What Is Prior Authorization?
Prior authorization is the payer's process of pre-approving a planned service, procedure, medication, or admission before it is rendered, based on medical-necessity criteria; without an approved PA where required, claims typically deny under CARC 197.
- Build a payer-specific PA requirements matrix into scheduling.
- For high-PA-volume specialties (cardiology, oncology, orthopedics, behavioral health), invest in dedicated PA staff with payer portal access and clinical-criteria training.
- CMS's 2026-2027 FHIR PA mandate will reduce burden but only for federal-program plans.
Prior Authorization
Also known as: Prior Auth; PA; Precertification; Predetermination
Prior authorization is the payer's process of pre-approving a planned service, procedure, medication, or admission before it is rendered, based on medical-necessity criteria; without an approved PA where required, claims typically deny under CARC 197.
Definition
Prior auth applies most commonly to advanced imaging (MRI, CT, PET), inpatient admissions, surgeries, specialty drugs (oncology, biologics, GLP-1s), behavioral health visits beyond a threshold, and DME. Each payer maintains its own PA list, criteria (often InterQual or MCG-based), required documentation, and submission portal. Turnaround typically ranges from a few hours (urgent) to 14 days (standard). CMS has finalized rules requiring Medicare Advantage and Medicaid Managed Care plans to use FHIR-based PA APIs and shorter turnaround times effective 2026-2027 to address the well-documented administrative burden.
Example
An advanced imaging request (MRI brain, CPT 70551) for a Humana Medicare Advantage patient: provider submits PA via Humana's portal with clinical documentation supporting medical necessity (failed conservative treatment, neurological exam findings, ICD-10 indications). Humana approves the PA, returns an authorization number, and the practice schedules the MRI. The auth number must appear on the 837 claim's REF*G1 segment (Box 23 on CMS-1500) for payment.
Common Misconceptions
PA is not eligibility — even an active member can have a denied PA, and even a denied PA can sometimes be overridden via peer-to-peer review with the payer's medical director. PA approval also does not guarantee payment; the claim still adjudicates against eligibility, coverage, and coding rules.
Practical Application
Build a payer-specific PA requirements matrix into scheduling. For high-PA-volume specialties (cardiology, oncology, orthopedics, behavioral health), invest in dedicated PA staff with payer portal access and clinical-criteria training. CMS's 2026-2027 FHIR PA mandate will reduce burden but only for federal-program plans.
Related Terms
CARC 197
CARC 197 indicates a denial because precertification, authorization, or notification required by the payer was not obtained before the service was rendered, often paired with RARCs identifying the specific authorization missing.
Read definition arrow_forwardEligibility Verification
Eligibility verification is the process of confirming a patient's insurance coverage is active for the date of service, determining the plan benefits (deductible, copay, coinsurance, covered services), and identifying any prior-auth or referral requirements before the encounter.
Read definition arrow_forwardMedicare Advantage
Medicare Advantage (Part C) is private health-plan coverage that replaces Original Medicare Parts A and B, offered by insurers under contract with CMS, typically as HMO or PPO products with provider networks, prior-authorization, and capitated risk-adjusted CMS payments.
Read definition arrow_forwardDenial Rate
Denial Rate is the percentage of claims (or claim dollars) denied by payers on initial adjudication, calculated as Denied Claims ÷ Total Claims Adjudicated × 100, typically tracked monthly and segmented by payer and denial reason category.
Read definition arrow_forwardWhere This Applies on MedPrecision
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