How Hospitals and Emergency Services Get Authorization

You Don’t Need Authorization if It’s an Emergency

In a recent blog, “What is Authorization in Medical Billing?”, we delved into the authorization process that healthcare providers must follow to get medical treatments and procedures approved by insurance companies. But what about hospitals and emergency services departments? Do they have to follow the same process for authorization?

This is a matter of vital concern for many people, because they worry that if they must run to an emergency room (ER), or if they’re staying in a hospital and they experience a surprise medical emergency, does the hospital and/or emergency department have to go through a pre-authorization process before they can receive care in such a crucial situation?

The AMA, CMS, and HealthCare.gov all agree

No less an authority than the federal government’s Centers for Medicare & Medicaid Services (CMS) is unambiguously clear on this matter:

Q: Are emergency department services subject to prior authorization?

A: No. CMS excludes the Emergency Department services from prior authorization requirements [emphasis added] when an outpatient service is submitted with an ET modifier or 045x revenue code. These claims are not excluded from future pre-payment or postpayment medical reviews.

Another pillar of the American medical establishment—the American Medical Association (AMA)—wholeheartedly agrees: “All physicians and health care facilities have an ethical obligation and moral responsibility to provide needed emergency services to all patients, regardless of their ability to pay. (Reaffirmed by CMS Rep. 1, I-96),” adding, “All health plans should be prohibited from requiring prior authorization for emergency services” [emphasis added].

In a Q&A on its website, the federal government’s HealthCare.gov—the website of the Affordable Care Act’s insurance marketplace—reinforces this point when giving advice to Americans panicking about whether an emergency room visit will be covered: 

In an emergency, you should get care from the closest hospital that can help you. That hospital will treat you regardless of whether you have insurance. [emphasis added] Your insurance company can’t charge you more for getting emergency room services at an out-of-network hospital.

I’m having an emergency. Should I go straight to the hospital or do I need to call my insurer first?

In a true emergency, go straight to the hospital. Insurers can’t require you to get prior approval before getting emergency room services from a provider or hospital outside your plan’s network. [emphasis added]

It should be mentioned that post-stabilization authorization might be needed. While initial emergency treatment doesn’t require prior authorization, the hospital may need to obtain approval for further non-emergency care after the patient is stabilized. 

A look at required authorization

Okay, so emergency procedures and treatments are exempt from pre-authorization. But if you’re in the hospital for a stay, and your doctors decide you need a certain kind of treatment or procedure, you still need to go through pre-authorization—as long as the recommended treatment isn’t an immediate matter of life and death.

If you’re a healthcare provider in a hospital setting, there are three kinds of authorization that might be necessary for you to get from insurers before moving forward. The most common type is pre-authorization (also known as prior authorization), which is necessary before treatment can begin. Concurrent authorization might be necessary during a patient’s treatment so the insurance company can confirm that that the treatment is still needed. Insurers ask for retrospective authorization after treatment if there was no prior authorization or if the insurance company needs to assess whether the treatment was called for after it was delivered.

How do you get authorization in a hospital or ER?

• First, if you’re a healthcare provider in a hospital or ER setting, you determine whether this treatment you’re contemplating needs authorization; that depends on the kind of treatment under discussion, the details of the patient’s insurance plan, and the insurer’s policies.
• If authorization is needed, you submit a request for authorization to the insurance company.
• After reviewing your request, the payer will approve or deny the authorization. In case of denial, you can appeal the decision if you believe the service is medically necessary.
• After you get authorization, you must document the approval in your patient’s medical records so you can bill the treatment correctly.

The crucial role of authorization

Why is authorization so important?

• For one thing, it helps insurance companies ascertain that all the treatments they’re paying for are needed, so they’re not wasting money.
• If hospitals and emergency departments get authorization in advance, they can reduce the chance that their medical claim will be denied.
• It also improves their cash flow (also known as revenue cycle management or RCM) because they know reimbursement is on its way and their claim won’t be denied.
• Authorization also helps patients by assuring them that their insurance plan will cover their care so they can avoid out of pocket expenses.

Roadblocks to authorization

Several factors can delay the process of authorization.

• Hospitals can be forced to wait for several days or even longer before the insurer finishes processing their request for authorization—so patient treatment is delayed.
• When it comes to authorization, each insurer has its own complex set of policies and requirements. If the hospital or ER billing staff messes up any details, authorization will be delayed or denied.
• In addition, processing these authorizations only adds to the increasing workload of overworked hospital administrative staff, who may not be experts in navigating the complicated world of insurance company authorization requirements.