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.