Prior Authorization Letter

Boy, I love it when my readers do all the work for me.  I encourage the rest of you to do the same.

The subject?  How do deal with prior auth issues, especially when our insurance friends change their minds after-the-fact.

The lead in:

Hey Chip! Thought I would pass this on to you, perhaps it can help you for the coding. We found this out as insurance companies would sometimes deny payment when we had called for prior auth for the VEP, 95930. However there are specific laws governing this matter. Here is a form letter we have for our denials when we get prior auth for the 95930 and they refuse to pay, but it has much larger implications.

Realistically we also call to get prior auth for things like well visits, hearing tests, and immunizations, and sometimes insurance companies would refuse to pay. Before we would often unfortunately just have to make the parents pay, which was horrible after we had verified that their insurance would pay. But legally insurance companies are liable.

As I am in California the initial section deals with California law, but there is precedent in federal law as well.

Hope this helps you! Thanks for your advice in the past!

And now, the letter:

Dear [Patient->Primary Insurance Name]:

On [Visit->Date Occurred] our office called to verify 

that [Patient->Full Name] was indeed an enrollee 

covered under your plan. On that date, 

***NAME OF CONTACT *** verified that 

[Patient->Full Name] was covered for CPT code 95930. 

At no time were we told that:

(1) the enrollee’s right to receive benefits was 

subject to forfeiture or reduction;

(2) the enrollee’s coverage was contingent upon 

further investigation of the facts; or that

(3) you would conduct a post-claim investigation to 

determine the availability of benefits to the enrollee.

If you had made such representations we would 

have sought reimbursement from other sources.  

Based on your assurances of coverage we provided 

necessary treatment to the enrollee.  The cost of that 

treatment totaled $___________.

You afterwards informed our office that you are 

denying our claim because the enrollee is no longer 

eligible for benefits.  This denial is against California 

law that prohibits a Knox-Keene plan or insurance 

company that authorizes treatment and/or verifies 

eligibility from rescinding or modifying the 

authorization/verification after the physician renders 

the service in good faith and pursuant to the 

authorization for any reason, including, but not limited 

to, the plan’s subsequent determination that it did 

not make an accurate determination of the enrollee’s 

or subscriber’s eligibility.  

(Health and Safety Code 1371.8; Insurance Code 796.04.)  

Further, regulations implementing CMA sponsored 

unfair payment legislation, A>B>1455 (2000), deem 

a plan or IPA’s denial under these circumstances unlawful.  

(28 C.C.R. 1300.71 (a)(8)(T).)

Therefore, since the care referenced above was 

authorized you must pay us even if your employee 

made a mistake and the patient was not covered 

for the specific services provided.  

This denial is also contrary to federal law, I.E., the 

Case of The Meadows v. Employers Health Insurance

(9th Cir 1995) 47F.3d 1006.  In this case an ERISA 

plan denied coverage to a drug treatment facility 

after previously verifying eligibility. The court 

allowed a suit to be brought against the plan 

for breach of contract and negligent misrepresentation, 

among other things.  The court stated that 

if eligibility is verified such verification cannot 

later be rescinded as plans are not insulated “from 

the consequences of their own misrepresentations” 

to providers. 

Pursuant to the above referenced California law, 

please remit the amount of $____ to our office within 

30 days. If we do not receive payment by that date we 

regretfully will send this to the Department of Managed 

Health for further legal action.  

Thank you for your cooperation.

Awesome. Thanks.