Health insurance companies use a process of prior authorization to evaluate for cost-effective and appropriate care. Your doctor may recommend treatment that requires pre-approval from your insurance plan.
Prior authorization is a utilization management process used by insurance companies to reduce unnecessary healthcare spending.
Doctors’ offices are in charge of submitting prior authorization requests, but you may be notified to fill out paperwork.
Health insurers develop standards for determining what services require pre-approval, which can confuse and delay care.
While the responsibility to obtain prior authorization falls on the doctors’ offices, it’s helpful to know how the process works, so you know what to expect.
What is prior authorization?
A prior authorization sometimes referred to as a pre-approval or preauthorization, is a utilization management process that health insurers use to decide on the medical necessity of a health care service, medication, treatment plan, or durable medical equipment. Receiving prior authorization means that your insurance company has approved coverage for that health care service.
Why is prior authorization needed?
Insurers’ rationale for prior authorizations is to reduce costly, low-value healthcare spending without impacting healthcare quality. Insurance companies use the prior-authorization process as a cost-control tool to regulate spending and push for cost-effective treatment. Insurance companies develop standards to determine what services require prior authorization, so insurance plans differ significantly in what medical treatments need pre-approval.
What kinds of services require prior authorization?
While insurance plans vary, prior authorizations are typically needed when your doctor recommends a medical service that is:
Expensive, such as imaging or certain kinds of lab tests
Recurring, such as regular intravenous infusions done at an outpatient infusion center
Elective, such as a scheduled procedure or surgery.
Medical equipment like wheelchairs, feeding pumps, and CPAP machines.
Hospitalization for inpatient services.
Who is responsible for processing prior authorizations?
Doctors’ offices are tasked with submitting prior authorizations. This may include a team such as an insurance processing department or a clinical team such as nurses and medical assistants. To obtain your insurance company’s permission for a medical service, they will collect necessary documentation such as administrative or clinical notes, letters of medical necessity, and medical literature that supports your provider’s recommendations. In addition, they may ask for your involvement in the prior authorization process by notifying you of forms that require your signature or other information.
Prior authorization process
Let’s say your doctor recommends medication for your chronic condition. They send a prescription to your pharmacy, which then notifies your doctor’s office that your insurance company requires pre-approval for this medication. Sometimes the pharmacy won’t know that prior authorization is needed until you go to the pharmacy to pick up your prescription, which can be frustrating. The provider’s office then starts the prior authorization process by determining what information the insurer needs and sending them the required documentation. The insurance company reviews the information and approves or denies your medication based on their guidelines.
So what happens if they deny it? There are usually a couple of options. Your doctor can decide to prescribe a different medication within your insurance company’s formulary, or they can submit an appeal. An appeal could include writing a letter of medical necessity, submitting articles from medical research journals explaining the necessity of the medication, or speaking directly with a doctor at the insurance company to defend their decision to prescribe this medication.
How does this process affect care?
The prior authorization process is cumbersome, and receiving approval can take up to several weeks. A 2021 American Medical Association (AMA) survey revealed that 93% of physicians surveyed reported a delay in medical care for their patients whose insurance companies required prior authorization. Furthermore, 30% of physicians surveyed reported that insurers’ prior authorization programs were not evidence-based, and 24% reported that the need for prior authorization led to a patient’s hospitalization. Overall, 88% of doctors surveyed reported a high administrative burden associated with completing prior authorizations. Some staff in doctor’s offices work exclusively on prior authorizations because insurers so frequently require them.
There is a growing call for transparency in the prior authorization process. For example, legislation that would streamline the prior authorization process for Medicare Advantage enrollees, the Improving Senior’s Timely Access to Care Act of 2021, passed the U.S. House of Representatives in 2022. While the Affordable Care Act already requires that health plans report data and disclose information about claims payment and coverage to consumers so that they know how their health plan works, the federal law is largely unenforced.
What you can do
While obtaining approval takes time, you can take an active role by checking in with your doctor’s office about the status of the prior authorization. Find out who in your provider’s office is responsible for working on prior authorizations, and ask if there is anything you need to do. Keep track of dates, such as when a prior authorization was submitted, when you received approval or denial, and how long a prior authorization is granted. Insurance companies often approve medical treatments or prescriptions for a specific time window. If you miss the time frame, your doctor’s office will need to re-submit a prior authorization.