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Prior authorization is preapproval for medical services or prescription drugs that health insurance plans often require before they will cover the cost.
How often and under what circumstances prior authorization is required depends on the health plan. While Original Medicare has a few preapproval requirements, private Medicare Advantage plans and Part D prescription drug plans use this procedure more often.
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A provider or supplier typically must complete and submit forms to a health plan to verify the need for a specific drug, piece of equipment or service. Plans put these requirements in place to avoid paying for unnecessary services or expensive procedures and drugs when a lower-cost version that works just as well may be available. Patients also will know ahead of time if their plan will approve something that’s not always covered rather than having to appeal a denial afterward.
Prior authorization requirements vary by type of plan and insurer.
What is prior authorization in Original Medicare?
Original Medicare rarely requires prior authorization. The government program generally covers medically necessary services without requiring you or your doctor to submit special forms in advance or even a referral to see a specialist.
In the few instances when authorization is needed, a Medicare administrative contractor (MAC) reviews the request and makes a decision.
Original Medicare prior authorization
Original Medicare requires prior authorization only for three types of services. In 2022, most of the requests were approved in an average of about four days.
Outpatient services, primarily dermatology
• Percentage approved: 78.6 percent
• Average time: 4.5 days
• Denials overturned on appeal: 0.3 percent
Durable medical equipment
• Percentage approved: 66.9 percent
• Average time: 4.7 days
• Denials overturned on appeal: 0.3 percent
Nonemergency ambulance services
• Percentage approved: 63.2 percent
• Average time: 4.1 days
• Denials overturned on appeal: 3.9 percent
What is prior authorization in Medicare Advantage?
Prior authorization requirements are much more common in Medicare Advantage plans. A study from health researchers KFF, formerly the Kaiser Family Foundation, found that almost all Medicare Advantage enrollees in 2023 — 99 percent — are in plans that require prior authorization for some services.
Some of the most common services requiring prior authorization for Medicare Advantage plans include:
- Part B drugs: Medications generally taken in a doctor’s office, where 99 percent of enrollees are in Advantage plans that require preapproval
- Durable medical equipment: 99 percent
- Skilled nursing facility stays: 99 percent
- Sudden, short-term inpatient hospital stays, called acute care: 98 percent
- Psychiatric inpatient hospital stays: 93 percent
- Diagnostic lab work and tests: 92 percent
- Home health services: 91 percent