Prior authorization is the approval process that many health plans require before covering certain tests, services, medications, or procedures. Providers must submit clinical information about the patient’s needs and a proposed treatment, and the payer will either approve, deny, or ask questions. In specialty medical care, delays in authorization are usually some of the most common reasons why referred patients are forced to wait longer before receiving treatment.
Also called: prior auth, PA, preauthorization, precertification
Quick facts:
Function: Pre-visit financial clearance
Domain: Front-end revenue cycle
Used by: Authorization specialists, access teams, clinical staff
Related KPIs: authorization turnaround time, authorization-related denial rate
What usually requires prior authorization?
Payers usually require prior authorization for services like:
- Advanced imaging: CT, MRI, PET scans, and other imaging services
- Certain procedures and surgeries: Procedures that are either elective, expensive, or both
- Specialty medications: Often infusions or injectables, but others may apply as well
- Some therapies: Like physical therapy after a certain number of visits
The particular payer and plan will determine the specific prior authorization requirements, and for many payers, those requirements can change often, so it’s important to actively check the requirements of each patient’s plan individually.
How does the process for prior authorization work?
- Check whether authorization is needed: Check the service, code, and plan, and confirm their current requirements with the payer.
- Gather clinical documentation: Assemble all necessary info and documents, such as the referral, notes from prior visits, diagnosis codes, test results, and whatever prior treatment history is required by the payer.
- Submit the request to the payer: Send the request through the payer’s portal or electronic system.
- Follow up: Keep track of the request, respond to any questions from the payer promptly, and escalate the request if it stalls.
- Record the decision: Document the outcome of the request, including the authorization number, the services approved, and the validity dates in the patient’s account.
Incomplete submissions are a very common cause of delays. Without the right notes or the correct codes, a request can find itself knocked to the back of the queue.
Why does it matter for specialty groups?
- Delayed care: When prior authorization is mishandled, approval stays pending for longer, and patients have to wait longer for treatment.
- Slower referral-to-care times: Between a referral and the first scheduled visit, a slow authorization process leaves patients waiting and more likely to seek help elsewhere.
- Claim denials: Services are likely to be denied when they fall outside the approved scope or are performed without authorization in the first place.
- Staff time: The tasks of checking statuses, calling payers, and resubmitting denied claims all use up valuable time that can be better spent on other front-end work and helping patients directly.
How is prior authorization measured?
There are 2 main metrics that are commonly used regarding prior authorization:
- Authorization turnaround time: How long does it take from the time a claim is submitted to when a decision is reached, either authorization or denial?
- Authorization-related denial rate: What percentage of insurance claims are denied because the required prior authorization was either missing, expired, or mismatched from the service performed?
It’s important, when tracking either of these metrics, to do so by payer. Payer plans can vary greatly when it comes to turnaround. When you only track a simple blended average of all the payers you work with, it can obscure the ones that cause you the most delay.
Prior authorization in outsourced operations
With a dedicated outsourced team taking care of prior authorization, the authorization process can start right at [referral intake] [Link to Referral Intake page] instead of waiting until booking, and that goes a long way to shorten the time it takes from a patient’s referral to the time they can get care. A dedicated team can work through the payer queues every day and make note of possible delays early, giving clinical staff and schedulers the heads-up they need to adjust schedules when needed. Additionally, the clinical decisions stay with the group’s providers. The outsourced team merely manages the administrative process, without making any decisions on appropriate care.
Prior authorization vs. eligibility verification
Eligibility verification is a confirmation that a patient’s coverage is active. Prior authorization is the provider getting approval from the payer to perform a specific service and assurance that it will be covered by the payer.
Regulatory notes
Federal and state laws have set expectations for payer response times and electronic prior authorization. For federal-level regulations, the CMS Interoperability and Prior Authorization final rule (CMS-0057-F) was finalized in January 2024, and it sets the requirements for Medicaid and CHIP-managed care plans, as well as issuers of qualified health plans on the federally facilitated exchanges, most of which are required to be implemented before January 2027. Note that these requirements apply to certain payers, not the providers themselves.
FAQs
How long does prior authorization usually take?
This is heavily dependent on the payer, the service being requested, any questions the payer may have about the request, and whether or not the submission is fully complete. For many requests, the turnaround may be 1 to 2 days, but others can take a week or longer. By tracking each payer’s turnaround, you can figure out what to expect from each plan, time-wise. Federal and state rules both set maximum response times for certain types of plans, so check with official sources for more info.
How do I get patients from referral to care within fourteen days?
What happens if a service is performed without required authorization?
Most likely, the claim will be denied, and in such cases, the group usually won’t be able to bill the patient for the denied amount and will have to eat the cost depending on the situation and the details of the payer’s contract. Though some payers might allow a retroactive authorization in a very limited circumstance, that’s never a guarantee, and it’s much less expensive to confirm authorization ahead of time instead of appealing for an exception after the fact.
Can prior authorization be automated?
Some parts of the process are automatable, such as checking which services require authorization, pre-filling forms, submitting requests electronically, and tracking the status of existing requests. However, many parts of prior authorization still need a human touch, such as escalating requests that have been stalled, assembling clinical documentation, and resolving any questions from payers.
