Report Shows Burden of Insurance Prior Authorizations

WASHINGTON—A new study by KFF analyzes the issues and scrutiny surrounding the use of prior authorizations by insurance companies. 

Health insurers use prior authorization to reduce the use of low-value or unnecessary care. However, many individuals report this practice may result in delays or denials in receiving necessary care, as well as administrative burdens for patients and providers.

“In 2024, the Centers for Medicare and Medicaid Services (CMS) published a final rule (2024 regulation) aimed at streamlining and automating the prior authorization process for almost all insurance programs it oversees: Medicare Advantage, Medicaid and CHIP fee-for-service and managed care plans and Affordable Care Act (ACA) Marketplaces on the federally facilitated exchanges,” KFF reported. “As part of these requirements, every year, payers in these programs are now required to publicly post on their websites specified prior authorization metrics, including approval and denial rates and response times, aggregated for all medical items and services (excluding prescription drugs) for the previous calendar year.”

The authors used that data to look at denial rates and re-requests. Key takeaways from the report were:

• Medicare Advantage insurers denied 12% of standard prior authorization requests, Medicaid managed care insurers denied 14% and ACA Marketplace insurers denied 18%. Denial rates for expedited requests were slightly lower. However, the aggregated approval statistics do not allow for further analysis into which services are being denied.
• Prior authorization denials are rarely appealed, but when they are, a considerable share are overturned. Sixty-seven percent of prior authorization denials were overturned upon appeal in Medicare Advantage, 47% were overturned upon appeal in Medicaid managed care and 43% were overturned in the ACA federally facilitated Marketplace.
• Median response times in all markets were about one day for standard prior authorization requests, about half a day for expedited prior authorization requests for Medicare Advantage and approximately one day for Medicaid managed care and the ACA Marketplace. Insurers are not required to report response time ranges or differences by service category.  
• Despite the regulatory intent to make insurer prior authorization practices more transparent, difficulty locating and interpreting metrics on insurer websites and gaps in how (e.g., a standardized template that insurers are required to use) and what metrics (e.g., denominators and breakouts by service category) must be reported limit the usability of this information directly by the public.

For more information or to access the report, click here.