Prior Authorization: Overview, Purpose, Process

Prior authorization in health care is a requirement that a healthcare provider (such as your primary care physician or a hospital) gets approval from your insurance plan before prescribing you medication or doing a medical procedure.

Without prior approval, your health insurance plan may not pay for your treatment (even if it would otherwise be covered by the plan), leaving you responsible for the full bill.

This article will cover what prior authorization in healthcare is, why and when health plans require prior authorization, and your options if a prior authorization request is denied by your health plan.

Why Do Health Insurers Require Prior Authorization?

Insurance providers use prior authorization to make sure that a specific medical service is really needed and worth the cost. 

Your health insurance company uses prior authorization as a way to keep healthcare costs in check. Ideally, the process should help prevent too much spending on health care that is not really needed.

A pre-authorization requirement is a way of rationing health care. Your health plan is rationing paid access to expensive drugs and services, making sure the only people who get these drugs or services are the people for whom the drug or service is appropriate.

The idea is to ensure that health care is cost-effective, safe, necessary, and appropriate for each patient. In the process of prior authorization, your insurer will make sure that certain criteria are met.

Medical Necessity

Being medically necessary means that you really do need the service or drug your provider is prescribing. 

When insurers are trying to determine if criteria for medical necessity are being met, they’re looking for factors like whether the treatment is recommended for your situation according to up-to-date, research-backed evidence.

They’re also checking to make sure that the service is not being duplicated. For example, if you have lung cancer you might be seeing more than one specialist. Your lung provider might order a chest CT scan, not realizing that your cancer provider had you get one two weeks ago. 

In this case, your insurer would not pre-authorize the second CT scan until it has confirmed that your lung health provider saw the scan you had two weeks ago and still thinks you need to have another one. 

Cost

Insurers also want to see if it makes financial sense for you to have a service or treatment. The procedure or drug should be the most economical treatment option for your condition. 

For example, imagine that Drug C and Drug E both treat your condition. Drug C is cheaper and Drug E is more expensive. 

If your healthcare provider prescribes Drug E, your health insurance plan may want to know why Drug C would not work just as well.  If your provider can show that Drug E is a better option for you even though it costs more, it might get pre-authorized. 

However, if there’s no medical reason why the more expensive Drug E should be chosen over the cheaper Drug C, your health plan may refuse to authorize it.

Some insurance companies require step therapy in these situations. Step therapy means that they'll only agree to pay for Drug E after you've tried Drug C and it has not helped. The same concept applies to other medical procedures—for example, they might not agree to an MRI unless your provider proves that an X-ray would not be enough. 

Benefits

Your insurance provider needs to make sure that ongoing or recurrent service is actually helping you.

For example, suppose you’ve been having physical therapy (PT) for three months and your provider is requesting authorization for another three months. In that case, your insurance plan might wonder if the PT is actually helping you. 

The additional three months might be pre-authorized if you’re making slow but measurable progress. However, if you’re not making any progress or the PT is making you feel worse, your health plan might not agree to authorize any more PT sessions until it talks with your healthcare provider to better understand why they think another three months of PT will help you.

What Medications and Services Require Prior Authorization? 

Prior authorization is generally not required for emergency services, as there wouldn't be time to request and receive it. (Retro authorization is occasionally used after the fact in emergency situations, although this is rare.) For certain types of non-emergency care, your insurance plan wants to make sure that the care is necessary and the most cost-efficient option.

If your doctor wants to prescribe a medication, your insurer may want to determine whether the drug is really needed and whether it's the best option for your situation. In some cases, your insurer might agree to give you a short-term supply of a medication (for example, one or three months) while they are making their decision.

Some types of medication are more likely to require prior authorization, including:

• Drugs with serious risks (such as severe side effects)
• Drugs that carry a high risk for misuse or addiction 
• Drugs that are used for cosmetic reasons not for treating a condition
• Drugs that are expensive (especially if there is a lower-cost drug available to treat the condition you have)
  

Services That Require Prior Authorization

Some services, tests, or procedures are more likely than others to need prior authorization. Examples of services that commonly require prior authorization before being approved include: 

• Diagnostic imaging (such as MRIs, CTs, and PET scans)
• Durable medical equipment (such as wheelchairs)
• Rehabilitation (like physical or occupational therapy)
• Home health services (such as nurses)
• Non-emergency surgery (elective surgery)

How Long Does Prior Authorization Take?

The prior authorization process depends on the urgency of the need for treatment, where you live, and the type of health coverage you have. If your health plan is state-regulated (i.e., not a self-insured plan), the rules for prior authorization vary from one state to another.  

At the federal level, the Biden administration proposed rules that would streamline the prior authorization process for Medicaid managed care plans, Medicare Advantage plans, and Marketplace/exchange plans that people purchase themselves. However, Marketplace plans are already subject to state rules for prior authorization because those plans are subject to state regulations.

The proposed rule would require health plans to respond within seven days to a non-urgent prior authorization request (the current requirement is within 14 days), and within 72 hours if the prior authorization request is urgent.

How to Speed Up Prior Authorization

The best way to make the prior authorization process go quickly is to tell your provider's office that you need prior authorization as soon as possible, get organized, keep track of due dates, and make sure all the paperwork you need to fill out is accurate and complete.

What Are the Rules of Prior Authorization?

Health plans each have their own rules in terms of what services need prior authorization. In general, the more expensive the procedure, the more likely a health plan is to require prior authorization. But some services will require prior authorization under one health plan and not under another.

Prior authorization requirements are also controversial, as they can often lead to treatment delays and can be an obstacle between patients and the care they need. For patients with ongoing, complex conditions that require extensive treatment and/or high-cost medications, continual prior authorization requirements can hinder their progress and place additional administrative burdens on providers and their staff.

How Do I Get a Prior Authorization?

If you need to get prior authorization for a healthcare service, there’s a process that you'll need to follow.

Talk to Your Provider's Office

The first thing you'll need to do to start getting prior authorization is contact your provider's office. You’ll need to talk to the office person who handles prior authorization requests.

Once you find out who you need to talk to about getting prior authorization, the next step is to find out what they need from you. You can ask this person your questions about what to expect during the process and what you’ll have to do if your request is denied.

Fill Out Paperwork

Depending on how much information your medical provider already has, you may be asked to fill out forms that your provider's office will use to submit the request. A prior authorization form will include information about you, as well as your medical conditions and needs.

It's very important that you fill out these forms completely and make sure that the information is accurate. If there is information missing or wrong, it could delay your request or result in denied prior authorization.

Get Organized

As you're gathering and completing paperwork as part of your prior authorization request, make sure that you keep track of everything. You may need to go back to the paperwork later if the request is denied.

It's also helpful to have a record of approved prior authorizations in case you need to request another one in the future.

Keep Track of Dates

You may have deadlines for providing information. Your provider's office will probably be working on a timeline to submit documents during the prior authorization process. While your provider's office will help keep you up to date, it's also helpful if you know when things are due so you can set reminders for yourself.

Have a Plan if You're Denied

Talk to your provider and their office about what you will do if your prior authorization request is denied. You and your provider may choose to appeal the decision if you think the prior authorization denial was not justified.

If your prior authorization request is denied, the first step is to find out why. If a simple error was the problem, it might be a quick fix.

After you've checked all the paperwork that was submitted to make sure nothing is missing and all the information is correct, you might want to see if there are other things you could add that would help prove the medical care you're asking for is needed. For example, your provider might know of research that would be helpful to include.

Summary

Prior authorization means that a health provider needs to get approval from a patient’s health plan before moving ahead with a treatment, procedure, or medication.

Different health plans have different rules for when prior authorization is required. If prior authorization is required and is not obtained, the health plan can reject the claim—even if the procedure was medically necessary and would otherwise have been covered.

If your insurer denies coverage, you can ask them to reconsider. Your provider’s office can let you know what steps you need to take to appeal the decision. 

Your medical provider will generally take the lead on submitting a prior authorization request and communicating with the health plan to improve the odds of approval. But the more you know about this process, the better you can advocate for the care you need.