The 'hidden danger' regarding elimination of prior-authorization for certain medical and surgical service


We all know of the unnecessary delays in patient care that prior authorizations can pose.

We all also know of the added costs and inconvenience it imposes on medical practices. However, when it comes to an insurance company declaring it will eliminate prior authorization for certain medical/surgical services, it is important to remember that this is not all good for the medical provider. Prior authorizations should be eliminated for services which an insurance approves at least 90-95% of the time. By 90-95% insurance approval, I am referring to services in which there was not an initial denial of the requested service during the prior authorization process.

A lot of insurance companies are more recently using "no prior authorization required" response to requested service, to allow for medical practices bearing full cost of providing medical care. Insurance contracts allow insurance companies to deny reimbursement of provided care despite very significant costs to medical practices in providing those medically necessary services. The cost of providing medical care has continued to skyrocket, and some insurance companies have increasingly found mechanisms to unfairly delay provision of medically necessary care, or delay/deny reimbursement of provided care. This leads to an unfair significant financial burden on medical practices.

It is important to note that if an insurance company would have delayed providing authorization for a patient's care, or if an insurance company would have initially denied providing authorization for a requested service (during the prior authorization process), the same insurance company will also deny reimbursement of same service if such service was changed to "no authorization needed." The "no authorization needed" gives insurance companies the ability to have a procedure performed, and then later not pay for it due to one technicality or another.

In such a case, it would have been better for prior authorization to have occurred, and the insurance company denied the request. As that would have saved the medical practice the significant costs incurred in providing the medical care and would save the medical practice the significant costs that go into ongoing post-procedure appeals process. If a requested service is denied during the prior authorization process, the patient gets frustrated at the insurance which they pay premium to, an insurance responsible to provide coverage for their medically necessary care. This exposes the insurance to negative reviews from patients and exposes the insurance to various types of bad faith claims. Hence, there is a much better chance for the insurance to reverse an unreasonable denial of service during pre-procedure appeal, as the patient also will continue to call their insurance to get the authorization for the medically necessary care. Contrarily, if there is a "no authorization required" response from an insurance, that allows the insurance to gain the following potential advantages:

A. avoid patient anger directed to the insurance.

B. avoid bad reviews from patients.

C. save cost to insurance related to retaining physicians and nurses on reviewing cases for prior authorization.

D. allow insurance companies to then after all this potentially deny reimbursement of service after it has been provided. Using unreasonable technicalities or other schemes to justify such denials. Insurance companies know that with such post-treatment denials, the patient has gotten the medically necessary treatment, and hence will no longer be calling and "pressuring" the insurance to do the right thing and approve the needed service. It is not only more challenging to reverse a denial post-treatment given there is less incentive for the insurance company to reverse a denial at this point, but the medical practice will be at risk of bearing significant costs of providing care without having service provided reimbursed.

Additionally, some insurance companies like to release the "feel-good" announcement about elimination of prior authorizations for certain services. They want to gain goodwill from such announcements and want to get others talking about them as such news is spread around. However, these feel-good announcements to get goodwill from the public have hidden implications, and may result in insurance companies saving more money, and then refusing to reimburse medically necessary services rendered by medical providers. Such will lead to medical providers having to expend significant costs, and then not get reimbursed.

It is imperative for medical providers and facilities to ensure they are not "tricked" into expending significant costs without reimbursement. Prior to performing any procedure/treatment, if the insurance company tells you no authorization is needed, make sure you have the insurance company provide you in writing the list of diagnoses for which no prior authorization applies to, as if your patient does not have one of those listed diagnoses, they will deny reimbursement of care provided. That is when the treatment rendered is medically necessary based on patient's diagnosis, based on standard of care and evidence based medicine; if the diagnoses is not listed on the insurance's published list of diagnoses for which prior authorization is not necessary, then the insurance company will unfairly not reimburse the medical provider for care provided. Additionally, if an insurance company informs you that "no prior authorization is required," it is imperative to get in writing which conditions must be met for there to be no prior authorization requirement. As if such condition(s) are not applicable to your patient, following the procedure, the insurance company will unfairly refuse to reimburse the medical provider.

Even when a medical provider does his/her due diligence, attempting to obtain prior authorization before rendering a treatment, an insurance company responding by stating "no prior authorization is required," may set the medical provider up for providing free uncompensated care. Insisting on prior authorization and pre-treatment approval or pre-determination in some cases may be important especially if dealing with an insurance company with a track record of unreasonable denials. It is important for physicians to beware of this. If a prior authorization request results in request denial, the physician would not have spent significant expense on care, as such care will not be rendered until the prior authorization denial has been reversed. There is a much better chance of reversing denials for medically necessary care prior to treatment than following treatment.


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