Navigating the Preauthorization Maze

by Susan Gallagher Camden, RN, MSN, WCON, PhD; and Anita Houle

Susan Gallagher Camden, PhD, RN, MA, MSN, CBN, is from the Celebration Institute, Inc., Houston, Texas; Anita Houle is Insurance Authorization Specialist, Cleveland Clinic Florida Bariatric Institute, Weston, Florida.

Introduction
In recent years, there has been a dramatic increase in the number of weight loss surgery (WLS) procedures performed in the US. Subsequently, WLS-related medical insurance claims have soared. This increased cost to third-party payers has led to increased scrutiny of WLS procedures. Regardless, more and more individuals are considering it a viable option. This increasing interest is likely because of the realistic promise that successful WLS is expected to help some people control comorbid conditions, engage in regular activities, and improve self esteem. However, not all candidates have resources to cover payment for such surgery. Additionally, there are candidates who have resources but are challenged in accessing them. This challenge is often rooted in the process of insurance approval.

The precertification process is a utilization management tool designed to control hospital admissions, utilization of services, and facility expenses. Most bariatric weight loss teams would consider this process a distraction at best. However, the healthcare plans consider utilization management important for quality assurance and cost control. This article introduces you to the specific challenges inherent in seeking payment for WLS, and ideas to reconcile this tension; defines common terms (Table 1); and includes models for the patient-provider relationship.

What is Utilization Management?
One of the earliest techniques of managed care was developing programs to intervene in the delivery of services and judge appropriateness before procedures were performed. Pre-authorization or certification became a necessity for hospital admissions, specialty referrals, and certain tests and procedures. In the early years of utilization management, most programs simply created the barrier of a phone call and actual denial rarely occurred. This practice has largely been discounted as it did not accomplish the cost saving or quality goal that was initially desired.

Today, a more comprehensive look at resource management has been undertaken by most insurance companies who explain that there are many reasons to pre-certify in the current heathcare environment. For example, there is a pressing need to control use, and therefore the costs, of seemingly inappropriate or marginally effective interventions. The climate of increased expectations and decreased reimbursement from payers has lead to uncontrollable medical loss ratios. Uncontrollable losses place medical organizations and health plans at risk for going out of business. The failure of these groups could produce a domino effect, taking hospitals and medical groups with them—literally dismantling the healthcare delivery system. Thus, this type of resource management is likely here to stay, as is pre-certification, which has become a somewhat painful yet integral part of medical care including WLS.

Understanding the First Step
Before the patient schedules an initial consultation it becomes important to see if WLS is even a covered benefit or to what extent WLS is covered. Many insurance carriers have restricted coverage of WLS. Not only are there carriers that fail to provide any WLS reimbursement, many do not cover the fees necessary to establish medical necessity or preoperative clearances (Table 2). Fees associated with WLS extend beyond the surgery itself. In some cases, the surgeon may find a need for additional testing. For example, a diagnosis of sleep apnea may need to be confirmed by a sleep study. Diagnostic tests often support the indication for surgery, which can be helpful; however, an initial cost may be the patient’s responsibility. Regardless, the patient must understand that a variety of charges will be incurred and it is in their best interest to pursue third-party reimbursement whenever possible. Once it is determined that the carriers reimburses for WLS when medically necessary, the process for arguing for medical necessity begins.

Establishing Medical Necessity
Two models for pursuing coverage are commonly seen. The first entails a patient who is very aware of his or her insurance requirements and takes the initiative to begin the process of locating a surgeon who is identified by the carrier as a preferred provider. The second model occurs when a patient has responded to a surgeon’s marketing effort or has had a family member, friend, or other physician make a referral to a specific WLS practice. In many cases, the bariatric surgeon, primary care physician, or WLS team members collaborate to obtain documents supporting medical necessity. Weight loss surgery practices participate in varying degrees with patients seeking to obtain approval for surgery. In order to prevent disappointment, it is important for the practice to let the patient know, in the beginning, how much help can be expected in this process.

Most practices agree that a thorough medical history must be obtained, wherein the patient’s weight history—as well as BMI based on height and weight—is established. Efforts to achieve weight control by non-surgical methods must be reported by the patient and recorded in detail in the health history. Each of the patient’s comorbid conditions must be described to severity, duration, and response to previous treatment. Some insurance carriers require not only a statement indicating unsuccessful attempts at weight loss, but medical records reflecting this.

The letter of medical necessity may require documentation of the patient’s weight for the past five years. Dietary requirements will range between insurance carriers; in some cases, it might be specified that the dietary attempts be conducted with physician supervision up to 36 months. Some plans mandate a 5 to 10-percent weight loss before authorizing WLS. Preoperative evaluation by a psychologist and dietician is usually mandated but seldom covered. The letter of medical necessity must create a clear picture of the patient obesity and its effect on his current health status. This health history is building a case for medical necessity. Medical necessity is at the heart of reimbursement.

Obtaining Preauthorization
WLS practices are experiencing increasing preauthorization processing times. Denials are not uncommon. However, a comprehensive approach to this process can be helpful to facilitate preauthorization. Consider Cleveland Clinic Foundation, where a coordinated approach is used for a number of sound reasons. Communication between patient, provider, and insurance carrier is instrumental to seamless patient care and reimbursement thereof. Most important, however, is that prior authorization does not guarantee payment. The prior authorization simply helps to secure payment for both the doctor and hospital. Authorization specialists can help the patient navigate insurance company criteria.

Understanding Denials

Many insurance companies will deny an initial request, even when well-substantiated and well within the consensus criteria recommended in the NIH report. When faced with a determined appeal from a determined individual, they often reconsider and provide coverage. Providers can be helpful by making sure that the coding is correct because both diagnostic codes (ICD-9) and bariatric surgery codes (CPT) change regularly. Carriers are compelled to explain the reason for the denial; when resubmitting, make sure the medical necessity is fully described as indicated by the carrier. Explain any deviation from evidence-based guidelines. If the insurance carrier continues to deny the request, patients often seek legal assistance in obtaining good faith coverage of a medically necessary procedure. Keep in mind that a study by the New York State Insurance Department found that of more than 10,000 decisions appealed in 2004 against 16 HMOs, 39 percent of the appealed denials were reversed. (See Table 3, Table 4, and Table 5 for additional information.)

Conclusion
The demand for WLS will continue to increase until alternatives for treatment are developed. Paying for the medical clearances and WLS can be stressful for those who meet National Institute of Health (NIH) criteria but still struggle for insurance approval for coverage. Understanding the processes is the first step in overcoming these struggles. Recognizing the nuances in communicating with carriers is another. A certification specialist can be instrumental in facilitating the processes.

References
1. Pope GD, Birkmeyer JD, Finlayson SR. National trends in utilization and in-hospital outcomes of bariatric surgery. J Gastointest Surg 2002;6:855–61.
2. Alt SJ. Bariatric surgery may become a self-pay service. Health Care Strateg Manage 2003;21(12):12–9.
3. Safadi BY. Trends in insurance coverage for bariatric surgery and the impact of evidence-based reviews. Surg Clin N Am 2005;85:665–80.
4. Hall MA. State regulation of medical necessity: the case of weight-reduction surgery. Duke Law J 2003;53(2):653–72.
5. State of New York Department of Insurance. 2005 New York Consumer Guide to Health Insurance. Available at: www.ins.state.ny.us.acrobat/hg2005.pdf. Accessed January 29, 2008.
6. Akosa AN. Precertification, denials and appeals: Reducing the hassles. Fam Pract Manag 2006:45–6.

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