What Is Prior Authorization?
Prior authorization (also called "pre-authorization," "pre-approval," or "pre-certification") is a process where your insurance company must approve certain medical services, procedures, or medications before you receive them. If you proceed without approval, the insurer may refuse to pay - leaving you stuck with the entire bill.
Insurance companies claim prior authorization ensures "medical necessity" and prevents unnecessary treatments. Critics argue it is primarily a cost-control mechanism that delays care and overrides your doctor's medical judgment.
Services That Commonly Require Prior Authorization
- Specialty medications - especially biologics, cancer drugs, and high-cost prescriptions
- Imaging studies - MRIs, CT scans, PET scans
- Surgical procedures - including outpatient surgeries
- Durable medical equipment - wheelchairs, CPAP machines, prosthetics
- Physical therapy and rehabilitation - often after a set number of visits
- Mental health services - inpatient treatment, intensive outpatient programs
- Home health care - nursing visits, therapy at home
- Out-of-network care - seeing specialists outside your plan's network
California has some of the strongest prior authorization protections in the country. Under Health & Safety Code Section 1367.01, health plans must respond to prior authorization requests within 5 business days for routine care, and 72 hours for urgent care. If you have an "imminent and serious threat to health," they must respond within 24 hours.
California also requires health plans to have a clinical reviewer (not just a clerk) make coverage decisions, and denials must include the clinical rationale.
Common Reasons for Prior Authorization Denials
Understanding why insurers deny prior authorization requests helps you craft a stronger appeal. Here are the most common denial reasons and what they really mean:
"Not Medically Necessary"
This is the most common denial reason. The insurer claims the requested service is not required for your condition based on their clinical guidelines. However, these guidelines are often more restrictive than actual medical standards.
Your response: Obtain a letter from your doctor explaining why this treatment is medically necessary for your specific situation, citing peer-reviewed research and clinical guidelines.
"Step Therapy Required"
Also called "fail first," this means the insurer wants you to try cheaper treatments before approving the one your doctor requested. This can delay effective treatment for months.
Your response: Document any previous treatments you have tried, explain why they failed or would be inappropriate, and ask your doctor to request a step therapy exception.
"Experimental or Investigational"
The insurer claims the treatment has not been proven effective. This denial is often used for newer treatments even when they are FDA-approved and recommended by specialists.
Your response: Provide FDA approval documentation, clinical trial results, and letters from specialists explaining the treatment's effectiveness.
"Out of Network"
The provider or facility is not in your plan's network. Even when no in-network provider offers the needed service, insurers may still deny coverage.
Your response: Document that no in-network provider can perform the service, or that network providers have unacceptable wait times.
"Incomplete Information"
The insurer claims they did not receive all necessary documentation. Sometimes this is legitimate; often it is a delay tactic.
Your response: Request a specific list of what is needed, keep copies of everything you submit, and use fax confirmation or certified mail for proof of delivery.
Do not rely on what a customer service representative tells you. Get the denial in writing and review the specific reason codes and clinical rationale. The written denial is what you will appeal.
How to Fight Prior Authorization Denials
When your prior authorization is denied, you have the right to appeal. Here is the process I recommend:
Request the Complete Denial in Writing
Ask for the full denial letter, including the specific policy language, clinical criteria used, and the qualifications of the person who made the decision. You have a legal right to this information.
Talk to Your Doctor's Office
Your doctor's office likely has experience with insurance appeals. Ask them to conduct a peer-to-peer review (where your doctor speaks directly with the insurer's medical director) and to provide a detailed letter of medical necessity.
File an Internal Appeal
Submit a formal appeal in writing within the deadline (usually 60-180 days from denial). Include your doctor's letter, relevant medical records, clinical guidelines supporting the treatment, and a personal statement about how the denial affects you.
Request Expedited Review if Urgent
If waiting for the standard appeal timeline would seriously jeopardize your health, request an expedited (urgent) appeal. Insurers must decide expedited appeals within 72 hours for urgent care, or 24 hours for emergency situations.
File an External Review
If your internal appeal is denied, you can request an external review by an independent third party. The external reviewer's decision is usually binding on the insurance company. See our Appeals Process Guide for details.
Keep a journal of how the denial is affecting you - delayed treatment, worsening symptoms, emotional distress, financial costs of paying out-of-pocket. This documentation can strengthen your appeal and may support a bad faith claim later.
California offers Independent Medical Review (IMR) through the Department of Managed Health Care (DMHC). If your health plan denies, modifies, or delays a service based on medical necessity, you can request an IMR. This process is free, and the decision is binding on your health plan.
For urgent cases, California IMR decisions are made within 3 days. The DMHC reports that patients win IMR cases approximately 60% of the time, so it is worth pursuing.
What the Law Requires
Federal and state laws provide important protections for prior authorization:
ACA Protections (All States)
- Internal appeal right: You must be allowed to appeal any denial
- External review: You have the right to an independent external review
- Timeline requirements: Urgent appeals must be decided within 72 hours
- Notice requirements: Denials must be in writing with specific reasons
- No retaliation: Insurers cannot drop you for filing appeals
CMS Prior Authorization Rules (2024)
The Centers for Medicare & Medicaid Services issued new rules requiring many insurers to:
- Decide routine prior authorization requests within 7 days (down from no limit)
- Decide urgent requests within 72 hours
- Provide specific reasons for denials
- Report prior authorization denial rates publicly
If you have health insurance through your employer, your plan may be governed by ERISA (federal law), which limits your legal remedies. See our ERISA Guide to understand how this affects your rights.
When Prior Authorization Denials Are Bad Faith
Not every denial is wrongful, but prior authorization practices can cross into bad faith when:
- The insurer uses unreasonably restrictive criteria that contradict medical standards
- Denials are made by non-qualified personnel without proper clinical review
- The insurer fails to respond within required timeframes
- Medical necessity determinations ignore your doctor's documentation
- The insurer repeatedly requests the same information to delay decisions
- Denials are issued using template language without case-specific analysis
If you believe your insurer has acted in bad faith regarding prior authorization, document everything and consider consulting with an attorney. Bad faith claims can result in damages beyond just the cost of the denied treatment.
Related Guides
Struggling With a Prior Authorization Denial?
I help patients navigate complex insurance appeals and fight wrongful denials. Whether you need help with your appeal letter or want to explore legal options, I can provide guidance.