Two Common Areas of Insurance Coverage Confusion

Most Americans receive health insurance through their jobs. Understandably, they pay little attention to the specifics until they become ill. And while “the basics” of premium, deductible, and out-of-pocket maximums are pretty well understood, there are two areas that cause major confusion: prior authorization and the appeals process.

A clear understanding of both will help ensure you receive the degree of coverage you are entitled to.

Prior Authorization

Our client Charles spent months planning for a joint replacement. This included lots of physical therapy to get ready, time off from work for his wife, and coordinating visits by adult children to help with care. So when Charles received a call canceling his surgery the night before because it had not been authorized, you can imagine the family’s frustration and anger. Fortunately, we were able to step in and challenge the cancellation, but it was delayed a week, causing a great deal of angst for all involved.

Sadly, this scenario is not uncommon. One consumer survey found that 16% of all insured adults in the past year experienced prior authorization problems and were about three times more likely to report significant delays in receiving medical care or treatment as a direct result.

In another survey, more than three quarters of physicians stated issues related to prior authorization requirements caused unnecessary delays, and over 80% stated such delays contributed to poor clinical outcomes.

Even if your doctor says you need a specific test, outpatient surgery, or surgery involving a hospital admission, you still may need prior authorization from your insurance plan before you can receive care. Failure to obtain authorization can lead to a delayed or canceled diagnostic test or surgery, or what feels like a premature hospital discharge.

These requirements are not included in the Summary of Benefits (SOB) that most individuals refer to surrounding their coverage levels. However, they are specified in the Evidence of Coverage — your contract with your insurance company. 

Some common types of care requiring prior authorizations:

  • diagnostic imaging (MRI, CT, and PET scans)
  • sleep studies and related sleep apnea equipment
  • outpatient surgery
  • scheduled inpatient hospitalization 
  • inpatient acute rehabilitation or skilled nursing care following a hospital admission
  • ongoing care in an inpatient or rehabilitation setting

As recipients of care, it is up to us to stay on top of the process. Some suggestions:

Communicate. Providers should submit the prior authorization on your behalf. But it is a good idea to check well in advance and, more importantly, that the insurance company is responding in a timely way. If not, call the insurance company and push the situation along.

Inquire. A few days after the prior authorization request has been submitted, check its status using your health insurance member portal or by calling your health insurance plan. If the request is pending, ask when you should expect a decision; request it be expedited, if possible.

Document. Keep a record of your calls, including the date and who you spoke with. Ask for a “call reference number” which will be helpful if you need to call again. Once approved, request documentation. This may be available on your member portal, or you can request to have it sent directly to you.

Verify. The week before your scheduled test or surgery, call your provider to verify they have received the approved prior authorization. If you are having surgery, check with the surgery center to ensure they have also received the authorization. 

For inpatient services, in addition to the recommendations above, make sure to discuss authorization for ongoing care with the case manager. There is documentation that must be submitted at regular intervals to continue an inpatient stay. Initiate direct contact with the insurance company so you can intervene if necessary.

The Appeals Process

We are routinely contacted by clients after they receive a denial of a prior authorization or continued inpatient care. In some cases, a formal appeal process is necessary to resolve the issue, the details of which vary depending on plan requirements.

How do you file an appeal?

If your request is denied, identify the exact reason to be sure all the required clinical information and appropriate procedure codes were submitted. Speak with your physician’s office first as you must work hand-in-hand with them — they are responsible for providing the medical records to substantiate the need for the procedure or surgery. If the submission appears correct, ask your insurance plan to review it again through its appeal process. 

If you are inpatient, work with the case manager and the attending physician to be sure all the related clinical information was shared. In these cases, information from the physician of record, specialist physicians, and physical, occupational, and speech therapists, may be required for an adequate review. Ask for a copy of the information that was submitted so you can evaluate if it sufficiently represents your clinical status.

It is very important to follow the process for appeals exactly as outlined in your Evidence of Coverage. In addition to the information required, there may be process details that must be adhered to, whether that’s a particular form that must be filled out, a means of communication that must be used (e.g., email, fax, snail mail), or something else entirely. 

Health plans have both internal and external appeal processes. Your Evidence of Coverage will tell you how many internal levels of appeal are available to you, each of which must be followed in order. If you exhaust your internal appeals, you may request an external appeal. Here, your insurance plan will assign the appeal to an independent review organization outside of your health plan.

As you move through the appeal process, be sure to document your efforts and keep copies of all requests.

When will my appeal be reviewed?

Your Evidence of Coverage will provide specific details about the maximum amount of time your plan has to respond. It also provides details about how you will be notified about the outcome.

What if my request is urgent?

You may be entitled to an expedited appeal if it is related to urgent health care services, as defined by the plan. It may also be requested if you are currently receiving care in an inpatient setting and the request for continued care has been denied. 

In the case of our surgical client mentioned earlier, an expedited appeal was initiated that included additional clinical documentation from his physician and that resulted in an approval. But it still delayed his surgery for one week.


The need for prior authorization and an understanding of the appeals process are often both misunderstood. That’s why it is so important to be well acquainted with the details of your health insurance plan, all of which is specified in your Evidence of Coverage.

As always, educating yourself about your plan helps you be an active, informed participant in your health care!