Referral and Preauthorization: A Jump Start

By Nitin Chhoda PT, DPT on June 17, 2013

An increasing number of healthcare insurance companies are requiring preauthorizations and referrals before they’ll pay for testing and treatments.

Even though the onus is typically on the patient to provide proof of either before seeking treatment, clinicians should take the lead to ensure the proper approvals were obtained.

In this informative article, Nitin Chhoda discusses the referral and preauthorization process to ensure reimbursements are approved.

referralVerify Coverage
It’s essential that clinics, especially physical therapy management, verify a patient’s healthcare insurance coverage before they arrive for their appointment. The referral information is essential for the payment and treatment process.

Payers are a law unto themselves, each with their own set of rules, regulations and parameters for reimbursements. Some won’t pay for anything that it has determined to be experimental or investigative, or will only pay for a less expensive or basic procedure. Others won’t reimburse for any procedure that doesn’t have a specific code.

Preauthorization Dictates Payment
Verifying the client’s insurance coverage, with or without referral, allows practitioners to locate potential problems with reimbursements or special protocols that must be followed. The data will also impact the treatment provided by the clinician.

For insurance carriers that require preauthorization, clinicians must receive an agreement from the payer for reimbursement before providing a proposed treatment or service. An authorization number will be provided that must be included on the claim for reimbursement.

The critical element for a preauthorization is the CPT code, which must be determined before the patient is seen and services rendered. The challenge is for practitioners to supply the correct code for the anticipated treatment, taking into account all possible options. Insurance carriers will only pay for the specific procedure that was preauthorized.

In emergency situations, it may not be possible to verify insurance coverage beforehand. It then becomes necessary to seek authorization or referral from the payer as soon as possible. When preauthorization is required and not obtained, clinicians may find that they won’t be reimbursed, even if the service was essential for saving a patient’s life.

Practitioners should be aware that many payers won’t issue authorizations after that fact.

The Rules of Referrals
Sometimes a client requires the services of a specialist or a second opinion, but their healthcare insurance demands a referral. It’s to the medical provider’s advantage to assist in the referral process and to ensure that the referral is clearly noted on the reimbursement claim. Once the referral has been approved, many clinicians assist by making the appointment with the specialist and notifying the patient.

The large majority of clients don’t have a clear understanding of what their medical insurance will cover or if there are any special requirements. When a referral isn’t obtained when one is required, the patient will be held accountable for the expense and will blame the referring physician.

referral and preauthorization

It’s a situation that can cost the practitioner future revenues from the client and loss of potential patients in the future.

As more insurance carriers begin to require referrals and preauthorizations, it’s critical for any healthcare provider to obtain and verify a patient’s coverage prior to their appointment.

It will affect procedures and treatments provided. Obtaining the appropriate approvals ensures continuity of care for the client and that clinicians receive the reimbursements to which they’re entitled.

About Nitin Chhoda PT, DPT

Nitin Chhoda PT, DPT is the CEO of In Touch EMR and In Touch Biller Pro, an electronic medical records and medical billing software system built be leaders in the physical therapy software industry, with thousands of satisfied customers across the world. For more information, please visit www.InTouchEmr.com and www.InTouchBillerPro.com

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