Prior authorization is a health insurance requirement that asks a healthcare provider to obtain approval from a health plan before certain medical services, prescription drugs, procedures, or medical equipment are provided. It is also called preauthorization, prior approval, or precertification. The purpose is generally to determine whether a requested service meets the insurer’s coverage or medical-necessity requirements before care is delivered.

For patients and healthcare practices, understanding prior authorization is important because an authorization requirement can affect when a service is performed, what documentation must be submitted, and whether the payer will consider the service eligible for coverage. Importantly, an authorization approval does not necessarily guarantee that the insurer will pay the final claim.

What Is Prior Authorization?

Prior authorization is a utilization management process used by health plans to review certain healthcare services before they are provided.

In a typical process, a provider submits a request to the patient’s insurance company. The request may contain clinical information, the diagnosis, proposed treatment, medical records, test results, and other documentation required by the payer.

The health plan then reviews the request according to its applicable coverage policies and criteria. The payer may approve the request, request additional information, or issue a denial.

Prior authorization requirements vary by insurance plan and can change over time. A service that requires authorization under one health plan may not require it under another.

Prior Authorization vs. Preauthorization

The terms prior authorization and preauthorization are often used interchangeably.

Other terms include:

• Prior approval
• Precertification
• Utilization review
• Utilization management

The exact terminology depends on the payer and healthcare setting, but the basic concept is similar: the health plan reviews a requested service before it is provided or, in some circumstances, before it is eligible for payment consideration.

Why Do Insurance Companies Require Prior Authorization?

Health plans use utilization management processes for different reasons. According to CMS, prior authorization can be used to verify that an item or service meets applicable coverage requirements, medical-necessity criteria, and payment rules.

Common purposes include:

1. Reviewing Medical Necessity

The payer may require information demonstrating why a particular treatment, procedure, medication, or medical device is appropriate for the patient’s documented condition.

2. Confirming Coverage Requirements

Insurance plans have different benefits, exclusions, clinical criteria, and utilization policies. Prior authorization allows the payer to determine whether the requested service meets applicable requirements.

3. Managing Utilization

Prior authorization is one component of utilization management, which refers broadly to processes used by health plans to review healthcare services and their use.

4. Supporting Appropriate Payment

A payer may use prior authorization to review whether requested services satisfy applicable coverage, coding, and payment requirements before the service is delivered.

It is important to remember that prior authorization is primarily an insurance administrative process. It does not replace a healthcare professional’s clinical judgment about what care may be appropriate for an individual patient.

What Services May Require Prior Authorization?

There is no universal list of services requiring authorization. Requirements depend on the patient’s health plan, benefits, location, provider network, and the specific service.

Depending on the insurance plan, authorization may be required for certain:

• Prescription medications
• Specialty drugs
• Advanced diagnostic imaging
• Surgical procedures
• Hospital admissions
• Outpatient procedures
• Medical equipment
• Infusion therapies
• Specialty treatments
• Certain behavioral health services
• Home healthcare services
• Durable medical equipment

Some plans may also require authorization when a patient changes treatment or when a service exceeds specified utilization limits.

Because payer policies differ, providers should verify the patient’s current benefits and authorization requirements before providing services when applicable.

How Does the Prior Authorization Process Work?

Although the exact workflow varies, the process commonly follows several steps.

Step 1: Identify the Authorization Requirement

The provider or billing team determines whether the patient’s health plan requires prior authorization for the planned service.

This may involve checking the payer’s provider portal, contacting the health plan, reviewing the patient’s benefits, or using an electronic authorization system.

Step 2: Gather Clinical Documentation

The provider’s office collects the information required by the payer.

Depending on the service, this could include:

• Patient demographics
• Insurance information
• Diagnosis codes
• Procedure or service codes
• Clinical notes
• Previous treatment history
• Laboratory or imaging results
• Medication history
• Treatment plans
• Referrals or other supporting documentation

Incomplete documentation can result in requests for additional information or delays in the review process.

Step 3: Submit the Request

The request is submitted to the payer through the method accepted by that health plan.

Depending on the payer and service, submission may occur through:

• An online payer portal
• Electronic prior authorization technology
• Electronic health record workflows
• Telephone
• Fax
• Other designated channels

CMS has been promoting greater use of electronic data exchange and standardized technology to streamline prior authorization processes for certain federally regulated health plans.

Step 4: Payer Review

The health plan reviews the submitted request and supporting documentation.

The payer may:

• Approve the request
• Deny the request
• Ask for additional information
• Modify the requested authorization
• Request further clinical review

The review process and response time can vary according to the payer, service, and applicable rules.

Step 5: Document the Decision

The provider’s office should record the authorization decision and relevant details, such as:

• Authorization number
• Approved service
• Approved dates
• Number of authorized services, when applicable
• Site of service, when applicable
• Any limitations or conditions
• Payer communication

Accurate documentation helps the practice track the authorization and compare it with the eventual claim.

Step 6: Provide the Authorized Service

If the request is approved and the clinical team determines that the service should proceed, the service can be provided according to the authorization and the patient’s care plan.

However, the practice should still verify other applicable requirements because authorization does not automatically mean every aspect of a claim will be paid.

What Happens If Prior Authorization Is Denied?

A denial means the payer has not approved the requested service under the submitted request. It does not necessarily mean that the patient’s clinical team has determined the service is inappropriate.

Depending on the health plan and applicable rules, a provider or patient may have options such as:

• Reviewing the denial reason
• Correcting missing information
• Submitting additional documentation
• Requesting reconsideration
• Filing an appeal
• Requesting a peer-to-peer review when available
• Reviewing alternative covered services

The appropriate next step depends on the payer’s rules, the type of service, and the reason for the decision.

Providers should carefully review denial notices because the payer may identify missing documentation, coverage criteria, or other information relevant to the decision.

Common Reasons for Prior Authorization Problems

Prior authorization requests may encounter problems for several administrative or clinical-documentation reasons.

Common examples include:

Issue	What It May Mean
Missing documentation	Required medical records or supporting information was not submitted
Incorrect information	Patient, provider, diagnosis, or service details do not match payer records
Coverage criteria not met	The request does not satisfy the payer’s stated criteria
Incomplete request	Required fields or documents are missing
Service not covered	The requested service may be excluded or subject to different coverage rules
Authorization not obtained	Required approval was not secured before the service
Authorization expired	The approved period has ended
Coding mismatch	Submitted service information may not align with the authorization

These issues highlight why accurate documentation, eligibility verification, payer-specific requirements, and careful follow-up are important parts of the medical billing workflow.

Prior Authorization and Medical Billing

Prior authorization is closely connected to medical billing, but it is not the same thing as submitting a claim.

A prior authorization request generally occurs before the service. A claim is typically submitted after healthcare services have been provided and contains information used by the payer to process payment.

A simplified sequence looks like this:

Eligibility verification → Prior authorization, if required → Patient care → Claim submission → Payer adjudication → Payment or denial

The exact workflow varies by payer and service.

Medical billing teams may therefore be responsible for tracking authorization requirements, maintaining authorization documentation, communicating with clinical staff, and ensuring that claims correspond appropriately with approved services.

Prior Authorization vs. Referral

Prior authorization and referrals are different concepts.

A referral generally involves a healthcare provider directing a patient to another provider or specialist, depending on the patient’s health plan and care arrangement.

A prior authorization is an approval process conducted by the health plan for certain services, treatments, medications, or equipment.

A patient may need a referral, prior authorization, both, or neither, depending on the insurance plan.

Does Prior Authorization Guarantee Insurance Payment?

No.

An approved prior authorization generally means that the payer has approved the requested service under the applicable authorization process. It should not automatically be interpreted as a guarantee of payment for the final claim.

Other factors can still affect claim processing, including:

• Patient eligibility on the date of service
• Benefit limitations
• Provider network status
• Correct coding
• Deductibles and cost-sharing
• Authorization dates
• Number of approved services
• Claims documentation
• Other payer-specific requirements

Healthcare.gov specifically notes that preauthorization is not a promise that the health plan will cover the cost.

How Technology Is Changing Prior Authorization

Traditional prior authorization workflows can involve portals, phone calls, faxing, manual data entry, and repeated communication between providers and payers.

Healthcare organizations and regulators have increasingly focused on electronic prior authorization and interoperability.

CMS’s prior authorization final rule includes requirements for certain impacted payers to implement Health Level Seven International Fast Healthcare Interoperability Resources (HL7 FHIR) APIs. These technologies are intended to improve electronic exchange of health information and streamline certain prior authorization processes.

Electronic workflows can help practices access payer requirements, transmit information, track requests, and receive decisions more efficiently. However, implementation varies by payer and healthcare organization.

How Medical Practices Can Manage Prior Authorization More Efficiently

Healthcare organizations can strengthen their authorization workflow by creating clear processes for staff.

Useful practices include:

• Verify authorization requirements before scheduled services.
• Check the patient’s current eligibility and benefits.
• Maintain payer-specific authorization guidelines.
• Use accurate diagnosis and procedure information.
• Submit complete supporting documentation.
• Track authorization numbers and expiration dates.
• Document payer communications.
• Follow up on pending requests.
• Review denial reasons promptly.
• Coordinate communication between clinical and billing teams.
• Keep authorization records organized and accessible.
• Monitor changes in payer requirements.

Because insurance policies can change, practices should avoid relying solely on previous authorization experiences.

What Patients Should Know About Prior Authorization

Patients may encounter prior authorization when their insurance plan requires approval for a particular treatment, medication, test, procedure, or medical device.

If a healthcare provider tells you that authorization is required, useful questions may include:

• What service requires authorization?
• Has the request been submitted?
• Is additional information needed?
• Has the payer made a decision?
• What happens if the request is denied?
• Is there an appeal or reconsideration process?
• Does the authorization have an expiration date?

Patients should discuss clinical questions with their healthcare professional and insurance questions with their health plan or benefits administrator. Emergency care may be subject to different rules, so patients should follow appropriate emergency medical guidance rather than delaying urgent care because of an administrative requirement.

Frequently Asked Questions About Prior Authorization

1. What does prior authorization mean in healthcare?

Prior authorization means an insurance health plan requires advance review or approval for certain services, treatments, medications, or equipment before they are provided or considered eligible for coverage.

2. Is prior authorization the same as preauthorization?

Yes, the terms are commonly used to describe the same general insurance approval process. Other terms include prior approval and precertification.

3. Who submits a prior authorization request?

In many cases, the healthcare provider or the provider’s administrative team submits the request to the health plan. The exact process depends on the payer and service.

4. How long does prior authorization take?

There is no single standard timeframe for every authorization. Processing time depends on the health plan, type of service, submission method, applicable regulations, and whether additional information is requested.

5. Does prior authorization guarantee payment?

No. Authorization does not necessarily guarantee that the final claim will be paid. Eligibility, benefits, network status, coding, authorization limits, and other requirements can still affect payment.

6. What can happen if prior authorization is denied?

The provider or patient may be able to request reconsideration or appeal the decision, submit additional documentation, or pursue another option allowed under the health plan’s rules.

7. Why is prior authorization important in medical billing?

Prior authorization is an important part of the pre-service administrative workflow because failing to meet a payer’s authorization requirements can create billing and reimbursement complications. Accurate verification, documentation, tracking, and follow-up can help practices manage the process more effectively.

Conclusion

Prior authorization is an important part of healthcare utilization management and medical billing. It allows health plans to review certain services, treatments, medications, and equipment before care is provided, while requiring healthcare practices to manage payer-specific requirements and documentation.

For medical practices, an effective authorization workflow includes checking requirements, submitting complete information, tracking decisions, documenting authorization details, and responding appropriately to denials or requests for additional information. For patients, understanding the process can make it easier to communicate with their provider and health plan.

Because insurance requirements differ by plan and can change, patients and healthcare organizations should confirm current requirements directly with the applicable health plan and consult qualified healthcare professionals for clinical questions.