ModifiedDHAPolicy 6010.61-M

Provider Payment Reductions for Missing Preauthorization

Customize your policy alerts

Sign up for DHA Policy 6010.61-M alerts

Get alerted when Policy 6010.61-M changes without checking for updates manually.

Monitor payer policy activity

Receive email alerts as soon as relevant payer policies are published or updated.

Governs TRICARE contractor reductions to provider payments when required preauthorization is not obtained, including calculation, communication, reporting, and waiver procedures.

Policy Summary

PayerDHA

PolicyProvider Payment Reductions for Missing Preauthorization

Policy CodePolicy 6010.61-M

Change TypeModified

Effective DateN/A

Next Review DateN/A

Key ActionObtain required preauthorization for applicable care to avoid a reduction in provider payment.

SourceLink

POLICY UPDATE CHANGES

Payment-reduction examples expressly include partial hospitalization programs and intensive outpatient programs in addition to residential treatment centers and mental health per diem hospitals.

10%Illustrated reduction rate

PreauthorizationReduction trigger

3Payment methodologies

EOBReduced services identified on

TEDReduction amounts reported through

Policy Summary

PayerDHA

PolicyProvider Payment Reductions for Missing Preauthorization

Policy CodePolicy 6010.61-M

Change TypeModified

Effective DateN/A

Next Review DateN/A

Key ActionObtain required preauthorization for applicable care to avoid a reduction in provider payment.

SourceLink

On This Page

OpenPayer is powered by Trek Health's payer performance platform. Trek continuously ingests, validates, and normalizes Transparency in Coverage data alongside payer policies and other commercial payer data to create a structured payer intelligence foundation. OpenPayer uses this foundation to deliver personalized search results, dynamically generated policy pages, and tailored policy monitoring based on each user's payers, specialties, billing codes, and areas of interest. The same intelligence powers broader payer performance workflows, including reimbursement benchmarking, contract evaluation, payer negotiations, and financial decision-making.

ModifiedDHAPolicy 6010.61-M

Provider Payment Reductions for Missing Preauthorization

Customize your policy alerts

Sign up for DHA Policy 6010.61-M alerts

Get alerted when Policy 6010.61-M changes without checking for updates manually.

Monitor payer policy activity

Receive email alerts as soon as relevant payer policies are published or updated.

Governs TRICARE contractor reductions to provider payments when required preauthorization is not obtained, including calculation, communication, reporting, and waiver procedures.

Policy Summary

PayerDHA

PolicyProvider Payment Reductions for Missing Preauthorization

Policy CodePolicy 6010.61-M

Change TypeModified

Effective DateN/A

Next Review DateN/A

Key ActionObtain required preauthorization for applicable care to avoid a reduction in provider payment.

SourceLink

POLICY UPDATE CHANGES

Payment-reduction examples expressly include partial hospitalization programs and intensive outpatient programs in addition to residential treatment centers and mental health per diem hospitals.

10%Illustrated reduction rate

PreauthorizationReduction trigger

3Payment methodologies

EOBReduced services identified on

TEDReduction amounts reported through

Policy Summary

PayerDHA

PolicyProvider Payment Reductions for Missing Preauthorization

Policy CodePolicy 6010.61-M

Change TypeModified

Effective DateN/A

Next Review DateN/A

Key ActionObtain required preauthorization for applicable care to avoid a reduction in provider payment.

SourceLink

On This Page

Payment Reduction Requirements

Reduction for Failure to Obtain Preauthorization

Payment reduction applies when required preauthorization was not obtained for certain types of care in accordance with Chapter 1, Section 28.

REQUIRED

Required preauthorization was not obtained for the applicable care, service, or treatment.
The care is subject to the TRICARE preauthorization requirements and applicable payment-reduction or waiver procedures.

Payment-Reduction Calculation

Calculate the reduction using the otherwise allowable amount before beneficiary liability or coordination-of-benefits adjustments.

CALCULATION BASIS

Determine the otherwise allowable amount consistent with the applicable reimbursement methodology.
Calculate the reduction before applying deductible, beneficiary cost-share, or Other Health Insurance (OHI) adjustments.
Convert the affected days or services to the applicable dollar amount and deduct the reduction from the provider payment.

Payment Reduction for Missing Preauthorization

Reduce payment only for the days or services affected by the missing preauthorization.

APPLICATION

Identify the days or services provided without the required preauthorization.
Apply the payment reduction to the affected days or services, rather than to authorized days or services.
Identify the reduced days or services and the payment-reduction amount on the Explanation of Benefits (EOB) using an appropriate message.
Maintain payment-reduction calculation information in internal files for claims processing and audit, and report the total reduction and affected days or services in TRICARE Encounter Data (TED) as required by the TRICARE Systems Manual.

Calculation Methodologies

Apply the methodology corresponding to the claim’s reimbursement arrangement. The examples use a 10% payment reduction.

APPLY THE APPLICABLE METHODOLOGY

DRG PAYMENT METHODOLOGY
- Determine the full DRG allowance, total length of stay (LOS), and number of days without preauthorization.
- Divide the days without preauthorization by total LOS to determine the affected proportion.
  Example: 2 days without preauthorization ÷ 10 total days = 0.20.
- Multiply the full DRG allowance by the affected proportion to determine the target amount for the reduction.
  Example: $8,500 DRG allowance × 0.20 = $1,700.
- Apply the applicable reduction percentage to the target amount and deduct the resulting payment reduction from the DRG allowance after applicable beneficiary cost-share is calculated.

Reduction Calculation Parameters

Illustrated Payment-Reduction Percentage

Reduction rate10% of the target amount

Per diem exampleA $3,600 target amount produces a $360 payment reduction when multiplied by 10%.

Per-service exampleA $60.00 allowable charge produces a $6.00 payment reduction when multiplied by 10%.

Reduction Calculation Basis

Calculation basisOtherwise allowable amount

Applied beforeDeductible and beneficiary cost-share

Coordination of benefits

Preauthorization and Payment Responsibilities

Prior Authorization

Preauthorization Required

Obtain preauthorization before providing care that requires it under Chapter 1, Section 28. Failure to obtain required preauthorization may result in a reduction of the provider payment.

Prior Authorization

Follow Preauthorization and Waiver Procedures

Follow the applicable preauthorization procedures and any payment-reduction waiver procedures described in Chapter 1, Section 28.

Denial Risk

Provider Payment Responsibility

Providers are responsible for obtaining preauthorization for applicable types of care. When preauthorization is not obtained, the associated provider payment is subject to reduction under the applicable requirements.

Key Payment Terms

Otherwise Allowable Amount

DefinitionThe amount otherwise allowable for the claim before applying deductible, beneficiary cost-share, or Other Health Insurance.

DeductibleExcluded from the calculation until after the reduction is calculated.

Beneficiary cost-shareExcluded from the calculation until after the reduction is calculated.

Other Health Insurance (OHI)

Full termOther Health Insurance

Calculation orderOHI is considered after the payment-reduction calculation.

Reduction basis

PER-SERVICE METHODOLOGY

For a service-based claim, determine the allowable charge for each visit or service provided without preauthorization using the applicable fee or charge methodology, such as CMAC.
Apply the payment reduction only to the affected visit or service.
Example: When the first of three outpatient adjunctive dental visits lacks preauthorization and the other two are authorized, reduce payment for the first visit only.
Multiply the allowable charge for the affected service by the applicable reduction percentage to determine the payment reduction.
Example: $60 allowable CMAC charge × 10% = $6 reduction.
Calculate Government payment as the allowable charge less applicable beneficiary cost-share and the payment reduction; normal payment rules apply to authorized services.
Example: $60 − $12 beneficiary cost-share − $6 reduction = $42 Government payment in the absence of OHI.