What is the Difference between Prior Authorization and Predetermination?

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Understanding closely related medical terms can be confusing at times, not just for patients, but for dental professionals as well. While there is a significant difference between prior authorization and predetermination, these terms are often unclear or misunderstood by many. The article will discuss the difference between prior or preauthorization and predetermination in detail and why it’s crucial for dental professionals to know about them in order to improve their services and revenue cycle.

What is Prior Authorization and why is it required?

Prior authorization, also known as preauthorization or prior approval, confirms a patient’s medical insurance coverage. Preauthorization allows you to know if a particular treatment is covered by your patient’s insurance or not. You can inform your patient if it’s not covered and he/she will have to bear the cost of the treatment.

As a medical professional, it’s your responsibility to take prior authorization before starting the treatment. Health insurance companies may refuse reimbursement for a particular treatment if you have not taken preauthorization. In case you don’t follow the preauthorization process, you are likely to experience the following:

  • The insurance company may refuse to pay for the services rendered and drugs. 
  • The insurance company may carry out a post-service utilization management review which asks for medical records and evaluation of claims for consistency with Medical policies, State and federal requirements, Member’s benefits, and other clinical guidelines.

If you provide treatment to your patient without getting the prior authorization from the insurer, you would be responsible for the treatment and may not be able to charge your patient for the service or drug.

What is Predetermination?

A Predetermination is the second in-process and equally important to perform right after the preauthorization. In predetermination, you get to know the percentage of the recommended treatment covered by the insurance company. It includes other specifics like how the insurance company will pay a claim and when you or your patient will receive repayment. Here’s how you can file a predetermination request:

The predetermination request can be submitted by using a claim form. It should include the below-mentioned details:

✔  Patient name

✔  Member name

✔  Group number

✔  Member ID

✔  Procedure codes

✔  Charges

✔  Dental provider name, his/her address, and tax ID number

Although prior authorization and predetermination are correlated, but both serve different purposes. Prior authorization confirms whether the patients have the recommended treatment covered by their insurance company or the coverage plan. On the other hand, predetermination provides detailed information like what percentage of the treatment is covered. And, if they are willing to pay for in-network orders and services.

Understanding the clearly visible difference between preauthorization and predetermination will allow you to communicate transparently with your patients. You can inform them about their medical coverage and how much they are liable to pay. It will allow you to build trust with your patients. Also, you would know exactly how much the insurance company owes you. It will help you submit claims with the correct reimbursement details and you are likely to get paid on time improving your revenue cycle.