Common Terms Related to Health Insurance

Part of what adds to the frustrating process of obtaining mental health services is the confusing terminology that insurance companies use. Here are some of the most common terms used when health services are denied:

• Medical necessity criteria are standards used by health plans to decide whether treatments or health care supplies recommended by your mental health provider are reasonable, necessary and appropriate. If the health plan decides the treatment meets these standards, then the requested care is considered medically necessary.
• Utilization review, also known as utilization management, is the process used by insurers to decide whether the requested mental health care is medically necessary, efficient and in line with accepted medical practice. In line with accepted medical practice means that the mental health treatment or service is proven to be effective based on scientific evidence.
• Prior authorization, also known as pre-approval, preauthorization, prior approval or precertification, is a type of utilization review. It is when you or your service provider must ask for approval before your health plan will agree to pay for a service, treatment plan or prescription drug.
• Step therapy is a type of prior authorization in which you must try a less expensive prescription drug or service before you can move to a more expensive prescription or service.