Ever wish a tech company would develop an app like Mapquest or Waze to help navigate your dental staff and your patients through the maze of insurance claim complexity?
Even the terminology is challenging!
Predetermination. Pre-Estimate of Benefits. Preauthorization.
These terms are very confusing to patients—even to staff! So, what do these terms mean? What’s the difference between them?
Occasionally, dental offices find that a plan granted preauthorization for treatment is denied payment when the claim is submitted. The denial is often rooted in a hazy understanding of the what constitutes “preauthorization” and what is simply a “predetermination” or “pre-estimate of benefits”.
Preauthorization provides advance written approval for the planned service, which is generally valid for 60 days. Typically, preauthorization is not part of routine dental insurance plans, except Medicare, Medicaid, or managed care plans where certain types of services may require advance approval—or preauthorization.
This preauthorization for specified managed care plan services can be very important as failure to obtain it may—depending on the patient’s insurance plan—result in denial of the claim. In essence, preauthorization is a presubmitted claim for treatment, with diagnostic notes, radiographs, and specific procedure codes reflecting prescribed care.
In some states, once a health plan provider formally preauthorizes a course of treatment for one of its enrollees, the plan is required to pay for that authorized treatment. Because of this, many insurance providers are beginning to shy away from preauthorization.
Predetermination––sometimes called a pre-estimate of benefits or pretreatment estimate––provides confirmation that the patient is indeed a covered enrollee of the dental plan.
It also verifies that the proposed treatment is a covered benefit for this patient. In other words, a predetermination is a formal inquiry of patient’s eligibility for coverage but NOT a guarantee of payment. Many times, the insurance company’s initial response is inaccurate.
A predetermination typically requires all the same diagnostics as a preauthorization. It’s a process entailing a lot of work that results in no firm answer regarding payment. Again, a predetermination not a guarantee of payment, it is simply an of the patient’s benefits. However, it can only be accurate if the deductibles, maximums, and waiting periods are calculated in. Many times they are not!
One is example is a patient who had a $5000 treatment plan. Her insurance policy limited maximum coverage to $1000 annually. The dental office sent a predetermination to the insurance company; the insurance carrier replied by stating that the patient had 50% coverage of her $5000 plan—which was NOT true.
The treatment coordinator then had to explain to the patient that the insurance company would actually only pay 50% up to $1000 and not 50% of the entire plan––despite what the staff received in writing from the insurance carrier. It’s very difficult to explain to a patient why they will owe more than an additional $1000 than what the insurance carrier indicated. Most times, this confusion results in the patient declining treatment.
A Predetermination Is Not A Real Authorization
There are some benefits to obtaining a predetermination, such receiving notice of patient eligibility in writing, and it may prove to be useful financial tool when obtaining a patient’s consent for treatment and providing an estimated cost of what out-of-pocket costs may be involved.
But there is also a significant down side. The process of obtaining a predetermination often takes 4 to 6 weeks. This time-delay leaves time for patients to reconsider, lose interest, or forget the importance of the treatment plan.
And most importantly, the wording used to in explaining coverage to a patient is essential.The patient must be led to understand that a predetermination is only an estimate and not a guarantee of payment by their insurance provider.
Deductibles, copays, non-covered services, and the percentage of the dentist’s standard service procedure fee that the insurer has pre-negotiated with the dental provider may not be noted in the predetermination.
After much experience, we recommend that dental staff circumvent patient confusion by all together avoiding words like “authorization” and “determination”. For in-network providers, the best course is simply to rely on the fee schedule and break-down of benefits already provided by the insurance carrier. A predetermination is redundant and takes up staff time. However, should the patient request an advance understanding of costs, we believe the best terminology to use is “pre-treatment estimate”—which clearly communicates that the sum is only one’s best calculation of the total costs for services and potential out-of-pocket costs to the patient.