Preauthorization Traps: Beware of Unexpected Bills
We assume that if our doctor orders a test, procedure or drug—and we have a comprehensive health insurance plan, such as Medicare, Medicaid, a Medicare Advantage Plan or private insurance through our employer or purchased through an Affordable Health Care–authorized Exchange—it will be covered. But that is not always the case. Every insurance plan has certain tests, procedures and/or drugs that must be preapproved before the insurer will pay for them. To make matters worse, no two insurance plans, even from the same company, have the same requirements.
To avoid getting stuck with an unexpected, costly medical bill…
Play by the rules.Preauthorization (sometimes called “preapproval”) is designed to save you and the insurer the cost of an unnecessarily expensive test, procedure or drug when less expensive but effective alternatives are available. So you need to play by the rules. New and very expensive drugs, such as those used to treat hepatitis C (which can cost up to $90,000 for a 12-week treatment) or cancer (a newly approved cancer medication can cost $475,000 for the required course of treatment!), almost always require preauthorization. So do expensive tests, such as PET scans and MRIs. And complicated procedures, such as spinal fusions, organ transplants or open-heart surgery, usually must be preapproved.
Get an official go-ahead. When a doctor orders a test, procedure or new drug, always ask him/her or the office staff if it must be preauthorized by your insurance company. Because every insurer is different, your physician may not know offhand, but his office staff should handle any necessary preauthorization and will know who to contact. To cover your bases, you should also call your insurer’s customer-service department to make sure it will be covered—or what documentation must be submitted to have it covered. If you have traditional Medicare, there are very few tests and procedures requiring preauthorization. However, your Medigap plan may have limits, so check with both Medicare at 1-800-Medicare and with your Medigap carrier. Medicare Advantage members need to be diligent—these plans have many preauthorization requirements.
Keep up to date. Always check for changes in coverage that your insurer makes annually. A drug or medical service that did not require preauthorization last year may require it this year. This information can be obtained by calling your insurance company or consulting its website.
Appeal! If you are denied a preauthorization request, appeal the decision. Nowadays, few insurers make these decisions in-house. They contract with outside medical groups by specialty. Ask your insurer who made the decision, and the representative must give you the contact information.
Ideally, your doctor should contact that entity directly to discuss your case. But if that doesn’t happen, ask the doctor for the diagnosis code and a letter explaining why you need the drug or procedure so you can take the matter up with the group that denied the preauthorization. This information will give you the best possible shot at winning your appeal.