Referral vs Authorization

A Referral is not the same as an Authorization. 

In general a referral is required when a PCP refers a patient to a specialist in-network provider for consultation, while an Authorization also known as Prior Authorization, is approval from the Insurance plan for the performance of certain specific medical procedures and services, based on medical necessity.

A typical scenario would be a PCP referring a patient to a in-network Nephrologist. A referral would be required without which the Insurance plan will not pay. If the Nephrologist performs only an evaluation, the referral alone would suffice, but if the Nephrologist chooses to administer a Procrit injection, than this procedure ( which is on the Prior authorization list of the Insurance plan ) would require a Prior authorization for the Insurance plan to make payment.

Referral :

• A referral is required when a PCP refers a patient to a specialist
• HMO Plans in general require a referral while PPO plans do not require a referral
• A referral is valid for a certain period and for a certain number of visits
• A referral is not required for Emergency services
• A referral is not required for Routine / Preventive services
• Without a referral the insurance plan will not pay

Prior Authorization :

• A Prior authorization is required when a provider plans on performing a procedure which is on the Prior authorization list of the Insurance plan
• A Prior authorization needs to be obtained from the Insurance plan before the performance of the medical procedure
• A Prior authorization is provided by the Insurance plan when they are satisfied as to the medical necessity of the procedure
• A Prior authorization is not required for Emergency services
• Without a Prior authorization the Insurance plan will not pay for procedures that are on its Prior authorization list 

HMOs

 Most Americans who have health insurance through their employer (or who are self-insured) are enrolled in some type of a managed care plan - either an HMO or PPO. The most common types of managed care plans are health maintenance organizations (HMOs) and preferred provider organizations (PPOs). Less common are point-of-service (POS) plans that combine the features of an HMO and a PPO.

All managed care plans contract with doctors, hospitals, clinics, and other health care providers such as pharmacies, labs,  and medical equipment vendors. This group of contracted health care providers is known as the health plan's "network."

In some types of managed care plans, you may be required to receive all your health care services from a network provider. In other managed care plans, you may be able to receive care from providers who are not part of the network, but you will pay a larger share of the cost to receive those services.

Health Maintenance Organizations (HMOs)

If you are enrolled in a health maintenance organization (HMO) you will need to receive most or all of your health care from a network provider. HMOs require that you select a primary care physician (PCP) who is responsible for managing and coordinating all of your health care.
Your PCP will serve as your personal doctor to provide all of your basic healthcare services. PCPs include internal medicine physicians, family physicians, and in some HMOs, gynecologists who provide basic healthcare for women. For children, you can select a pediatrician or a family physician to be their PCP.
If you need care from a specialist in the network or a diagnostic service such as a lab test or x-ray, your primary care physician (PCP) will have to provide you with a referral. If you do not have a referral or you choose to go to a doctor outside of your HMO's network, you will most likely have to pay all or most of the cost for that care.

Features of HMOs

• You must choose doctors, hospitals, and other providers in the HMO network.
• The HMO will not provide coverage if you do not have a PCP.
• You will need a referral from your PCP to see a specialist (such as a cardiologist or surgeon) except in emergency situations. Your PCP also must refer you to a specialist who is in the HMO network.
• All of the providers in the HMO network are required to file a claim to get paid. You do not have to file a claim, and your provider may not charge you directly or send you a bill.
• The only charges you should incur for in-network services are copayments for doctor's visits and other services such as procedures and prescriptions.
• Except for certain types of care that may not be available from a network provider, you are not covered for any out-of-network services.