What Is Prior Authorization?
Prior authorization (PA), sometimes called pre-authorization or pre-approval, is a requirement from a Medicare Advantage plan or Part D drug plan that your doctor obtain approval from the plan before performing a specific medical service, procedure, or prescribing a specific medication. Without that approval in place, the plan may deny the claim and you could be responsible for the full cost of the service.
Prior authorization is distinct from a referral. A referral is from your primary care physician directing you to a specialist. Prior authorization is from the plan, approving a specific service or drug. A specialist visit may require both a referral from your PCP and prior authorization from your plan for the specific procedure the specialist recommends. They are separate requirements, and both must be satisfied for the service to be covered.
Original Medicare vs. Medicare Advantage: A Stark Difference
Original Medicare (Parts A and B) rarely uses prior authorization. There are a small number of services that require coverage decisions in advance, such as certain durable medical equipment, but for the vast majority of medical services, Original Medicare does not require your doctor to seek plan approval before treating you. If a service is medically necessary and Medicare-covered, you receive it and Medicare pays its share.
Medicare Advantage plans, by contrast, use prior authorization extensively. PA requirements are one of the primary ways Medicare Advantage plans manage costs and utilization. Common services that frequently require PA on Medicare Advantage plans include MRI and CT scans, inpatient hospital admissions (particularly for planned surgeries), certain outpatient procedures, post-acute care (skilled nursing facility stays, inpatient rehabilitation), home health services, specialty drugs, and high-cost durable medical equipment. Some plans have hundreds of codes subject to PA requirements.
How the Prior Authorization Process Works
The process typically works as follows: your physician recommends a service, imaging study, procedure, or medication. The physician's office submits a PA request to your plan, including supporting clinical documentation (medical records, test results, notes supporting medical necessity). The plan's clinical reviewers evaluate the request against coverage criteria. The plan then issues an approval, denial, or request for additional information.
Federal rules set timelines for PA decisions:
- Standard (non-urgent) requests: Plans have up to 14 days to respond, with a possible 14-day extension.
- Expedited (urgent) requests: Plans must respond within 72 hours (3 business days).
- Concurrent reviews (ongoing hospitalization): Plans must respond within 24 hours for expedited requests during an inpatient stay.
If approved, the authorization typically covers a defined period or number of treatments. If the authorization expires and additional treatments are needed, a new PA request must be submitted. If denied, you have the right to appeal.
CMS Tightening PA Rules in 2024 and 2025
CMS has been addressing concerns about improper prior authorization denials and delays by Medicare Advantage plans. New rules effective in 2024 and 2025 require Medicare Advantage plans to use CMS coverage criteria (rather than their own internal criteria) as the minimum standard for PA decisions. This means plans cannot deny a PA for a service that Original Medicare would cover. Plans must also make PA decisions based on their medical criteria publicly available. These reforms are ongoing, and beneficiaries who feel their care is being improperly delayed or denied through PA should document their cases and appeal.
How to Handle a Prior Authorization Denial
- Step 1 (Immediate): Ask your doctor's office for a copy of the denial and the reason code. Denials must include the specific reason and the plan's coverage criteria used in making the decision.
- Step 2 (Redetermination): Your first appeal is a plan redetermination. Submit a written appeal with additional clinical documentation from your physician supporting medical necessity. This must be filed within 60 days of the denial notice.
- Step 3 (Reconsideration): If the plan upholds the denial, you can request reconsideration by an Independent Review Entity (IRE) not affiliated with the plan.
- Step 4 (ALJ Hearing): If the amount at issue meets the threshold, you can request a hearing before an Administrative Law Judge.
- Escalate urgently if your health is at risk: You can request an expedited appeal if standard timing would seriously jeopardize your health. Expedited appeals have 72-hour response requirements.
Choosing Plans With Transparent PA Rules
Before enrolling in a Medicare Advantage plan, it is worth asking about the plan's PA requirements for services you are likely to need. Some plans have broader PA requirements than others, and some have better track records on approval rates. Your Medicare agent can help you compare plans based not just on premium and MOOP but also on the practical experience of using the plan for your health needs.
Call Insurance Innovators LLC at (530) 395-5309 if you are dealing with a PA denial or if you want to understand how different Medicare Advantage plans handle prior authorization for your specific health needs.