Referral and Approval Rules

Some health plans require patients to get a referral from their primary care doctor before going to a specialist or before receiving certain services.  The primary care doctor acts as a “gatekeeper” to oversee and coordinate your care.  Your primary care physician’s office may have requirements regarding when and how you get referrals to specialists or other services.  If your doctor provides the referral, be sure to ask when the referral must be renewed and how you get it.  For example, the plan may initially authorize a limited number of visits to a specialist for your condition.  If you need more, will you be able to obtain approval over the phone, or will you need to schedule another visit with your primary care physician?

You may need pre-authorization by the health plan for some services such as surgeries.  Often the doctor’s office will contact your health plan to obtain this pre-authorization.  For some plans you may need to contact the health plan directly.  A phone call to the health plan before your surgery to verify that all authorizations are in order is far easier than finding out that approval has not been granted or paperwork is missing when you show up at the hospital.

Although these details may seem trivial to you now, many disputes arise when payments are denied because the patients did not obtain proper referrals and pre-authorizations.

Using Non-Network Services

Most health plans negotiate payments with doctors and hospitals in order to lower the cost of care.  As a result, your health plan contract may stipulate that you must use “in-network” doctors and hospitals in order to obtain coverage.  However, even if your plan is an HMO that requires you to use in-network providers, you may be allowed to use out-of network providers in certain cases.  For example, Minnesota requires that HMOs “must pay for highly specialized medical care that is not available in network.”⁽⁷⁾  You also may need to use out-of-network services in emergencies or when you are traveling.  If you can, you should contact your health plan before using out-of-network services or, in emergency cases, as soon as reasonably possible after you have begun to receive care.  Your health plan has rules governing when and how you may obtain coverage for services obtained from out-of-network providers.  These rules should be described in your Summary Plan Description. 

Many people choose health plans such as a PPO (preferred provider organization) or a POS (point-of-service) plan that also cover services provided doctors or hospitals that are not part of the plan’s network.  If you have a health plan such as a PPO or POS plan that allows you to go to doctors or hospitals that are not part of its network, be aware that the amount the plan will pay for the services you receive may be less than what the doctor or hospital bills.  If the out-of-network provider charges more than what the health plan claims is reasonable, you will have to pay the difference, plus any coinsurance.

For example, PPO or POS plans usually require you to pay coinsurance (often 20 or 30 percent or more) of their “allowable charge” for services from providers who are not part of the network.  Suppose your out-of-network coinsurance percentage is 20 percent.  If the doctor charges $100 for a service and your health plan’s allowable charge for that service is only $80, you will pay the $20 difference plus 20 percent of the $80 allowable charge, for a total of $36.  Obviously, for complicated procedures and treatments, these out-of-network charges add up.  You may unwittingly incur these extra out-of-network charges when you have surgery.  It is common for the surgeon and the hospital to be in-network providers, but the anesthesiologist who puts you to sleep may not be in the health plan’s network.  Even though patients rarely have the opportunity to select the anesthesiologist, some health plans maintain that you are responsible for these out-of-network charges.  At least one state external review case has upheld such a determination – in March 2003, the Michigan Commissioner of Insurance ruled in favor of the plan when the consumer used an out-of-network anesthesiologist.⁽⁸⁾  Your health plan has rules about coverage of services obtained from out-of-network providers.  These rules should be described in your Summary Plan Description.  See if you can find out from your doctor which anesthesiologist or anesthesiology group will be used, so you ask your plan whether they are in the plan’s network. What follows is a checklist to help you remember information about your coverage.

⁽⁷⁾ http://www.health.state.mn.us/divs/hpsc/mcs/referral.htm.

⁽⁸⁾ PRIRA Cases (Patients Right to Independent Review Act), File No. 51806, March 11, 2003 -- http://www.michigan.gov/cis/0,1607,7-154-10555_20594_20596-76700--,00.html, accessed May 13, 2005.