Imagine this: A provider orders an MRI for a patient. The symptoms match the criteria. The clinical notes are clear. Everything seems medically necessary. The claim is submitted — and then it returns with one frustrating message: “Prior authorization required.” Situations like this are exactly why many people search for what is prior authorization in medical billing, because understanding it is the only way to avoid these delays and denials.
Suddenly, the patient can’t get the service, the provider can’t move forward with treatment, and your staff now has hours of extra work chasing paperwork and approvals.
Sound familiar?
Many patients, providers, and billing teams run into delays, denials, or unexpected costs simply because prior authorization wasn’t understood, completed correctly, or submitted on time. And because every insurance plan handles it differently, the process can feel confusing even overwhelming.
This guide breaks it all down in simple, practical terms. You’ll learn:
- What prior authorization actually is
- Why insurance companies use it
- How the process works from start to finish
- What causes denials and how to avoid them
- Tips to streamline approvals and protect reimbursement
Let’s dive in.
What Prior Authorization in Medical Billing Really Means
Prior authorization is essentially pre-approval from a health insurance company. Before a provider can perform certain procedures, tests, or prescribe specific medications, the insurer must confirm that the service is medically necessary and covered under the patient’s plan.
You can think of it as a checkpoint:
The provider wants to deliver care.
The insurer needs to verify necessity and cost-effectiveness.
The service can only move forward once the insurer signs off.
Without that approval, the claim may be partially covered—or not covered at all.
Why Insurance Companies Require Prior Authorization
While prior authorization can be frustrating, insurers use it for several reasons:
Cost Control
Advanced imaging, surgeries, and specialty drugs are expensive. Authorizations help avoid unnecessary or duplicate services.
Medical Necessity Review
Insurance companies want documentation showing the service is appropriate based on symptoms and clinical guidelines.
Preventing Overuse
It ensures procedures are used only when needed—not as routine defaults.
Common Services That Typically Require Prior Authorization
Not every service needs prior authorization, but these usually do:
MRI, CT scans, and PET scans
Non-emergency surgeries (planned procedures)
Specialty or biologic medications
Durable medical equipment (wheelchairs, CPAP machines, braces)
Hospital admissions (especially elective ones)
Some behavioral health or therapy services
Every insurer has its own list, so requirements vary widely.
How Prior Authorization Works Behind the Scenes
Step-by-Step Breakdown of the Process
Although each insurance company has its quirks, most follow this workflow:
1. Provider Determines the Need for a Service
Based on symptoms, medical history, test results, and clinical guidelines.
2. The Prior Authorization Request Is Submitted
Typically by the provider, medical assistant, or billing team.
The request includes:
Diagnosis codes
CPT/HCPCS procedure codes
Clinical notes
Imaging or lab results
Previous treatments tried
3. Insurance Reviews the Documentation
A medical reviewer checks:
Whether it meets criteria
Whether alternatives were attempted
Whether the provider or facility is in-network
4. Approval, Denial, or Request for More Info
The insurer sends one of three outcomes:
Approved — service can proceed
Denied — not medically necessary or not covered
Pending — more documentation required
5. Service Performed Only After Approval
Performing it beforehand risks the patient paying out of pocket.
Who Is Responsible for Submitting Prior Authorization?
Most of the time, it’s the provider or their administrative staff.
However:
Patients may need to provide medical history or personal details.
Some insurers require patients to initiate or confirm requests.
Specialists often rely on referring providers to start the process.
Regardless, the responsibility usually falls on the provider side.
How Long Does Prior Authorization Take?
The timeline varies:
Standard requests: 3–10 business days
Urgent requests: 24–72 hours
Medications: often same-day or within 48 hours
Factors that slow it down include:
Missing documents
Incorrect codes
High volume of requests
Insurer-specific backlog
Prior Authorization Outcomes: Approval, Denial, or Pending
What Happens When Authorization Is Approved
Once approved:
The provider receives an authorization number.
The authorization is valid only for a set period (often 30–60 days).
Coverage is guaranteed as long as the service matches what was requested.
Changes in procedure, location, or diagnosis may require a new authorization.
Why Prior Authorization Gets Denied
Denials usually happen for predictable reasons:
1. Lack of Medical Necessity
The insurer believes the service doesn’t meet their clinical criteria.
2. Missing Documentation
The request lacked notes, lab results, or justification.
3. Out-of-Network Providers
Some plans won’t approve services outside their network.
4. Incorrect CPT or Diagnosis Codes
Even a minor coding mismatch can lead to rejection.
How to Appeal a Denial Successfully
When a denial happens, don’t panic—appeals often succeed.
Steps include:
Review the denial letter
Understand the exact reason for rejection.Gather supporting clinical evidence
Updated notes, imaging, and medical history.Write a detailed appeal letter
Explain why the service is necessary.Submit everything within the deadline
Each insurer has strict appeal timelines.
Some insurers allow peer-to-peer reviews, letting the provider speak directly with a medical reviewer.
Challenges and Controversies Surrounding Prior Authorization
How It Impacts Patient Care
While it’s meant to control costs, prior authorization can:
Delay treatment
Cause patients to abandon care
Lead to worsening symptoms
Create confusion about coverage
In urgent but non-emergency situations, delays can be significant.
Burden on Providers and Billing Teams
Providers face:
Extra paperwork
Lost productivity
Higher chances of errors
Frustration when denials feel arbitrary
Billing teams often spend hours per week submitting, tracking, and appealing authorizations.
Efforts to Reform the Prior Authorization Process
Organizations like AMA, CMS, and major insurers are trying to improve the system by:
Introducing electronic prior authorization (ePA)
Setting deadlines for insurer response times
Reducing requirements for providers with good track records
Streamlining medication authorizations
Progress is being made, but inconsistencies still exist between insurers.
Tips to Avoid Prior Authorization Delays & Denials
Verify Requirements Before Ordering Services
Always check:
Insurance portals
Payer guidelines
Prior authorization lists
This prevents unnecessary surprises.
Provide Clear and Complete Documentation
Include:
Diagnosis codes
Imaging or lab results
Clinical notes
Treatment history
Insurers approve faster when documentation is thorough.
Use Electronic Prior Authorization Tools
ePA integrations through EHRs help:
Reduce errors
Submit requests instantly
Receive faster responses
Track approvals automatically
Train Staff and Standardize Internal Procedures
Create:
Checklists
Step-by-step workflows
Templates for documentation
A tracking log for requests
Trained staff = fewer denials and faster approvals.
FAQs About Prior Authorization
What is prior authorization in simple words?
It’s when your insurance requires approval before you receive certain treatments, tests, or medications.
Why would you need a prior authorization?
To ensure the service is necessary, appropriate, and covered under your plan.
Who is responsible for getting prior authorization?
Usually the provider or their staff, but sometimes patients must supply information.
What does preauthorization mean?
It’s another term for prior authorization both mean pre-approval from insurance.
Does emergency care need prior authorization?
No. Emergency services are covered without prior authorization.
Conclusion:
Prior authorization may be frustrating, but understanding how it works can prevent denied claims, unexpected bills, and treatment delays.
Here’s what to remember:
Prior authorization is pre-approval required for certain services.
Insurers use it to manage costs and confirm medical necessity.
The process involves documentation, review, and approval before care.
Delays and denials usually stem from missing information or coding errors.
Proactive verification and strong internal workflows keep the process smooth.
Before scheduling your next procedure or prescribing specialty medication, verify whether prior authorization is required one quick check can prevent major delays and visit AAAMB for more information.