Prior authorization as a measurable plan process

What is prior authorization?

Prior authorization (PA), also called prior approval or pre-certification, is a plan requirement that the treating clinician obtain approval before prescribing a medication, performing a procedure, or ordering certain tests. The insurer reviews whether the requested care is "medically necessary" under its internal criteria before agreeing to pay.

Why plans require prior authorization

Insurers, particularly Medicare Advantage plans, use prior authorization as utilization management: to limit treatments the plan classifies as unnecessary or experimental, to steer toward preferred providers or drugs (step-therapy protocols that sequence lower-cost alternatives first), to detect fraud and billing errors (duplicate billing or upcoding), and to meet clinical-oversight standards written into plan contracts.

Medicare Advantage PA rates in OIG reporting

Medicare Advantage (MA) plans show significantly higher PA denial rates than traditional Medicare in public reporting. According to CMS OIG report OEI-09-22-00380, some MA contracts deny prior-authorization requests at rates exceeding 10–15%. When those denials are appealed, overturn rates often exceed 60–70%, which OIG interprets as evidence that many initial denials did not hold under review. The Medicare Advantage PA scorecard lists denial and overturn rates for major contracts in this registry.

Common coded reasons PA requests are denied

Denial notices commonly cite: the treatment is not on the plan's formulary or approved list; step therapy requires a lower-cost drug first; documentation from the treating clinician is incomplete; the procedure is classified as experimental or investigational; the service fails the plan's "medically necessary" criteria; or the provider is out-of-network without a special authorization.

What plan rules provide after a PA denial

Plan documents require a written denial stating the specific reason and appeal rights. Peer-to-peer clinical review between the treating physician and the plan reviewer is a documented intermediate stage that resolves many denials. An internal appeal follows (Medicare Advantage typically allows 60 days). Expedited appeal clocks of 72 hours apply when the plan treats the case as urgent. After an internal denial, Independent Review Organization (IRO) external review is available and binding. State insurance commissioners also accept complaints when a denial is alleged to violate plan or state rules.

CMS rules for Medicare Advantage PA (2024)

CMS implemented PA reforms for Medicare Advantage in 2024. Plans must apply the same coverage criteria as traditional Medicare for services covered under original Medicare, decide standard PA reviews within 7 calendar days and urgent ones within 72 hours, approve requests that meet coverage criteria (denials require specific documentation), and provide continuity of care for enrollees switching plans mid-treatment.

Prior authorization as a comparable metric across insurers

CMS Transparency in Coverage data reports volume statistics on prior-authorization filings, approvals, and denials for ACA marketplace plans, while NAIC consumer-complaint data identifies prior-authorization disputes as a complaint subcategory. Together these give a quantitative starting point, though the data does not capture provider time burden, the volume of services where PA is required but rarely denied, or enrollee wait experience. Carriers with higher filing volumes per enrollee tend also to have higher denial rates on a percentage basis, though not always, because the mix of high-denial-rate services varies by plan design. The relationship is descriptive, not causal; reading the per-service-category breakdown when available is more informative than the aggregate count.