What to Expect for Prior Authorization in 2026

 Prior authorization requirements cost the U.S. healthcare system an estimated $35 billion each year, and their overuse has triggered a backlash, stirring some policymakers into action.

Whether these changes actually fix prior authorization for patients and clinicians is an open question. Meanwhile, stakeholders are weighing the risks versus benefits of artificial intelligence (AI) to streamline processes, according to a recent Health Affairs Insider report.

Prior authorization is a form of utilization management designed to gauge the appropriateness of certain medical and pharmacy services -- think elective surgeries, imaging tests, brand-name drugs, and biologics. However, the time and expense for physicians chasing approvals and the potential harm to patients leave many wondering whether these policies serve their intended purpose.

On the clinician side, practices complete about 39 prior authorization requests per physician per week, according to a 2024 American Medical Association survey. Ninety-three percent of physicians experienced delays in care while waiting for prior authorization approvals, 82% said prior authorization has sometimes led patients to abandon treatment, and 29% blamed prior authorization for delays that led to serious adverse events including hospitalizations and deaths.

Moreover, a 2023 KFF survey showed that about 16% of U.S. adults reported problems with prior authorization in the prior year.

A study of Medicare Part D patients in plans that use prior authorization or step therapy for certain medications used to treat atrial fibrillation were both less likely to receive and to take their medications consistently. Notably, patients enrolled in the more restrictive plans had a higher risk for death, stroke, or mini-stroke versus patients in plans that did not require prior authorization.

Another study found that each prior authorization transaction costs practices between $20 and $30. At the same time, about 90% of requests to private payers are approved, suggesting that "spending is not producing meaningful value," noted the Insider report. Payers spend between $40 and $50 per request but maintain that there is "an overarching financial benefit to doing so," the report said.

On the payer side, insurers argue that prior authorization is critical for cost containment. A 2023 report commissioned by the Blue Cross Blue Shield Association found that if health plans are allowed to continue leveraging prior authorization cost controls, the health system could save up to $308 billion between 2024 and 2033. However, the Insider report stressed that the evidence for major cost savings stems from "narrow use cases in the public payer space" -- for example, pilot programs that use the requirements to rein in nonemergent medical transportation.

When researchers asked employees of private insurers whether prior authorization is needed, 94% said yes, according to Health Affairs Scholar.

At the federal level, the CMS Interoperability and Prior Authorization final rule of 2024 includes a number of provisions seeking to change how payers implement these tools and to require more transparency from them. For example, patients must be able to learn whether prior authorization is required for a service, what documentation is needed, and the status of their request. The rule also mandates that urgent requests be decided in 72 hours and non-urgent requests in 7 calendar days.

Members of Congress have introduced a number of bills aimed at reforming prior authorization, which range from prohibiting prior authorization outright to requiring an audit of prior authorization requirements in Medicare Advantage, in which the mechanism is widely used. However, none of these bills have been passed into law.

States, in comparison, have had more success. Roughly 10 states, including Arkansas, Wyoming, and West Virginia, have enacted exemptions to prior authorization for clinicians who maintain high approval rates over a certain period -- a practice known as "gold carding."

Other states have passed bills tightening response times. In Virginia, payers must respond to urgent requests within 24 hours and to non-urgent requests in 2 business days. More than half of states have passed laws aimed at promoting the use of electronic prior authorization, which can reduce both completion times and denial rates.

Despite widespread efforts at the state and federal level to curb the misuse of prior authorization, CMS recently introduced a pilot initiative to test these same tools in traditional Medicare.

The Health Affairs Insider report also suggested that AI creates new opportunities and invites new risks. Generative AI can help physicians draft appeals more quickly, but insurers' efforts to weave AI into their processes has already triggered lawsuits and claims of improper use.

https://www.medpagetoday.com/practicemanagement/reimbursement/120526