When patients go to the pharmacy to fill a prescription, they are often told that their insurance company won’t pay for the medication unless a physician obtains approval. Patients may even wait days, weeks, or months for a necessary test or medical procedure to be scheduled because physicians must obtain similar authorization from an insurer. This tactic, used by insurance companies to control costs, is called prior authorization.
Major US health insurance companies are posting record profits while receiving most of their revenues from the government. But they’re still jacking up prices by double digits, leaving nearly half of the country underinsured or uninsured.
One way to raise profits is by rejecting claims. Cigna, one of the country’s largest insurers, has built a system that allows its doctors to instantly reject a claim on medical grounds without opening the patient file, leaving people with unexpected bills, according to corporate documents and interviews with former Cigna officials.
Over two months last year, Cigna doctors denied over 300,000 requests for payments using this method, spending an average of 1.2 seconds on each case, the documents show. The company has reported it covers or administers health care plans for 18 million people.
Before health insurers reject claims for medical reasons, company doctors must review them according to insurance laws and regulations in many states. Regions said that medical directors are expected to examine patient records, review coverage policies, and use their expertise to decide whether to approve or deny claims. This process helps avoid unfair denials.
Then there are prior approvals.
Prior authorization, or pre-certification, was designed decades ago to prevent doctors from ordering expensive tests or procedures that are not indicated or needed to deliver cost-effective care.
Few things about the American healthcare system infuriate patients and doctors more than prior authorization, a common tool whose use by insurers has exploded in recent years. Doctors have long asserted that prior authorization — the need to get permission from the patient’s insurer before treatment — causes delays that can hurt patient care. In an American Medical Association survey conducted in December 2021, one-third of physicians reported that such delays have caused at least one of their patients to experience a severe problem, such as hospitalization, the development of a birth defect, disability, and even death. In that same survey, more than 80 percent of doctors said patients sometimes abandon their recommended treatment because of prior authorization hassles. Just over half of the physicians who treat adult patients in the workforce said prior authorization has interfered with patients’ ability to do their jobs.
The nationwide poll, conducted by Lake Research Partners and the Tarrance Group found that:
- 75% of health care consumers are concerned that prior authorization can delay or block patients’ access to treatment.
- 71% are worried that prior authorization will increase patient costs.
- 74% expressed concern that prior authorization can require patients to substitute less effective or ineffective treatments for what their doctors prescribed.
- 72% said they are concerned that such policies can override doctors’ recommendations by allowing insurance companies to control treatment decisions.
The federal government proposed several changes that would force health plans, including Medicaid, Medicare Advantage, and national Affordable Care Act marketplace plans, to speed up prior authorization decisions and provide more information about the reasons for denials. Starting in 2026, it would require plans to respond to a standard last authorization request within seven days, typically, instead of the current 14, and within 72 hours for urgent requests. The proposed rule was scheduled to be open for public comment through March 13.
Some states have passed laws governing the process. In Oregon, for example, health insurers must respond to nonemergency prior authorization requests within two business days. In Michigan, insurers must report annual last authorization data, including the number of requests denied and appeals received. Other states have adopted or are considering similar legislation, while in many places, insurers regularly take four to six weeks for non-urgent appeals.
When you have a medical problem, the last thing you want to hear is that a treatment or test is delayed because of “insurance authorization.” Still, insurers are in business to make lots of money, meaning patients suffer.