What Is a Pre-Determination Letter for Health Insurance?

Insurers often require pre-determination for experimental or investigational procedures.

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A "pre-determination letter" is part of the claims management process for health insurance providers. The letter relates to the coverage of specific medical services under a patient's policy. Insurance companies require health care providers to follow submission instructions, such as the content that must be included in the pre-determination letter. The exact definitions and procedures for these letters vary among insurers.

Claims Management

The American Medical Association recommends that physicians review health insurance company contracts. Doctors will want to confirm the insurer’s definition of claims-management terms and the verification processes used for cost containment. Insurers often require pre-authorization for outpatient diagnostic and surgical procedures. Pre-certification is required for hospital admission and surgical procedures. Pre-authorization and pre-certification confirm medical necessity before the insurer approves or pays a claim. Pre-determination confirms that the patient’s policy covers a specific service.

Pre-Determination Letter

Insurers tell providers which medical services require pre-determination letters. These include cosmetic, investigational or experimental procedures. Pre-determination letters are submitted on the provider’s letterhead. The letter requests advance verification that the patient is covered for the medical service. Failure to submit a pre-certification letter usually results in denial of the claim for payment. The American Medical Association recommends that physicians also submit pre-determination letters for services and procedures that an insurer frequently denies as medically unnecessary.

Letter Content and Attachments

Insurance companies often provide a pre-determination letter form or a request form for health care providers. Insurers also help providers prepare the letters, which should include the name and contact information for the patient and the health care provider. The letters also should include a description and medical codes for the service, fees for the service, and the date it will be performed. Providers' attachments to the pre-determination letter document the patient’s medical history, such as how long she has been under the physician’s care; test results; medical records and photographs. Although the pre-determination letter focuses on verification of coverage, it's important to include a statement of medical necessity.

Determination Letter

The insurance company’s medical staff reviews the pre-determination letter and attachments to decide whether the service is covered under the patient’s health care insurance policy, and whether it's medically necessary. The insurer sends a determination letter to the provider and the patient. This letter states the insurer's decision, the maximum fee allowed and the period for completion of the service. The pre-determination letter guarantees payment. However, payment can be affected by the patient’s previous use of benefits. The insurance company might deny the claim if a change in the patient’s condition makes the medical service medically unnecessary.