Published 12/31/2019
Madeline Kroll

Prior Authorization: Controlling Costs or Hurting Patients?

The term prior authorization (PA) elicits an almost instant sigh from physicians. It has all kinds of associations—patient care delays, administrative burden, peer-to-peer consultations, and more.

What started as a way for insurers to manage the utilization of physician services in the early 1970s has morphed into something entirely different. The time and energy associated with PA have grown exponentially in the past decade, delaying medically necessary care for patients and forcing physicians to devote significant resources to completing requests. The American Association of Orthopaedic Surgeons (AAOS) has been active in advocating for needed reforms to the current system of PA, working to reduce the time it takes to get patients the care they need.

With renewed efforts to reform PA in the House of Representatives, states, and federal agencies, there is increasing focus on changing this burdensome system.

History of utilization management programs

PA is formally known as a utilization management program, born out of earlier iterations known as utilization review (UR). UR was employed in the early 1960s following the formation of Medicare and Medicaid, as more individuals began receiving healthcare services in clinical settings (hospitals, private physician offices) versus in their homes or at their places of employment.

Insurance and how Americans are covered also were changing at that time. During the 1960s, employers began offering healthcare insurance with increasing frequency, giving American patients more access to healthcare services.

As hospitals became busier, they implemented UR, with typically two hospital physicians reviewing cases to look for irregularities in utilization. The processes were difficult, time consuming, and expensive. Electronic medical records and computer systems were not ubiquitous then, so reviewing physicians did not have consistent information regarding whom should be admitted to the hospital, receive tests, or have surgical procedures.

As hospital-run UR was acknowledged to be inconsistent and expensive, both individual plans and Medicare began developing their own UR criteria and processes to control rapidly increasing utilization at sites of care. UR programs have since evolved into what we now know as PA.

PA today

The impact and scope of utilization management programs, specifically PA, have grown significantly. In the 1980s and early 1990s, PA was used primarily to control the costs associated with innovative, expensive therapies. Now the reviews are often required for the most basic of medically necessary services, resulting in potentially dangerous delays. One in four physicians (28 percent) report that PA delays have led to a serious adverse event (such as hospitalization, disability or permanent bodily damage, or other life-threatening event) for a patient in their care. Most physicians (92 percent) also report that PA requests have had significant, negative clinical impacts and delayed needed therapies and treatment within the past year.

Other than being a burdensome administrative process, PA has become an obstacle to physician diagnosis and treatment. As patients await treatment, their conditions may evolve or worsen, ultimately costing the healthcare system more money. Furthermore, PA is becoming an increasingly costly process for individual physicians, practices, and hospitals. According to a 2018 survey by the American Medical Association, PA processes cost physician practices and the healthcare system:

  • one physician hour, 13.1 nursing hours, and 6.1 clerical hours per week—the equivalent of more than two full workdays
  • $82,975 per full-time physician annually
  • $23 billion to $31 billion annually

Whether considering time, money, or administrative burden, PA is an overwhelming consumer of resources for physician practices. But no cost is as significant as the potential danger that PA delays can cause for patients. It is truly the patients who suffer as insurers delay access to medically necessary treatment in an effort to minimize cost.

AAOS advocacy on prior authorization

AAOS has closely followed the impact of PA on physicians and patients over the past decade. With 88 percent of physicians reporting that the burden of PA has increased substantially over the past five years, something needs to be done to reform this dysfunctional system.

AAOS has joined with 12 other medical specialty societies to form the Regulatory Relief Coalition, which aims to target issues that create undue burden on physician practices. The coalition has focused heavily on PA reform with this Congress, working with legislators in the House of Representatives to draft and introduce H.R. 3107, Improving Seniors’ Timely Access to Care Act. The bill focuses specifically on reforming PA processes under Medicare Advantage (MA) plans by:

  • establishing an electronic PA process
  • minimizing the use of PA for routinely approved services
  • ensuring that PA requests are reviewed by qualified medical personnel
  • requiring regular reports from MA organizations on their use of PA and rates of delay and denial
  • prohibiting the use of PA for medically necessary services performed during preapproved surgeries or other invasive procedures

This legislation is unique, as it was a collaborative effort based on a consensus statement signed by numerous healthcare stakeholders, including America’s Health Insurance Plans and the BlueCross BlueShield Association. It also has bipartisan support in the House of Representatives, with more than 100 cosponsors, and the potential to see committee action early this year.

Furthermore, AAOS is supporting efforts to advance meaningful PA reforms to state-regulated plans across the country. Onerous PA requirements complicate medical decision-making and delay access to care, and state orthopaedic societies are leading the charge against the administrative burdens. In particular, AAOS recently approved advocacy grants to support the Pennsylvania Orthopaedic Society and Minnesota Orthopaedic Society in their respective efforts to pass legislation aimed at standardizing and streamlining the PA process. AAOS also has written to the Centers for Medicare & Medicaid Services with concern about proposed and recently finalized PA processes for certain covered outpatient procedures.

With the help of its members, the Association can continue its fight for patients who are constantly impacted by PA delays. Show support for H.R. 3107 by visiting the AAOS Advocacy Action Center website at www.aaos.org/advocacyactioncenter and sending a letter to your congressional representative on this important issue.

Madeline Kroll is the manager of government relations at AAOS.


  1. Behrendsen J: A Brief History of How We Got to Electronic Prior Authorization. Available at: https://www.covermymeds.com/main/insights/articles/a-brief-history-of-how-we-got-to-electronic-prior-authorization/. Accessed November 12, 2019.
  2. Bendix J, Krivich RS, Martin KL, et al: Top 10 Challenges Facing Physicians in 2018. Available at: http://www.medicaleconomics.com/editors-choice-me/top-10-challenges-facing-physicians-2018/page/0/3. Accessed November 12, 2019.
  3. Robeznieks A: 1 in 4 Doctors Say Prior Authorization Has Led to a Serious Adverse Event. Available at: https://www.ama-assn.org/practice-management/sustainability/1-4-doctors-say-prior-authorization-has-led-serious-adverse. Accessed November 12, 2019.
  4. Center for Health Innovation & Implementation Science: The Prior Authorization Burden in Healthcare. Available at: http://www.hii.iu.edu/the-prior-authorization-burden-in-healthcare/. Accessed November 12, 2019.
  5. American Medical Association: 2018 AMA Study on Prior Authorization (PA) Survey. Available at: https://www.ama-assn.org/system/files/2019-02/prior-auth-2018.pdf. Accessed November 12, 2019.
  6. AAOS Comment Letter. Medicare Program: Proposed Changes to Hospital Outpatient Prospective Payment and Ambulatory Surgical Center Payment Systems and Quality Reporting Programs; Price Transparency of Hospital Standard Charges; Proposed Revisions of Organ Procurement Organizations Conditions of Coverage; Proposed Prior Authorization Process and Requirements for Certain Covered Outpatient Department Services; Potential Changes to the Laboratory Date of Service Policy; Proposed Changes to Grandfathered Children’s Hospitals-Within-Hospitals Proposed Rule. September 27, 2019. Available at https://bit.ly/30psPut. Accessed December 6, 2019.