J.J. Conway
Today’s healthcare preauthorization requirements seem more focused on delays in needed care or creating defenses to patient claims than on the assurance of quality healthcare treatments. In fact, concern over quality healthcare seems far removed from the authorization process itself.
Originally, there were valid reasons for a health plan to require preauthorization or pre-certification. A preauthorization was designed to ensure that coverage for a requested medical treatment was actually a covered benefit under the terms of a patient’s healthcare plan. The request also ensured that the medical treatment sought would be rendered in an “approved” medical facility. In other words, the care would be provided in a facility that was qualified to provide the treatment or a facility specifically designated by the plan to provide the requested treatment (or sometimes both).
Like all things involving insurance, a contractual preauthorization requirement also serves as a cost-containment mechanism. If the service or drug was not covered by the plan, or it was not properly authorized or prescribed, then a health plan could possibly prevent a costly charge from being incurred.
The problem with today’s use of preauthorization requests is that they have moved beyond valid rationales and become a mini battleground for some health plans, especially for expensive medical or drug treatments. From back surgeries to lengthy inpatient medical care to drug therapies, preauthorization requirements can add frustrating delays. Preauthorization forms can be complex and completing them is burdensome to doctors and healthcare providers. Finally, the fight over what treatments are “medically necessary” during the preauthorization phase of a claim can consume considerable resources in terms of time and money.
Healthcare has a unique place within the U.S. economy. Under a typical health insurance model in the U.S., a patient is given an insurance identification card that operates like a credit card where charges are made, invoices are issued, and the insurance company is required to pay the bill. Unlike auto or homeowner insurance claims, which arise when an unexpected event happens and coverage is triggered, in the healthcare economy, a claim may arise when an unexpected event occurs — or when an event is preplanned.
The key to navigating preauthorization or preapproval requirements is to carefully read the contract or at least contact the health plan before the medical treatment is sought or a prescribed drug is purchased. Efforts to exhaust the preauthorization process should be documented, preferably in writing, with some form of proof that the request was made prior to the treatment.
As for the health plan, its contractual terms of coverage should plainly state when preauthorization or preapproval is required for a medical treatment or prescribed drug. A good rule of thumb is to expect that any potentially expensive medical treatment that is capable of appointment scheduling is going to require preapproval by the insurer. The same goes for a patient’s expensive pharmaceutical needs.
Sophisticated medical providers will often seek preauthorization on behalf of the patient before scheduling the appointment, but not always. Whenever there is a planned expensive treatment, the plan should be contacted to confirm not only that preauthorization has been sought but the treatment has been approved.
Are there exceptions? Yes. There are times where preauthorization is not required, no matter what the contract states. Following the passage of the Patient Protection and Affordable Care Act, the Secretary of Health and Human Services was empowered to promulgate regulations covering most health plans. In its regulations, HHS has proscribed onerous preauthorization requirements and excused preauthorization entirely in emergency medical situations.
Are there exceptions to the exception? Yes. Occasionally, a patient will receive emergency medical care that does not require preauthorization, but the patient’s admission for “observation” or extended care does require preauthorization. It is a grey area, and hospitals that are dealing with an emergency situation will not always secure preauthorization for continued care and treatment. As such, sometimes, a patient will receive an Explanation of Benefits statement that separates out the charges and divides them between emergency and non-emergency care — along with a shocking bill.
There are some changes afoot. The HHS is streamlining the preauthorization process for use in Medicare Advantage plans. Its proposed rulemaking would provide for greater use of online prior approval requests and reduce the paperwork needed to satisfy proof requirements. In June, the State of Michigan adopted its own preauthorization rules. These rules apply only to group or individual health contracts that are purchased within the state. There are several reforms in the new Michigan law; most notably under the new rules, a preauthorization is valid for sixty days and if the insurer does not respond to a request within seven days, preauthorization is granted automatically.
These laws and regulations are finally recognizing that the purpose of healthcare is to safeguard the patient’s health, not create bureaucratic headaches and contractual defenses to necessary care.
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John Joseph (J.J.) Conway is an employee benefits and ERISA litigator and founder of J.J. Conway Law in Royal Oak.
