Prior Authorization (PA) is a tool in the health care payor’s repertoire that was designed to reduce costs and overutilization of services but is being used inadequately by some bad actors to limit access to care. This has resulted in increased administrative costs and worsening health conditions for patients. Nearly 90% of physicians reported that prior authorization leads to higher overall utilization of health care resources. Additionally, the latest international rankings on health-system efficiency rank the U.S. in the bottom third of peer nations, with PA cited as a major contributor. Now, third party vendors and advancements in Artificial Intelligence (AI) may further complicate the PA process.

PA Third Party Involvement  

Insurance companies are not always responsible for making PA decisions. Instead, they often outsource medical reviews to third-party companies promising insurance companies a return on their investment. The largest of these third-party companies, EviCore, markets that it can increase denials by 15%, and it often does—often by using an AI-powered algorithm that it can adjust to get higher denials.

How Physicians Feel About It

Results from a recent survey on patient and physician interactions with PA demonstrate how frustrating the situation has become.

• Patient Harm: Nearly one in four physicians (24%) reported that prior authorization has led to a serious adverse event for a patient in their care, including hospitalization, permanent impairment, or death.
• Bad Outcomes: More than nine in 10 physicians (93%) reported that prior authorization has a negative impact on patient clinical outcomes.
• Delayed Care: More than nine in 10 physicians (94%) reported that prior authorization delays access to necessary care.
• Disrupted Care: More than three-fourths of physicians (78%) reported that patients abandon treatment due to authorization struggles with health insurers.
• Lost Workforce Productivity: More than half of physicians (53%) who cared for patients in the workforce reported that prior authorizations had impeded a patient’s job performance.

What are Policymakers Trying to Do?

A bipartisan group of Senators tried to advance a federal prior authorization bill this fall but unfortunately the bill hit some roadblocks and hasn’t moved. Many states are also trying to address prior authorization by passing their own legislation and we expect continued legislative action in 2025. Most of the state bills we are seeing focus on increasing transparency by requiring insurers to report metrics such as denial and overturned rates. Others are looking into establishing gold care programs in which PA requirements are waived for certain services for physicians who have a history of appropriate documentation and utilization. While none of these bills completely fix the PA issues experienced by providers, they seek to increase accountability and simplify the current process.