Prior authorization is a double-edged sword. As a utilization management (UM) process, it helps health plans cut costs and improve safety because organizations can decide in advance which treatments they will cover. For physicians, however, it is costly and time-consuming, often requiring them to spend hours working with insurance companies rather than taking care of patients.

In recent months, Congress and the Trump administration have made changes intended to improve the prior authorization process, in conjunction with the Centers for Medicare & Medicaid Services (CMS). 

Here are 3 key things to know:

  1. Prior authorization is a burden

Prior authorization is often cited as the most costly, time-consuming thing providers are required to do. According to CMS experts, its a primary driver of physician burnout. 

Part of the problem is that the scope has expanded dramatically. Originally, it was created by insurers to make sure the newest treatments — often the most expensive — were used only when necessary. Today it applies to far more procedures, medications and treatments. Sometimes prior auth is employed for low-cost or generic drugs, which is far outside its original intent. 

  1. Automation is the future of prior authorization

While the American Medical Association (AMA) believes the volume of treatments that require prior authorization should be greatly reduced, it also supports a standardized process to minimize the burden placed on both physicians and insurers. Automation is key to that process. In recent years, the AMA has doubled down on electronic prior authorization (ePA) technology, which integrates with current electronic prescribing workflows, to improve the drug prior authorization process.

  1. Medicare is prioritizing patient choice

In 2019, CMS finalized policies intended to increase patient choice by making Medicare payment available for more services in more outpatient settings. 

The new policies: 

    • Eliminate payment differences between certain sites so patients can get quality care at lower costs
    • Reduce costs paid at clinics when accessing care
    • Extend coverage for certain procedures in outpatient settings (hip replacements, spinal surgery, anesthesia)
    • Reduce supervision requirements for some procedures to decrease the burden on rural hospitals
    • Require prior auth for services that are primarily cosmetic (Botox injections, rhinoplasty, etc.)
    • Update payment rates for outpatient services 


To learn more about the changes to prior authorization in outpatient care, click here.


At Shearwater, we’re happy to answer questions about prior auth and utilization management as a whole. 

We offer the following services:

  • Utilization Management
  • Denial management
  • Medical editing
  • Clinical data reconciliation and documentation
  • Medical necessity review
  • Provider outreach

Contact us to learn more.