Understanding prior authorization

What is prior authorization?

Prior authorization (PA), also called prior approval or pre-certification, is a requirement by an insurance plan that your doctor or healthcare provider get approval before prescribing a medication, performing a procedure, or ordering certain tests. The insurer reviews whether the requested care is "medically necessary" according to its internal criteria before agreeing to pay.

Why plans require prior authorization

Insurers — particularly Medicare Advantage plans — use prior authorization to control costs (avoiding treatments they consider unnecessary or experimental), to steer toward preferred providers or drugs (step-therapy requirements push patients to cheaper alternatives first), to detect fraud and billing errors (catching duplicate billing or upcoding), and to comply with utilization-management standards as a clinical-oversight tool.

The Medicare Advantage PA problem

Medicare Advantage (MA) plans have significantly higher PA denial rates than traditional Medicare. According to CMS OIG report OEI-09-22-00380, some MA plans deny prior-authorization requests at rates exceeding 10–15%. When patients appeal these denials, overturn rates often exceed 60–70%, suggesting many initial denials were inappropriate. Our Medicare Advantage PA scorecard shows denial and overturn rates for major plans.

Common reasons PA requests are denied

The treatment is not on the plan's formulary or approved list; step therapy requires trying a cheaper drug first; documentation from your doctor is missing; the procedure is classified as experimental or investigational; the service was not deemed "medically necessary" by the plan's criteria; or the provider is out-of-network without special authorization.

What to do if your PA is denied

Get the denial in writing — your plan must provide a written denial with the specific reason and your appeal rights. Ask your doctor for a peer-to-peer review, which resolves many denials. File an internal appeal (for Medicare Advantage you typically have 60 days). Request an expedited appeal if the denial is urgent — you can get a 72-hour expedited review. Escalate to an Independent Review Organization (IRO) if your internal appeal is denied; IRO decisions are binding. And contact your state insurance commissioner if you believe the denial was improper.

CMS rules for Medicare Advantage PA (2024)

CMS implemented significant PA reforms for Medicare Advantage in 2024. Plans must now apply the same coverage criteria as traditional Medicare for services covered under original Medicare, conduct PA reviews within 7 calendar days for standard requests and 72 hours for urgent ones, approve requests that meet coverage criteria (denials require specific documentation), and provide continuity of care for patients 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 the patient experience of waiting through authorization queues. Carriers with higher filing volumes per enrollee tend also to have higher denial rates on a percentage basis, though not always, because the proportion 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.