Prior Authorization

Key facts

Used by

Commercial plans, Medicare Advantage, Part D plans, Medicaid and CHIP

Main federal rule

CMS Interoperability and Prior Authorization Final Rule (CMS-0057-F), 2024

Decision deadlines from 2026

72 hours expedited, 7 calendar days standard (MA, Medicaid, CHIP)

Scope of that rule

Items and services; drugs are excluded

What is prior authorization?

Prior authorization is a utilization management tool. Before a covered item is provided, the clinician or pharmacy submits clinical information showing that the patient meets plan criteria, and the plan approves, denies or asks for more information. Health plans say it prevents unnecessary or unsafe care; physician groups say it delays treatment and adds administrative cost.

Requirements are common for imaging, surgery, specialty drugs, durable medical equipment and post-acute care. Original Medicare uses prior authorization only for limited sets of services, such as certain durable medical equipment and certain hospital outpatient procedures, and CMS began testing broader prior review in selected states in 2026 through the WISeR Model.

How prior authorization works

A typical request moves through these steps. For drugs, requests often go through electronic prior authorization (ePA) built into prescribing systems.

• The provider checks whether the plan requires authorization for the service or drug.
• The provider submits the request with diagnosis codes, clinical notes and supporting evidence, by portal, fax, phone or electronic transaction.
• The plan reviews it against its coverage criteria, often with clinical staff or physician reviewers.
• If the request is denied, the provider can request a peer-to-peer review or file an appeal.

Recent federal prior authorization rules

The CMS Interoperability and Prior Authorization Final Rule (CMS-0057-F), released in January 2024, applies to Medicare Advantage organizations, state Medicaid and CHIP programs and their managed care plans, and qualified health plan issuers on federally facilitated exchanges. Starting in 2026 it requires specific reasons for denials and public reporting of prior authorization metrics, and most of these payers must meet 72-hour expedited and 7-day standard decision timeframes. Prior authorization application programming interfaces (APIs) are required starting in 2027.

The rule does not cover drugs. Separately, a CMS rule effective in 2024 limits how Medicare Advantage plans use prior authorization, requiring them to follow Original Medicare coverage criteria and keep approvals valid for a course of treatment.

Why prior authorization matters

For drug and device makers, prior authorization criteria often decide real-world uptake more than FDA labeling does: a therapy restricted to patients who failed two earlier treatments reaches a much smaller population. Market access teams track criteria plan by plan, hub services help practices submit requests, and field reimbursement staff focus on offices with high denial rates. For providers and investors, authorization burden affects staffing costs, time to treatment and revenue cycle performance.