Prior Authorization

A requirement by an insurance payer that a provider must obtain approval before delivering certain services, procedures, or medications in order for the claim to be covered and reimbursed.

Prior authorization is the requirement to get approval from a payer before providing a specific service, procedure, or medication. If a service requires prior auth and you provide it without getting approval first, the payer can deny the claim and you may not be able to bill the patient. Prior authorization exists because payers want to control costs by making sure that certain expensive or potentially unnecessary services meet medical necessity criteria before they are performed. Common services requiring prior auth include advanced imaging (MRI, CT), surgical procedures, specialty medications, durable medical equipment, and out-of-network referrals. The prior auth process involves submitting clinical documentation that supports the medical necessity of the requested service. This might include chart notes, lab results, imaging reports, and a letter explaining why the service is needed. The payer's utilization review team reviews the documentation and either approves, denies, or requests additional information. Timelines for prior auth decisions vary. Many states have laws requiring payers to respond within a certain number of business days, typically two to five for standard requests and 24 to 72 hours for urgent requests. But in practice, delays are common, especially when additional documentation is requested. Prior auth is one of the biggest sources of administrative burden in healthcare. The American Medical Association estimates that practices spend an average of 14 hours per week on prior authorizations. It is a major driver of provider burnout and can delay patient care. Know each payer's prior authorization requirements for the services you commonly provide. Most payers publish their prior auth lists online. Some services that required prior auth in the past may not anymore, and new services get added regularly.