What is pre-authorisation, and can insurers refuse to give it?: askST

Insurance group Great Eastern (GE) announced on June 17 that it had temporarily stopped issuing pre-authorisation certificates for policyholders admitted to Mount Elizabeth hospitals.

Mount Elizabeth and Mount Elizabeth Novena hospitals had higher costs than other private hospitals, GE said, adding that its move was aimed at “prioritising facilities that deliver the same high-quality care with greater cost transparency and cost-effectiveness”.

The decision took both the hospitals and GE policyholders by surprise.

The Straits Times looks at how withholding pre-authorisation certificates may affect healthcare and hospitalisation coverage of policyholders.

What is a pre-authorisation certificate?

Some health insurance plans require the doctor of its policyholder to request a pre-authorisation certificate before doing specific procedures.

A pre-authorisation certificate effectively confirms that the insurer has approved the medical treatment, including the costs, before the treatment begins.

Without getting pre-approval, some or all of the bill may not be covered by insurance, leaving the patient to pay for it himself.

How does the pre-authorisation work?

This process helps the insurer assess whether a treatment recommended by the doctor is medically necessary, and at a reasonable cost.

For the policyholder, it ensures that the treatment is covered under the plan. It also keeps out-of-pocket expenses in check, allowing the insurer to settle the medical bill directly with the hospital.

Through the pre-authorisation process, the insurer helps ensure the policyholder receives cost-effective treatments.

What is a letter of guarantee (LOG)?

Non-panel specialists and government hospitals require a letter of guarantee (LOG).

It provides assurance of payment to hospitals on behalf of patients for the portion of their medical bills covered by insurance, reduces the upfront cash deposit the hospital requires, and makes healthcare more accessible and affordable for patients.

How does a patient apply for the pre-authorisation and LOG?

In Singapore, patients may need both the LOG and the pre-authorisation certificate before undergoing surgery.

To apply for both, the patient needs to consult his doctor, who will then submit a pre-authorisation request to the insurer.

If approved, the insurer may also issue an LOG at the patient’s request, assuring direct payment to the hospital for covered expenses.

The patient may also need to submit additional documents and forms, depending on the insurer and the specific treatment.

How different is the pre-authorisation certificate from an LOG?

The pre-authorisation certificate is the insurer’s permit for a specific surgery or procedure, while the LOG assures the payment for the hospitalisation is covered by insurance.

The pre-authorisation provides clarity on coverage and potential costs before the policyholder undergoes treatment, allowing the patient to plan his healthcare expenses accordingly.

Without it, patients would have to fork out money from their own pocket, and file a claim later – risking partial reimbursement or outright rejection.

The LOG reduces upfront payment to the hospital, easing admission and surgeries, and can be generated instantly for selected public hospitals and institutions.

Can an insurance company withhold pre-authorisation?

Insurers can withhold pre-authorisation, and the reasons for doing so are:

• The planned treatment or procedure is not included in the policyholder’s coverage;
• The insurer determines that the treatment is not medically necessary based on its review;
• The estimated costs are significantly higher than what the insurer deems reasonable;
• The insurer needs more information from the doctor or patient to assess the request;
• The policy requires treatment at a specific panel of doctors or hospitals; and
• In emergency situations where the pre-authorisation is waived, the insurer may deny coverage later if the treatment is deemed not necessary.

However, insurers are encouraged by the Life Insurance Association to clearly communicate the reasons for withholding pre-authorisation to both the policyholder and the healthcare provider.

This is because policyholders have the right to appeal against the insurer’s decision to withhold pre-authorisation if they disagree with the insurer’s assessment.

Source: The Straits Times © SPH Media Limited. Permission required for reproduction.

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