Know Your Plan: Referrals and Prior Authorizations

As you use your health plan more and more, you may come across different requirements to get procedures covered. Each plan is different, but the Division of Insurance oversees all major medical plans and their rules. Some plans have stricter rules compared to others. Understanding the rules of your policy is important. Following the rules can sometimes feel like you are jumping through hoops, but it could save you thousands of dollars in the long run. This article discusses the similarities and differences between referrals and prior authorizations on health plans.


Referrals and prior authorizations may seem similar but they are very different. A referral is a requirement before seeing a Specialist on certain plans. In simple terms, a referral is when your doctor allows you to see a Specialist for a specific medical need. For the most part, your Primary Care Physician will issue a referral if it is required on your health plan. In extreme circumstances, you can get referrals from an Urgent Care or Emergency Room. Referrals are a requirement on most HMO and POS plan. PPO plans do not have referral requirements.

Insurance companies include referrals on plans so they can control expenses better. Referrals help eliminate unnecessary visits to the Specialist since a doctor has to sign off on the Specialist you want to see. Getting a referral will slow down the health care process. Fortunately, referrals help reduce the monthly premium on your health plan due to the increased control from the insurance company.

Prior Authorizations

One of the big differences between referrals and prior authorizations is that all health plans include prior authorization requirements for specific procedures. A prior authorization is simple: the insurance company determines that your procedure is medically necessary and then issues an authorization so it can be covered by insurance. Each procedure is different and sometimes specific medical professionals are the only ones who can submit a prior authorization request. For example, if you need a knee surgery you need to follow the necessary steps with an orthapedic surgeon before it gets covered and approved. A Primary Care Physician will not have the authority to request a knee surgery. Also, some insurance companies will include more requirements and steps before a procedure is covered.

Like referrals, prior authorizations help eliminate unnecessary procedures and give control to the insurance company. Prior authorizations can be tedious, but your doctor will guide you through the process. Be careful – some insurance companies are strict with certain procedures and will not cover expenses as well as other companies.