Benefits Strategy

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.

March 24, 2025

Full Series icon_right_chevron_dark

Introduction

Prior authorizations (PAs) have been used as a primary utilization management tool for many years. PAs were originally introduced under Medicare and Medicaid as a way to alleviate crowded hospital systems and provide relief for providers who were overcapacity. Employers see PA as one of the most important tools at their disposal to prevent inappropriate utilization of care, including medications or medical items and services, which in turn helps to mitigate waste and manage costs across the plan for employees and the employer. According to Business Group on Health’s 2025 Employer Health Care Strategy Survey, 95% of employers use PAs to manage specialty medications.¹ The goal of the PA process, which most stakeholders philosophically agree with, is to reduce ineffective and costly nonevidence-based care. There are, however, mounting concerns from all sides about how that goal is achieved. In some cases, the large volume of PAs, associated administrative burden and delays in treatment, along with the inability of PA processes to keep up with progressing care protocols and personalized medicine standards, are highlighting the need for reassessment of the PA process to benefit all stakeholders, including patients.

Regularly monitoring and evaluating the PA processes the carriers administer can help employers understand the value that PAs deliver and the impact they have on plan participants. Additionally, employers can use this information to gain insights into areas of the PA process that need improvement to advance their quality and cost of care objectives. By asking for regular reporting on PAs from their partners, employers can ensure that this utilization management solution is accomplishing what it is truly intended to do.

What Is Prior Authorization?

According to KFF, prior authorization, which is also called “preauthorization” and “precertification,” is defined as “a requirement by health plans for patients to obtain approval of a health care service or medication before the care is provided. This allows the plan to evaluate whether care is medically necessary and otherwise covered. Standards for this review are often developed by the plans themselves, based on medical guidelines, cost, utilization and other information.”²

The Evolving Role of PA in Health Care

PA is one of the most common tools used to determine whether a health care service or medication is medically necessary, as well as to control utilization, ensure the plan’s financial stability and protect patient safety. The PA process, however, which includes how decisions are made on what drugs and which procedures should be subject to PA, may not necessarily keep pace with the growing and evolving body of evidence-based guidelines and treatment protocols. According to a survey of health plans conducted by the American Medical Association (AMA), most said that their PA programs are based on peer-reviewed and evidence-based studies. However, 31% of physicians report that PA criteria are rarely or never evidence-based,³ a concerning finding.

The role of PAs has been expanding since their inception, and their permeation into the health care delivery system across just about every specialty comes with specific challenges and no simple fixes. Concurrently, the innovation seen in health care delivery, such as improvements in evidence-based guidelines, rapidly emerging changes in practice patterns and greater adoption of precision medicine, all imply a push toward greater personalization of treatment. The role of PA in this ever-advancing system seems to evolve slowly in these areas. This incongruity between the PA process and up-to-date medical practices can be confusing for providers and exacerbate care delivery issues.

While the challenges with the PA process are the major focus of this article, there are many cases where the use of PA prevents inappropriate utilization of services or medications and redirects patients to treatments that are more appropriate and cost effective, and potentially less invasive. For example, when Blue Cross Blue Shield of Massachusetts (BCBSMA) implemented a new PA program for opioid prescriptions in July 2012, the company saw the prescribing rate for opioids decrease by almost 15% during the first 3 years after implementing the policy, just as the opioid epidemic was ravaging communities and filling news headlines.⁴ This program delivered not only lower costs, but more importantly, better patient safety. This is an example of how PAs play a crucial role in mitigating low-value care. In many cases, however, the processes by which PAs are created, facilitated and reported on require meaningful improvement.

Stakeholder Perspectives on the Prior Authorization Process

Employers’ Perspective on PAs

Employers, first and foremost, care about the health and safety of their employees and covered family members. PAs can help patients avoid medical errors. On the other hand, the administrative time it takes to perform PAs may complicate adherence to a specific treatment schedule. It is essential for employers to challenge their partners to strike a better balance between clinical appropriateness and avoiding unnecessary delays in care. In some cases, leveraging technology and data insights to review the results of these processes more effectively may inform and enable eliminating or adjusting PA requirements or certain criteria. According to physicians treating patients in the 18-65 age bracket, 58% state that PA has interfered with their patients’ ability to perform their job responsibilities.3 The indirect financial impacts of this for employers and patients manifest themselves through

Lost workdays;
Reduced productivity as a result of delayed care; or
A possible adverse health event taking place due to PA-related delays in care.

Employers often are not familiar with the details, impacts and results of each PA. An absence of transparent reporting on the process or an inability to get information about PAs from their partners may also make it challenging for many employers to assess how frequently PAs are used and their effectiveness in achieving desired health outcomes and/or ensuring appropriate plan coverage and spending.

Moreover, these challenges in monitoring and evaluating the effectiveness and usefulness of PA processes have come at the expense of improving PA processes, a cycle that has been compounded over the last few decades. In a March 2022 survey by Medical Group Management Association (MGMA), 98% of provider practices reported that PA requirements remained the same or increased over the previous 12 months, with a majority of MGMA members reporting increased PA requirements year over year since 2016. This finding points to an opportunity for employers to hold partners accountable for the sheer volume of PAs administered and billed and advocate for removing PAs that do not add value.⁵

Employers, as the plan sponsors, are generally not expected to have the clinical expertise to design and implement PAs and monitor against evolving evidentiary standards. In hiring claims administrators, they generally rely on and expect credible expertise and investment from the vendor in these areas. In some cases, the vendors manage PAs across their book of business, and in others they may engage with each plan sponsor in more detail. In both cases, however, employers may need additional detail and transparency into the underlying processes in order to evaluate PA impacts, assess trade-offs and make desired changes to improve and streamline the PA experience for covered employees and their families.

Patients’ Perspectives on PAs

Of all the stakeholders involved in the PA process, the group most directly impacted is the patient. Even for patients, PAs have pros and cons. While a PA may potentially delay a patient’s access to necessary treatment, they can also prevent unsafe or inappropriate treatments from being prescribed and clarify coverage so patients are not offered treatments that would result in unexpected out-of-pocket (OOP) costs. Those potential benefits for patients, however, are overshadowed by the additional complexity PAs add to what may already be a hard-to-navigate health care journey, potentially resulting in loss of trust in their provider, plan or health care system overall. If a PA request results in a denial without an alternative recommendation, it can extend the time it takes to receive treatment needed by the patient, which may lead to additional visits, or even worse, deteriorating health and higher-cost treatments needed later.

Contesting an initial PA denial when trying to receive necessary care is complex and may require coordinating with the patient’s provider and health plan to ensure that all the correct codes are used to file the PA request and that the physician has submitted a letter with the appeal that systematically refutes the reason for the denial. Even with physician support, however, adverse events occur with delays in the PA process. According to the AMA, 82% of physicians surveyed report that issues related to the PA process at least sometimes lead to patients abandoning treatment, and 29% report that PA led to a serious adverse event for a patient in their care.³

Providers’ Perspective on PA

As PAs are designed and administered today, they often disrupt workflows and cause a disproportionate administrative burden on providers while offering little incremental clinical insight. Physicians surveyed in December of 2024 stated that their practices completed 39 PAs per physician per week, spending about 13 hours, or almost 2 business days, each week completing them.³ The U.S. Surgeon General identified PA as a major contributor to clinician burnout, with about 89% of physicians describing the burden associated with PA as high or extremely high.^6,3

Determining the method used to submit a PA seems to be a major cause of the burden for physician practices. PAs can be submitted via phone, fax, secure email, a payer portal or electronically. Web portals are the most common method used, with 37% of payers and 33% of providers reportedly using this method. Nonetheless, 67% of providers said that that it is at least somewhat difficult to determine which method to use when submitting a PA request.7 According to WEDI’s Prior Authorization Survey, 62% of providers reported that they do not have the technology to evaluate whether a PA is required without initiating a PA request.7 Even if they find a vendor to optimize the process, only 45% of vendors reported that they have the necessary technology to alleviate this issue.⁷

These survey data illustrate how and why the PA process is time-consuming for providers. According to a study in the Journal of the American Medical Association, the top six specialties with the highest rates of PA for services are:

Radiation oncology

97%

Cardiology

93%

Radiology

91%

Neurosurgery

90%

Hematology or oncology

88%

Rheumatology⁸

85%

Many of these specialties have experienced significant clinical progress in recent years, but an equivalent advancement in the design of the PA process may be lagging. In fact, virtually all medical groups state that in their view PA requirements are not improving.⁵ The number of innovative treatments and procedures tagged with a PA, regardless of their effectiveness, may limit physicians’ ability to adapt care protocols to the unique needs of patients. The oncology space is a prime example of how a large number of standardized PAs can derail personalized treatments at a time when the industry is moving more toward precision medicine.

Providers are stretched thin, and the inefficiencies riddled throughout the PA process cause a high administrative burden. This concern is the most significant contributing factor to why provider groups are advocating for change; they are hoping that reevaluation of the PA process may show how resources can be redeployed to reduce waste and increase efficiency to alleviate provider burden.

The Role of Health Insurance Companies/Third-Party Administrators (TPA) and Pharmacy Benefit Managers (PBMs)

Typically, employers contract with health insurance companies under an administrative services only (ASO) contract or another TPA and PBM for health care and pharmacy claims administration. The ASO/TPA and PBM, sometimes referred to as administrators, generally are the organizations that design the scope of PAs and manage their administration. These entities have established practices that may make decisions on the following:

What treatments or medications have a PA requirement;
What information they need from the patient or provider to clear the PA process;
How the patient or provider needs to submit the required information; and
Whether the request is approved or denied.

Procedures, medications or equipment that usually have a PA requirement include:

Diagnostic imaging (e.g., MRIs, CTs, and PET scans);
Durable medical equipment (e.g., wheelchairs, at-home oxygen and patient lifts);
Brand and specialty medications; and
Inpatient procedures and services.*

* These do not include emergency care.

While there is an ever-growing list of medications and treatments in the industry that the ASO/TPA and PBM must assess to decide on PA requirements, the onus of knowing what treatments have a PA and submitting a PA request largely falls on the physician. However, according to a WEDI survey in 2019, 73% of payers named a lack of a mandated standard to automate submission of supporting clinical information as a top challenge with the PA process.⁷

Though administrators manage PAs, employers may have some ability to customize the list of drugs and procedures subject to PA. Most commonly, administrators offer standard PA packages based on the level of intervention (low/med/high) and administrative cost their client accepts. Some may seek standard-of-practice accreditation for their PA “formulary” from various medical and physician groups in order to demonstrate that the services designated as requiring a PA are aligned with the most recent clinical evidence.

Employers can sometimes influence the criteria of granting PA approvals for therapies they wish to manage in customized ways if their vendor partner is able to support that level of custom administration. Designing the PA process for managing GLP-1 utilization is a recent good example of how employers engage in this process.⁹ However, employers may vary in their ability to maintain this level of oversight on every treatment and every drug. Therefore, they rely on their administrative partners to establish the protocols that will enable them to effectively manage safety and appropriateness of the covered treatments and procedures. Employers are often asked to evaluate new PA packages that may expand the scope of PAs, but PA removals are discussed less frequently. Some administrators inform their employer clients when a service becomes a standard of practice, encouraging the removal of any PA requirement on that service. There are opportunities for more visibility into and emphasis on how services are evaluated for PA requirement removal.

The ability to grant exceptions may seem like a tempting fix when a difficult member experience is brought to an employer’s attention. However, granting an exception would mean that the employer is deviating from the consistency of their plan administration, which may create other compliance concerns or require other changes and plan amendments to conform to new practices. For this reason, employers generally refrain from overriding their administrators’ PA decisions on a one-off basis.

Potential Avenues to Improving PA

Vendor Carve-outs

Some employers are exploring carving out the PA process to have a separate specialty PA vendor perform some or all of the plan’s PA in order to achieve more transparency on PA decisions and to apply a higher level of scrutiny for protocol administration and member impact. Like any carve-out, this decision involves significant consideration on the part of the employer, including assessment of the additional vendor’s capability to handle volume and the potential disruption to other utilization management processes for which the core administrator is still responsible. Additionally, PA carve-outs have the potential to be an increased burden for physicians, who would need to deal with multiple administrators for coverage and formulary decisions and for PA requirements. Vendor carve-outs are generally not common for these reasons.

Gold Carding

A Texas law aimed at improving PA processes by reducing physician burden took effect September 2021.¹¹ The law states that physicians who have a 90% PA approval rate for certain services over a 6-month period are exempt from PA requirements for those services. This exemption is referred to as a “gold card.” Gold carding would seemingly reward physician practices that consistently remain in line with evidence-based guidelines for treating their patients, but it also may just be rewarding physicians who consistently achieve approval due to their proficiency in navigating the current PA process.

This new approach to PA is supported by many medical associations, including the AMA, the American Hospital Association, the American Pharmacists Association and the American Academy of Family Physicians.¹¹ According to Cave Consulting Group, an additional 30% of specialists across the country should be gold carded for their consistently high PA approval rates.¹² However, if the clinical protocols deployed by gold carded practices become outdated and are not concordant with the latest evidence-based guidelines, PA exemptions or expedited approvals for these practices will not serve to ensure the highest quality of health care. Furthermore, gold carding is based only on historical data. While it significantly rewards providers with a high approval rate, it does not decrease the potential for these providers to request an unnecessary procedure or medication. Recently, third-party vendors have emerged that establish gold carding privileges based on the physician’s adherence to up-to-date evidence-based clinical protocol, rather than prior PA approval ratings. This type of approach targets total appropriateness of care and evaluates physicians on a continuous basis. The Blues Association recently partnered with Motive Medical Intelligence to deploy this type of physician measurement.¹³

Some parties are skeptical about what results the gold-carding program will show. At this point in time, data corroborating success of the model is being awaited by many practices and health plans across the country. With providers continuing to voice their discontent with the PA process, states like Louisiana and Michigan passed gold-carding legislation in 2022, and similar legislation was introduced in Mississippi but failed to pass.¹⁴

Automation

Automated PAs (aPAs) and electronic PAs (ePAs) are supported by many stakeholders in the U.S. health care industry. According to the 2021 Council for Affordable Quality Healthcare (CAQH) Index, adoption of aPA or ePA in 2020 increased to being prevalent in slightly over a quarter of the market, from 21% to 26% in 2021.¹⁵ CAQH stated there is an annual cost-saving opportunity of $437 million, including savings that can be captured by both payers and providers, if ePA is adopted nationwide.¹⁵ The distinction between ePA and aPA is essential for some stakeholders, as ePA is still a time-consuming process, with staff needing to access multiple portals and search manually for missing information. On the other hand, a system implementing a true aPA process may relieve much of the burden faced by stakeholders dealing with information siloes and resulting inefficiencies. It is worth remembering that any automation process carries a risk of removing human judgment that may be necessary for making some decisions about appropriateness of treatments for distinct patients, reducing the value aPAs may add to care delivery and outcomes.

PA Policy Landscape

Recently, there has been increased bipartisan interest in passing legislation aimed at making the PA process less burdensome and more standardized across the industry. In mid-2023, a bipartisan group of almost 300 members of Congress submitted letters to the Department of Health and Human Services encouraging them to implement the rules and go even further to alleviate the burden of PAs. For example, lawmakers urged the Centers for Medicare & Medicaid Services (CMS) to include provisions in the proposals to enable faster decision-making and reduce delays as well as provider burden. Throughout 2024, both regulations and legislation were introduced to reform PA processes, but these efforts have largely focused on Medicare and Medicare Advantage plans. Many states have also introduced bills to limit the volume of PAs or change the way they are managed. As of August 2024, 10 states enacted PA reform, with over a dozen bills still pending. These recently enacted laws include provisions such as mandating faster response times for PA requests, implementing gold card programs to exempt high-performing providers from PA requirements and enhancing transparency by requiring public reporting of PA metrics.¹⁶

States can only regulate insured coverages (individual or group), but some states are attempting to enact legislation purporting to apply to self-insured Employee Retirement Income Security Act of 1974 (ERISA) plans as well, which would be problematic for uniform plan administration under ERISA preemption principles. These bills may help providers by reducing their administrative burden and expediting the process, but the proposed legislation does not focus on making the PA process more effective in guiding patients to appropriate care while limiting waste and saving dollars.¹⁴

Whether at the state or federal level, additional government requirements for specific PA processes, limitations and performance standards would be a challenge for plan flexibility, discretion, innovation and administrative burden. Employers generally prefer to review and refine their PA and other claims processes with their partners in ways that work best for their plans and employees.

In addition to legislative, regulatory or policy changes aimed at PA directly, certain other requirements may indirectly result in changes to various PA elements and processes. Notably, under the Mental Health Parity and Addiction Equity Act of 2008 (MHPAEA), the comparative analysis of non-quantifiable treatment limitations (NQTLs) for medical-surgical (med-surg) benefits and mental health/substance use disorder (MH/SUD) may highlight PA differences between various benefits in ways that are questioned by U.S. Department of Labor (DOL) regulators. This may result in changes, generally reductions, to PA for both med-surg and MH/SUD in order to reconcile any differences in a way that avoids unnecessary DOL involvement.

Employer Recommendations

The PA landscape is complex and involves numerous stakeholders across the health care industry, but employers can begin to determine how to optimize their PA process by taking the steps listed below:

1 | Collaborate with your administrative partners to achieve PA goal alignment and increased transparency about the benefits, limitations and overall impacts of the PA process.
2 | Encourage partners to collect outcomes data to measure the effectiveness of the process as defined by its impact on patient satisfaction and trends.
3 | Ask your partners to report on PA trends regularly, including volume of requests submitted, approved, denied, appealed and overturned, so you can effectively weigh member impact against cost savings. Consider adding PA reporting requirements to contracts.
4 | Spur your partners to identify common reasons for incorrectly submitted PAs. Focus on educating members on engaging patient advocates and leaning on their expertise when navigating the PA process.
5 | Even if PAs are optimized and made more efficient, real and perceived PA denials and delays are going to occur. Work with your partners to ensure that any appeal or request for review of a PA denial is streamlined, handled promptly and fairly and accompanied by an appropriate explanation.
6 | Engage your administrator’s care management teams, vendor partners and navigators to help your members find lower cost alternatives to appropriate services and therapies to help them navigate away from treatments that likely will trigger a PA requirement.
7 | Promote discussions among administrative partners 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. Motivate partners to use the PA process as a tool to inform providers on evolving evidence-based treatment protocols, not as one to create barriers to new standards of care.
8 | Galvanize your administrative partners to work with providers to improve efficiency and consistency of the PA process, reduce the need for manual intervention and align recommendations on how the process can be designed to help providers comply with efforts to offer the most effective covered treatment.
9 | See how progress in health data interoperability and digitalization can boost PA automation.
10 | Review the existing volume of PA requirements and the related cost and consider removing those that do not add value frequently, especially as you consider adding new ones.

Conclusion

Many employers understand the benefits of PA as a mechanism for ensuring patient safety, reducing errors and controlling fraud, waste and abuse. Due to numerous shortcomings, however, employers are seeking improvements to the PA design and process. Along with other stakeholders, employers recognize the importance of PAs, but they also realize that there is a need to focus on improving the PA process and continuously reassess how PAs can be designed to add value to care delivery. PA can be a tool that accomplishes the cost, quality and safety objectives that have evolved alongside treatment advancements to deliver appropriate care to patients. That being said, the process will accomplish its goals only if it keeps pace with the rapid evolution of the health care system itself.

Appendix: Questions Employers Should Be Asking

How much of the savings garnered through utilization management tools is directly related to PAs? Where do those savings primarily come from? Are savings resulting from denial of inappropriate therapies as per evidence-based guidelines?
What parts of the process can the employer/payer influence?
If you are choosing to eliminate PA, what reasons are under consideration and what is the impetus for this decision?
What percentage of PAs are automated?
How often is the PA process updated? What is taken into consideration when updating the process?
What PA reports are available to employers?
What is your average turnaround time for PA processing?
What percentage of denied PAs are ultimately approved?
How often do you evaluate and change your PA criteria?
What PA requirements do you have for members who have been successfully managing a chronic condition for long periods of time using the same medication?
Are providers in our network practicing in accordance with the most updated evidence-based guidelines from national medical associations and other widely trusted sources?
Have you explored the idea of gold carding for physicians who consistently follow high-value practices?
Are there vendor partnerships to explore that may alleviate the PA burden facing physicians in our network?
What training do PA staff go through to adhere to criteria and proper documentation methods?
What performance guarantees can we include in our contract to ensure that the PA process is working as intended?
Do you eliminate/penalize failing or underperforming providers from high-performance networks?
What should a health plan/TPA do when a provider has a high percentage of PA denials?

Questions to ask your PBM and/or health plan/third-party administrator:

Join today to gain access to member-only resources!

Learn More

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