CBCS Prior Authorization and Referrals 1 — Questions and Answers
Question 1: What is the primary purpose of prior authorization in healthcare?
- To allow patients to self-refer to specialists
- To verify that a proposed service meets the payer's criteria for medical necessity before it is performed (Correct answer)
- To ensure the provider is credentialed with the payer
- To notify the patient of their financial responsibility
Correct answer: To verify that a proposed service meets the payer's criteria for medical necessity before it is performed
Prior authorization confirms that a payer agrees the service is medically necessary before it is performed, reducing denial risk.
Prior authorization (also called pre-authorization, pre-certification, or pre-approval) is a requirement by health insurers that a provider obtain approval before performing certain services, procedures, or prescribing certain medications. The process confirms that the proposed service meets the payer's criteria for medical necessity. Without prior authorization when required, the claim may be denied or paid at a reduced rate.
Question 2: Which document is typically required to initiate a prior authorization request?
- A signed patient HIPAA authorization
- Clinical notes supporting medical necessity (Correct answer)
- The patient's complete billing history
- The provider's facility license
Correct answer: Clinical notes supporting medical necessity
Clinical documentation supporting medical necessity (such as office notes, test results, and the treating physician's orders) is the primary requirement for a prior authorization request.
To initiate a prior authorization, the provider or billing office typically submits clinical documentation including physician notes, relevant diagnostic test results, previous treatments tried and failed, the patient's diagnosis, and the requested service or medication. The payer's clinical team reviews this documentation against evidence-based criteria (such as InterQual or MCG guidelines) to determine if the service is medically necessary.
Question 3: A payer denies a prior authorization request as 'not medically necessary.' What is the next appropriate step?
- Immediately bill the patient for the full amount
- Submit the claim anyway without authorization
- File an appeal with additional supporting documentation (Correct answer)
- Refer the patient to a different provider
Correct answer: File an appeal with additional supporting documentation
When a prior authorization is denied, the provider should file a formal appeal with additional clinical documentation supporting medical necessity.
When a prior authorization is denied as 'not medically necessary,' the provider has the right to appeal the decision. The first step is typically an internal appeal, during which additional clinical documentation, peer-reviewed literature, or a letter of medical necessity from the treating physician is submitted. If the internal appeal is unsuccessful, a peer-to-peer review (direct physician-to-physician conversation) or an external independent review may be requested.
Question 4: What is a 'peer-to-peer review' in the context of prior authorization?
- A quality review of a physician's practice conducted by another physician
- A direct conversation between the treating physician and the payer's medical reviewer to discuss a denied authorization (Correct answer)
- A review of a patient's records by two different physicians simultaneously
- A second opinion requested by the insurance company
Correct answer: A direct conversation between the treating physician and the payer's medical reviewer to discuss a denied authorization
A peer-to-peer review is a conversation between the treating physician and the payer's medical director to advocate for an authorization that has been denied.
A peer-to-peer review occurs when a treating physician requests to speak directly with the payer's medical director or clinical reviewer after a prior authorization denial. During the peer-to-peer, the treating physician presents clinical information, explains the medical necessity, and advocates for the patient's need for the requested service. Peer-to-peer reviews frequently result in the reversal of denials and are an important tool in the appeals process.
Question 5: Which of the following services typically DOES NOT require prior authorization?
- Elective inpatient surgery
- MRI for a new complaint
- Emergency appendectomy (Correct answer)
- Specialty biologics
Correct answer: Emergency appendectomy
Emergency services generally do not require prior authorization; payers recognize that emergencies cannot be anticipated.
Federal law (and most payer contracts) exempts true emergency services from prior authorization requirements because, by definition, emergencies cannot wait for advance approval. Emergency services must be provided immediately to prevent serious harm or death. After stabilization, payers may require notification (usually within 24-48 hours) for continued inpatient care. Elective surgeries, advanced imaging, and specialty medications commonly require prior authorization.
Question 6: What is the difference between a referral and a prior authorization?
- They are the same process with different names
- A referral is a physician's order directing a patient to see a specialist; prior authorization is payer approval for a service (Correct answer)
- A referral is required only for inpatient care; prior authorization is for outpatient services
- A referral is given by the patient; prior authorization is requested by the physician
Correct answer: A referral is a physician's order directing a patient to see a specialist; prior authorization is payer approval for a service
A referral is the physician's direction for a patient to see a specialist, while prior authorization is payer approval that a service is medically necessary.
A referral is an order from the patient's primary care physician (PCP) directing the patient to see a specialist for evaluation or treatment. It is primarily a clinical and administrative document. Prior authorization (or pre-authorization) is a separate process in which the payer reviews and approves a proposed service, test, or medication for coverage before it is provided. Both may be required for the same visit — the referral gets the patient to the specialist, and the authorization ensures the payer will cover the service.
Question 7: In a managed care plan, a 'gatekeeper' is typically which of the following?
- The insurance company's medical director
- The primary care physician who manages referrals to specialists (Correct answer)
- The utilization management department
- The patient's case manager
Correct answer: The primary care physician who manages referrals to specialists
In managed care plans (especially HMOs), the primary care physician acts as a gatekeeper, coordinating and authorizing referrals to specialists.
In Health Maintenance Organization (HMO) and some other managed care models, the primary care physician (PCP) serves as the patient's 'gatekeeper.' The PCP provides primary care, manages the patient's overall health, and must authorize referrals to specialists before the patient can see them (except for emergencies). This model is designed to promote coordinated care, reduce unnecessary specialist visits, and control costs.
Question 8: What should a billing specialist do when a prior authorization is approved but expires before the service is rendered?
- Proceed with the service and appeal if denied
- Obtain a new or extended authorization before the service is rendered (Correct answer)
- Bill the patient directly for the service
- Use the expired authorization number on the claim
Correct answer: Obtain a new or extended authorization before the service is rendered
If a prior authorization expires before the service is performed, a new or extended authorization must be obtained to ensure coverage.
Prior authorizations are issued for a specific service within a defined date range. If a service is not rendered within the approved timeframe, the authorization expires and is no longer valid. Submitting a claim with an expired authorization may result in denial. The billing specialist should contact the payer to request an extension or resubmit the authorization request with current clinical documentation before rescheduling the service.
CBCS Prior Authorization and Referrals 1
What is the primary purpose of prior authorization in healthcare?