Prior authorization, or preauthorization,[1] is a utilization management process used by some health insurance companies in the United States to determine if they will cover a prescribed procedure, service, or medication.
[2][3] There is controversy surrounding prior authorisations and public opinion does vary about why insurance providers require it.
A failed authorisation may result in a requested service being denied or an insurance company requiring the patient to go through a separate process known as "Step therapy".
Providers should also track the status of prior authorizations to ensure that they are approved in a timely manner so that payments are not delayed[9] Insurers have stated that the purpose of prior authorization checks is to provide cost savings to consumers by preventing unnecessary procedures as well as the prescribing of expensive brand name drugs when an appropriate generic is available.
[14] A 2012 study in the Journal of the American Board of Family Medicine found that the annual cost per physician to conduct prior authorizations was between $2,161 and $3,430.
[6] In February 2012, the Maryland Health Care Commission presented the state legislature a plan of a standardized, electronic filing system for prior authorization requests.
[8] As of May 2013, the National Council for Prescription Drug Programs had adopted a standardized process for exchanging electronic prior authorizations.