CDA Practice Support occasionally hears a complaint from dental offices that a plan granted a preauthorization for treatment and then denied payment when the claim was submitted. Digging a little deeper into these complaints, there may be some confusion between what constitutes a “preauthorization” and what is a “predetermination” or pre-estimate of benefits.
The main difference between a predetermination and a preauthorization is that the predetermination provides a confirmation that the patient is a covered enrollee of the dental plan and that the treatment planned for the patient is a covered benefit. It also provides a written estimate of the patient’s likely out-of-pocket expense for the care.
A preauthorization provides written advance approval for the planned service, which is generally valid for 60 days. Certain types of services require advance approval, or preauthorization. This preauthorization for specified procedures is important, and the failure to obtain it may result in denial of the claim.
Under state law, health plans must pay for preauthorized treatment
Another distinction: State law requires health plans to pay for treatment that has been preauthorized. There is no requirement to pay for care for which a pre-estimate of payment is provided. In fact, dental plans will explicitly say that a pre-estimate of payment does not constitute a guarantee of payment.
Both the Knox-Keene Act (Health and Safety Code Section 1371.8), which governs dental health maintenance organizations and Delta Dental’s lines of business, and the Insurance Code (Section 796.04), which governs dental preferred provider organizations and indemnity insurance, contain provisions stating that a health plan “shall not rescind or modify [an] authorization after the provider renders the health care service in good faith and pursuant to the authorization for any reason.” In other words, if a dental plan operating under California law formally preauthorizes a course of treatment for one of its enrollees, by law the plan is required to pay for that authorized treatment. This is likely one reason that few dental plans still preauthorize treatment. Many plans may be hesitant to issue a formal preauthorization for services due to the legal requirement to pay for such preauthorized care. Such plans will still issue a predetermination of benefits.
A preauthorization is essentially a presubmitted claim for treatment, with diagnostic notes, radiographs and specific procedure codes reflecting prescribed care. (The requirements for a preauthorization may differ from plan-to-plan, so reviewing the process with the plan is advised before submitting treatment for preauthorization.) Plans may require a preauthorization of services to determine if those services are medically necessary. A plan may respond with alternative procedures to the ones suggested by the treatment provider. While many national health plans do not consider a preauthorization to be a promise that the insurance or plan will cover the cost of care, in California it is a commitment to pay if everything remains the same by the date of service.
For an enrolled patient, a preauthorization approves and authorizes planned treatment for a set period of time and sets aside the funds to reimburse the provider, given that the patient remains enrolled in the plan. Should the enrollee drop out of the group between the date of the preauthorization of treatment and the treatment itself, or should the group drop its contract, payment is not guaranteed. Consequently, a preauthorization will contain a disclaimer that it is not a guarantee of benefits but is a statement of benefits at the point in time that the authorization was issued. Furthermore, the preauthorization does not take into account an annual maximum that may be reached in the period between the preauthorization and treatment, as well as other factors such as subsequent claims for the same procedure from a different provider. Therefore, ultimately, the way to view a preauthorization of coverage is as an estimate.
A predetermination of benefits, or pretreatment estimate, is a formal inquiry of patient eligibility for coverage. Individual plans set specifics for predeterminations but requests for predetermination or pretreatment estimates are not as detailed as submissions for preauthorization. For example, X-rays are not always reviewed for pretreatment estimates, even when a plan requires X-rays for payment of the eventual claim. Unlike preauthorizations, predeterminations are only an estimate of payment if the treatment is paid. In providing an affirmative predetermination of benefits, a plan is saying, “Yes, your patient is enrolled with us; yes, what you propose as a treatment plan constitutes covered benefits with the plan.” A predetermination typically includes a patient’s eligibility status, covered services, amounts payable, copayments, deductibles and plan maximums.
While not a guarantee of payment, a predetermination of a patient’s benefits may be a more accurate confirmation of eligibility than a verbal confirmation over the phone, simply because it is in writing.
Predetermination of patient benefits can be a trade-off
However, although having the patient eligibility in writing is helpful, a predetermination of a patient’s benefits can be somewhat of a trade-off. On one hand, predeterminations of patients’ benefits can be helpful financial tools when working with patients to achieve their consent for desired treatment plans. On the other hand, the process of obtaining a predetermination often can take four to six weeks, leaving enough time for a patient to lose interest or forget about the importance of the treatment plan.
Predetermination forms and instructions may be obtained by visiting the plan website or from the payer’s participating provider manual. The 2012 ADA J430D claim form may also be used by checking the “Request for Predetermination” box at the top of the claim form.
Some plans recommend obtaining predeterminations for procedures exceeding a specific dollar amount. These procedures can include extractions, crowns, onlays, veneers, fixed bridgework, implants or periodontal treatments.
It is important for the patient to understand that the predetermination is not a guarantee of payment. The claim is still subject to adjudication rules that include a review of limitations, exclusions, coordination of benefits and enrollee eligibility on the date of service. Carriers base the estimate of treatment on benefits available on the day the predetermination is processed. If other procedures are submitted before the predetermined treatment is performed, the payable benefits may be reduced accordingly.
Dental benefit plans usually do not determine eligibility for the enrollees and rely on the employer groups to provide that information accurately and on a regular basis. Occasionally, the dental benefit plan will receive information that an enrollee is no longer eligible, with a retroactive termination date. The benefit plans are allowed to do post-claims payment review going back 12 months, according to state law. These post-payment reviews could result in requests for refunds if the payment should not have been made. A typical reason that refund requests are made after post-payment reviews is that the patients were not eligible for coverage on the date of service .
In summary, California law prohibits an insurer or health care plan that preauthorizes treatment of an enrollee from rescinding or modifying the authorization after the provider renders the service in good faith and pursuant to the authorization. Because of the law’s requirement to pay for preauthorized care, many dental plans do not issue preauthorizations. They will instead pre-estimate or predetermine a patient’s benefits, which is not the same as a preauthorization, and a predetermination of benefits is not a guarantee of payment.
Regardless of whether a patient’s plan issues a preauthorization or a predetermination of benefits, if the patient has lost eligibility for coverage prior to the date of treatment, the plan will not pay for treatment and payment for care is solely the patient’s responsibility.
Dental Benefits 101 is a semiregular series launched in January that discusses basic dental benefit issues. Find additional installments in the CDA Update and on cda.org. Find more dental benefit resources in the Practice Support section of CDA’s website.