number
• Person’s name
• Department
• What you asked
• What you were told
• Call-reference number
• Next step
• Deadline

This record can be extremely helpful if different representatives give you conflicting information.

Getting Help

Depending on your coverage, assistance may be available through:

• Your insurance plan
• Your provider’s billing or authorization staff
• An employer benefits department
• A state Consumer Assistance Program
• A state Department of Insurance
• A Medicare State Health Insurance Assistance Program
• Medicaid member services
• A hospital financial counselor
• A patient advocate
• A social worker
• An authorized representative you choose

HealthCare.gov provides links to state Consumer Assistance Programs and other agencies that help with insurance questions and appeals. HealthCare.gov

Insurance Checklist Before Non-Emergency Care

Ask the provider:

• Are you in network with my exact plan?
• What service is being ordered?
• What billing codes will be used?
• Do I need a referral?
• Who submits it?
• Do I need prior authorization?
• Who submits it?
• What facility will be used?
• What cost estimate can you provide?

Ask the insurance company:

• Is the provider in network?
• Is the facility in network?
• Is the service covered?
• Does the deductible apply?
• What will my likely cost be?
• Is a referral required?
• Is prior authorization required?
• Are there visit or quantity limits?
• Can I have a call-reference number?

Keep:

• Referral information
• Authorization number
• Approval dates
• Cost estimate
• Names and call-reference numbers
• Copies of all notices

Suggested Guides

• Choosing a Primary Care Doctor
• Making & Managing Appointments
• Filling a Prescription & Using a Pharmacy
• Understanding a Diagnosis & Treatment Plan
• Understanding Medical Tests & Test Results
• What to Do After a Hospital Stay

Important Health & Safety Notice

The information in this guide is provided for general educational purposes only. Independence Answers is not a medical provider, and this content is not a substitute for professional medical advice, diagnosis, treatment, or supervision. Always follow the instructions of your doctor, pharmacist, or other qualified healthcare professional, especially if you have a medical condition, take medication, or are unsure whether an action is safe for you.

Do not ignore or delay seeking professional care because of something you read here. If you believe someone may be experiencing a serious or life-threatening emergency, call 911 or your local emergency number immediately.