Why Pre-Authorizations Matter: Avoid Unexpected Medical Bills

This week, I want to talk about something that causes a lot of confusion and frustration for people: pre-authorizations.

I get questions about this all the time, regardless of what type of insurance someone has. Whether you have an ACA Marketplace plan, employer-sponsored insurance, an indemnity plan, or another type of coverage, understanding pre-authorizations can save you a lot of money and headaches.

What Is a Pre-Authorization?

A pre-authorization (sometimes called prior authorization) is approval from your insurance company before you receive certain medical services, procedures, tests, or medications.

Think of it as your insurance company saying:

“Yes, this treatment is covered under your plan, and we approve moving forward.”

While it can feel like an extra step, pre-authorizations are incredibly important.

Why Should You Get a Pre-Authorization?

If you’re having anything major done outside of:

• Routine doctor visits
• Annual screenings
• Preventive care
• Basic lab work

you should always make sure a pre-authorization is completed.

A pre-authorization helps you:

• Confirm that the procedure is covered.
• Understand what your insurance is expected to pay.
• Avoid claim denials or reduced payments.
• Prevent unexpected medical bills.

Your Doctor’s Office Usually Handles It

The good news is that most doctor’s offices and specialists handle pre-authorizations regularly.

Surgeons, imaging centers, and specialty providers submit these requests electronically all the time.

At a minimum, the approval lets you know that the procedure is considered a covered service under your plan.

You can then review:

• Your deductible
• Coinsurance
• Out-of-pocket maximum
• Expected costs

before moving forward.

Specialty Medications Often Require Authorization Too

Pre-authorizations aren’t just for surgeries and procedures.

Many expensive brand-name medications also require approval.

In addition, your insurance company may require something called step therapy.

What Is Step Therapy?

Step therapy means your insurance company wants you to try lower-cost medications first before approving an expensive medication.

For example:

If a medication costs $10,000 per month, the insurance company may require your doctor to document that:

• Other medications were tried first.
• Those alternatives didn’t work.
• The expensive medication is medically necessary.

I know this process can be frustrating, but insurance companies use these programs to help control overall healthcare costs.

Why Do Insurance Companies Require This?

Healthcare costs continue to rise every year.

Insurance companies use:

• Pre-authorizations
• Step therapy
• Formularies
• Network requirements

to manage costs and reduce unnecessary spending.

The reality is that when insurance companies pay more claims, those costs eventually show up in higher premiums for everyone.

It’s not always convenient, but understanding the process can help you avoid bigger financial surprises later.

Emergency Situations Are Different

Obviously, emergencies happen.

You cannot plan for an emergency.

However, if you end up:

• Visiting the emergency room
• Being admitted to the hospital
• Having an unexpected surgery

you should still review your policy afterward.

Some insurance companies require notification within a certain timeframe after hospitalization.

Missing those deadlines can sometimes result in:

• Reduced payments
• Higher out-of-pocket costs
• Coverage complications

Always know your policy’s requirements.

Review Your Explanation of Benefits (EOB)

After any procedure or hospitalization, don’t forget one final step:

Compare your medical bill to your Explanation of Benefits (EOB).

Make sure:

• The procedure was processed correctly.
• Network discounts were applied.
• The provider billed the correct amount.
• The insurance payment matches your bill.

This simple step can potentially save you hundreds—or even thousands—of dollars.

Final Thoughts

Pre-authorizations may feel like an inconvenience, but they’re one of the most important ways to protect yourself from unexpected medical expenses.

If you’re planning a procedure, starting a specialty medication, or simply have questions about what your insurance requires, don’t guess.

Reach out and ask. A little preparation today can prevent a very expensive surprise tomorrow.
Let’s chat. Schedule your appointment today!