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Five Health Insurance Processes and Protocols to Know

By Matt Cavallo

In part one of our examination of health insurance terms you must know for the open enrollment period, we focused on financial terms and how they affect your buying decision. In addition to the financial terms, you must also follow the processes and protocols determined by the terms of the plan. These processes and protocols include what is covered by the plan and how to go about ensuring the plan will cover what is prescribed. If you follow the process and protocols, then you are more likely to ensure that the health service rendered to you is covered by the plan.

Five health insurance processes and protocols you must know:

1.   Formulary – The formulary is a list of prescription drugs covered by your health insurance plan. Prescription drugs on a formulary are broken into different tiers. Tier numbering and meaning can be specific to your plan. The tiers typically refer to safety, efficacy, and cost. Generic drugs are typically covered in tier one with name brands in tier two. When you get into the upper tiers, these are going to be for more expensive and effective treatments, as well as treatments that have a higher safety concern. Higher tier drugs typically will have a higher co-insurance. The formulary can change from year to year, so it is important to validate that your MS treatment is still covered by the formulary. If your treatment is not on the formulary, the health insurance plan can deny the prescription. If they deny the prescription, there are two options: appeal the denial or talk to your neurologist about other prescribing options that are included in the formulary. Either process can take time, so it is important to know whether or not your treatment is covered prior to enrolling in the plan.

2.   Prior authorization – Insurance prior authorization is the decision by your health insurance plan to render a health service, treatment, medical equipment or prescription drug. The issuance of prior authorization is based on medical necessity, except for an emergency. Prior authorization is not a promise that the health insurance will cover the cost. When you are with a prescribing physician, it is always wise to ask whether or not the treatment or equipment prescribed required prior authorization according to your plan. A doctor’s office has staff that specialize in understanding the benefits and eligibility of services and can submit for prior authorization on behalf of the patient. If a prior authorization is denied, the patient can file an appeal, ask the doctor for a treatment or equipment included in the plan, or decide to pay for the treatment or equipment themselves.
3.   Claims denials and appeals – When submitting for a prior authorization, the service, treatment, drug, or equipment may be denied by the health plan. The health plan is required to issue a written denial within two weeks of the prior authorization request, or within 72 hours for a patient safety issue. A denial does not mean that it is the final decision. Sometimes claims are denied because there isn’t the supporting documentation to prove medical necessity or other reasons that can be overturned on appeal. This would include a medical treatment that is not on the formulary, but is necessary for your MS. Ideally, you would pick a plan with your treatment included, but if your treatment is not included you can go through the denial and appeal process to get a final decision. Each health insurance company has different protocols for filing an appeal. To file an appeal for a denied service, call the customer service number on the back of your health insurance card and talk to a representative that can help you with the appeal process.
4.   In-network vs out-of-network – Health insurance plans have a list of approved physician groups, specialists, treatments, and prescription drugs that are contracted to accept specific rates approved by the health insurance plan. Out-of-network providers have not accepted the negotiated rates of the health insurance plan. Typically in-network vs out-of-network providers affect out-of-pocket cost for you, the consumer. Your health insurance plan does not have to approve out-of-network providers and can deny a claim on that basis. If your health insurance plan allows for out-of-network providers and treatments, then it will typically affect your co-payments or co-insurance. For example, a co-insurance of 20 percent for an in-network doctor’s appointment can be 40 percent co-insurance for an out-of-network doctor’s appointment. The same situation applies to prescription drugs. Prior to making a health insurance decision, you can make sure that the plan you are considering has your MS treatment in the formulary and your neurologist as an in-network provider. This information is generally available on the health insurance plan’s website or by calling the customer service representatives at the health plan.

5.   Open enrollment period – The open enrollment period is the yearly period when people can enroll in a health insurance plan. Open enrollment run for 2017 is from Nov. 1 until Jan. 31, 2017. Outside of open enrollment, you must qualify for a special enrollment period. To qualify for a special enrollment period you must have a major life event like moving, change of marital status, having a baby, or loss of current health coverage. Other special enrollment periods involve employer-based plans, which may allow you to enroll at different times based on terms of employment or the plan.
The clock is ticking for the 2017 open enrollment period. We hope that this two part guide to health insurance terms you need to know for this open enrollment period will help clarify insurance terms to allow you to make an educated decision based on your health needs.
Resource – insurance term definition was adapted from the Healthcare.gov Glossary