March 24, 2025

Prior Authorization: Benefits, Burdens, and Bold Ideas for Improvement

Prior authorizations have been a mainstay of utilization management strategies. Understanding the challenges they present for different stakeholders across the industry can lead to improved efficiency while helping employers remain steadfast to cost, quality, and member experience goals.

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Prior authorizations (PAs) have been used as a utilization management tool for many years. Employers see PA as an important mechanism to promote patient safety and prevent inappropriate utilization of a medication or medical service. From initially being used as a simple diagnosis validation tool, PA has changed greatly over time, becoming a process involving a far more robust set of criteria. Not only has the number of procedures and therapies subject to PA increased, but the onerous nature of manual processing coupled with increasingly complex clinical criteria has also added to the increased cost and resource burden associated with the process.

These challenges have sparked the industry and legislators to call for change and a reassessment of the value of PAs. Therefore, key stakeholders need to carefully consider the overall impact of their PA decisions in the delivery of care as well as on patients. This increased scrutiny has the potential to improve the efficiency of the PA process and how it is utilized, emphasizing how PAs should continue to evolve in tandem with overall changes in treatment protocols and care delivery.

In recent years, PAs have become a focus area for improvement due to the sometimes excessive administrative burden they can cause. Employers do not always have clear visibility to what services and medications require a PA, and an absence of reporting on the volume and outcomes of the process from their partners makes it challenging for many employers to assess the effectiveness of PAs and their role in achieving desired health outcomes as well as cost savings. Employers can work with their health plans, providers and pharmacy benefit managers (PBMs) to make decisions on what services have a PA requirement and regularly monitor and evaluate whether this tool is doing what it is intended to do.

Some strategies to improve efficiency in the PA process, such as gold carding and automation, have gained traction, but these strategies must be implemented in combination with an evaluation of medically necessary, appropriate and safe health care services personalized to each patient. An ideal PA process would be able to help physicians and plans navigate patients to the most cost-effective and clinically appropriate treatment without putting a disproportionate administrative or patient burden on providers, which could lead to delays in appropriate treatment and possibly adverse outcomes.

Stakeholder Perspectives

See Table 1 below outlining some of the benefits and challenges different stakeholders face regarding the PA process.

Table 1: Benefits and Challenges of the PA Process

	Benefits	Challenges
Employers	Preventing inappropriate or unnecessary care Promoting value in care delivery and reducing costs Encouraging provider adherence to the latest evidence-based protocols	Lack of visibility into the impacts and results of PAs Difficulties receiving data about the monitoring of PAs and evaluation of their effectiveness Delayed care can be detrimental to patients, impacting health, experience and productivity
Patients	Directing them away from unsafe or inappropriate treatments Reducing the potential for higher out of pocket costs	Appealing PA denials is a difficult process Health may continue to deteriorate if a denial is not accompanied by an alternative treatment recommendation in a timely manner
Providers	Finding safe alternative services for the patient Preventing inappropriate or unnecessary care Confirmation of coverage ahead of treatment	High level of administrative burden to complete PAs Lack of flexibility with the PA process when applied to new protocols may delay provider adoption of leading edge clinically appropriate standards of practice Differences across individual health plans and PBMs on submission processes and which services require PA
Health Plans & PBMs	Preventing inappropriate or unnecessary care Promoting value in care delivery and reducing costs	Increasing number of services with a PA requirement causes administrative burden Require client approval to remove PAs from services

Emerging Solutions and Relevant Changes within PA

Vendor Carve-outs: Employers may explore carving out the PA process to achieve more transparency on PA decisions and to apply a higher level of scrutiny for protocol administration, outcomes and member impacct.
Gold Carding: Physician practices that consistently remain in line with evidence-based guidelines for treating their patients are rewarded with an exemption from PA requirements for certain services. This may only reward physicians who consistently achieve approval due to their proficiency in navigating the current PA process, but multiple states are experimenting with the idea.
Automation: An end-to-end automation approach may be able to reduce administrative burden and optimize the PA process through a streamlined workflow for patients, providers and health plans and PBMs.

Key Recommendations

1 | Collaborate with your health plan, providers and PBM to achieve PA goal alignment and further transparency of the benefits, limitations and overall impacts of the PA process. This can be achieved by asking for regular reporting on the monitoring of PAs and the evaluation of their effectiveness.
2 | Promote discussions among health plans/PBMs and providers within your network about the clinical evidence behind certain common treatments and medications to see where PAs may not be necessary and where more stringent PA processes may be required. Encourage partners to use the PA process as a tool to inform providers on evolving evidence-based treatment protocols, not as a barrier to treating patients. Such discussions can help identify where PAs are successfully achieving their quality and cost goals while determining their incremental value to services that have become standards of practice.
3 | Set requirements contractually and otherwise encourage the health plans in your network to work with providers to improve efficiency and consistency of the PA process, reduce the need for manual intervention and align on recommendations about how the process can be designed to help providers comply while seeking the most effective, covered treatment.