Prior authorization (PA) is a payer requirement that certain services, procedures, medications, or referrals be approved before they are delivered. Without an approved authorization, even a medically necessary and correctly coded service may be denied. PA denials are among the most common and most frustrating denial types because they represent care that was actually provided to the patient.
Managing prior authorization effectively requires knowing which services require it, obtaining approval before care is delivered, tracking authorization numbers and validity periods, and documenting the authorization on the claim. Our prior authorization denial management service handles the complete PA workflow including appeals.
Which Services Typically Require Prior Authorization
- Specialty referrals requiring a PCP or plan referral, managed through our prior authorization services.
- Elective surgical procedures including most orthopedic, cardiac, and bariatric surgeries.
- Advanced imaging such as MRI, CT scan, and PET scan.
- Durable medical equipment above a certain cost threshold, billed using HCPCS codes per CMS guidelines.
- Non-emergency inpatient hospital admissions, see our hospital billing services.
- Injectable and infused drugs covered under the medical benefit.
- Post-acute care including skilled nursing, home health, and inpatient rehabilitation.
The Prior Authorization Process
Authorization requests are submitted to the payer before the service is delivered. The payer reviews the clinical information submitted, diagnosis, requested procedure code, provider credentials, and supporting notes that establish medical necessity. Approved authorizations include an authorization number, approved procedure codes, approved dates of service, and the approved provider. All of this must be documented and included on the claim. Our prior authorization services manage this workflow end-to-end.
Common Prior Authorization Denial Reasons
- Service provided before authorization was obtained or authorization expired.
- Service not covered under the patient plan regardless of medical necessity.
- Medical necessity criteria not met based on the clinical information submitted.
- Authorization obtained for the wrong procedure code or wrong treating provider, verify provider credentialing matches the authorization.
- Authorization number not included on the submitted claim.
- Service delivered by an out-of-network provider when in-network authorization was issued.
Appealing a Prior Authorization Denial
Most PA denials can be appealed if the clinical basis for medical necessity is solid. The appeal should include a letter of medical necessity from the treating physician, clinical guidelines supporting the service, and the relevant payer clinical policy. Peer-to-peer review, where the treating physician speaks directly with the payer medical director, is one of the most effective tools for overturning PA denials. Our insurance denial appeals team manages the complete appeal process including peer-to-peer coordination.
Key Takeaways
- Authorization must be obtained before the service is delivered; retroactive authorization requests are rarely approved.
- The authorization number must appear on the claim.
- Keep a tracking log of all pending and approved authorizations with expiration dates.
- Peer-to-peer review is the most effective tool for overturning medically necessary PA denials.
- Authorization requirements vary by payer, plan, and procedure, verify for every patient at every visit.
Frequently Asked Questions
Can you bill a patient if prior authorization was denied?
If the patient was informed in advance and signed an Advance Beneficiary Notice (for Medicare) or equivalent waiver, the patient may be billed. Otherwise, billing the patient for a service denied due to a practice authorization failure is generally not permitted under payer contracts.
Does Medicare require prior authorization?
Medicare Fee-for-Service does not require prior authorization for most services, though CMS has introduced requirements for some high-cost procedures. Medicare Advantage plans do have prior authorization requirements that vary by plan. Our Medicare billing services clarify PA requirements for both fee-for-service and Medicare Advantage.
What is the difference between prior authorization and a referral?
A referral is a clinical recommendation from one provider directing a patient to another. A prior authorization is a payer approval for a specific service to be covered. Some plans require both.