What is an insurance referral? 

A provider referral is a written recommendation that a patient obtains from their Primary Care Physician (PCP) in order for the patient to seek treatment with a specialist, such as a physical therapist. An insurance referral is an authorization or permission from your insurance plan for treatment with a specialist provider issued by a PCP. If an insurance referral is required but not obtained, the insurance plan may not pay for the services rendered.  

What is an insurance authorization? 

An authorization, sometimes referred to as ‘preauthorization’ or ‘precertification’, is the approval from a patient’s health insurance for treatment by a specialist, deeming it medically necessary. Authorizations, if needed, should be obtained before treatment is rendered. If a request for authorization is denied, the provider and/or the patient have the right to submit an appeal. Once an authorization number is received, it should be uploaded into the patient’s chart and entered into the designated area in the patient’s account to track the number of visits, start and end dates approved. If services are rendered outside of the approved date range and/or go over the number of visits approved, services will be denied by the health insurance carrier. 

What’s the difference between a referral and an authorization? 

Although many private practices will obtain an insurance referral on behalf of the patient, the patient is ultimately responsible for obtaining an insurance referral through their PCP. If a referral is not obtained by the patient prior to their treatment and claims are denied, the provider can bill the patient for the services rendered. Additionally, referrals can normally be backdated. 

Front desk specialists or a representative from your providers office are responsible for obtaining authorizations. If a prior authorization is not requested/obtained prior to treatment and claims are denied, the provider cannot bill the patient for services rendered. It is important to note that most authorizations cannot be backdated. 

Checking patient's benefits before their first visit so your staff can inform the patient of their financial responsibility (co-pay, co-insurance, deductible, etc.) and determine if a referral or authorization is required is critical. Understanding the difference between a referral and authorization and managing them accordingly will greatly reduce these types of denials.