What is an LOA in HMO? Meaning, Process, and When You Need It

What Is LOA in HMO?

LOA stands for Letter of Authorization (sometimes called Letter of Approval) in the context of HMOs. An LOA is a document issued by your HMO that confirms the member (employee or their dependent) is eligible for specific medical services at an accredited provider (hospital, clinic, or dental clinic). This also serves as clearance to access these services without paying out of pocket.

From an HR perspective, the LOA is a key tool for managing employee benefits, because it ensures that employees receive care without delays or unnecessary out-of-pocket payments, and that the organization’s HMO benefits are used efficiently.

ALSO READ: HMO Glossary: All the Definitions You Need to Know for HMO

Why LOAs matter for HR and business owners

LOAs are important because they:

• Ensure employees access covered benefits correctly, reducing confusion and follow-up questions
• Help HR track approvals and utilization, which is critical for reporting and planning benefits budgets
• Reduce the risk of unexpected reimbursements or denied claims
• Streamline the interaction between employees, providers, and the HMO, saving time for HR team
  
  

When Do Employees Need an LOA?

LOA requirements vary by HMO, but understanding common scenarios helps HR prepare employees and reduce confusion.

Common situations requiring an LOA

• Outpatient consultations, for both general practitioners and specialists
• Lab tests or diagnostics, such as blood work, X-rays, or ultrasounds‍
• Inpatient care, including hospital admissions, surgeries, or procedures
  
  • These are normally filed by medical liaisons on behalf of the member‍
• *Emergency care‍
  
  • Most HMOs allow employees to receive immediate care in emergencies without a prior LOA
  • HR should still ensure notification and submission of documentation afterwards for proper coverage

Who issues the LOA and how approval works

The LOA process is straightforward, but understanding each step helps HR guide employees and their dependents to streamline approvals:

1. The member schedules a consultation or procedure with an HMO-accredited hospital or clinic.
2. The member submits a request for LOA to the HMO, typically including a doctor’s letter with the working diagnosis and the proposed procedure, test, or service.
3. The HMO reviews the request and issues an approved LOA to the member.
4. On the day of care, the member presents the LOA along with a government ID and/or HMO card to the provider.
5. The provider may contact the HMO for further clarification or additional details if needed.
6. Once verified, the member receives the scheduled care without paying out-of-pocket.

This process ensures members can access care smoothly, helping reduce long lines, confusion, and errors for both the member and hospital. While this is the recommended process for most HMOs, there are cases where this is not applicable (e.g. inpatient care or emergency care) or for whatever reason, the member would prefer to go straight to the provider. In this case, the process will follow as such:

1. The member proceeds to the accredited hospital or clinic.
2. The member seeks the procedure needed, and then provides their HMO card and valid ID.
3. The hospital or clinic contacts the HMO for the LOA approval.

This offline method ensures that even if the member is not tech-savvy or isn't able to access their account, they can still avail of their benefits and get the care they need.

Billings and Claims: What happens after care

Once the member receives care, understanding the billing and claims process is essential to utilize your covered benefits efficiently (and get more context between LOA vs. Reimbursement). Here is a rundown of what steps are typically taken upon discharge.

1. Provider billing via LOA

• The accredited provider sends the invoice directly to the HMO using the approved LOA.
• Members generally do not pay for the procedure or test out of pocket, except for any co-pay services or prescriptions not covered by the HMO.
• HMOs like Hive Health typically inform HR of utilization via quarterly check-ins to be notified of benefits usage

2. Reimbursement claims (pay-first)

• If a member has the required documents for LOA but got denied (due to incomplete details, expired LOA, offline or walk-in, or even submitting too close to intended schedule), member can opt to pay upfront and file for claim after care.
• The member can settle payment at the provider billing counter, then submit the official receipt, doctor’s note, and other requirements to the HMO.
• The HMO will review the claim, and once it has been approved, funds will be reimbursed to the member according to plan coverage.

It’s also important to note that all HMO providers require the PhilHealth discount to be deducted first before they cover the rest of the bill.

LEARN MORE: PhilHealth Benefits Explained: How It Works and How HMOs Can Help