In theory, prior authorization (PA) exists to ensure that healthcare services are medically necessary and cost-effective. But in practice, it has become a bureaucratic roadblock causing treatment delays, administrative overload, and provider burnout. Despite increasing pressure from physicians, hospitals, patient advocacy groups, and even bipartisan lawmakers, the health insurance industry failing on prior authorization reform continues to be a major concern, as they consistently fall short on meaningful prior authorization reform.
This blog explores how and why the insurance industry is failing in its promises to fix the prior authorization system—and what the consequences mean for providers and patients alike.
The Promise of Reform: A Road Not Taken
In 2018, major health insurers pledged to improve prior authorization processes by streamlining approvals and reducing unnecessary administrative burden. These commitments included:
- Increasing transparency around PA requirements.
- Expanding electronic prior authorization (ePA) capabilities.
- Implementing gold-carding programs for providers with high approval rates.
- Reducing PA requirements for routinely approved services.
Fast forward to today, and not much has changed. In fact, prior authorizations are more prevalent and more disruptive than ever.
According to a 2024 report by the American Medical Association (AMA), 94% of physicians say prior authorization leads to care delays, and 33% report that PAs have resulted in serious adverse events for patients.
Key Failures by the Health Insurance Industry
1. Overuse of Prior Authorization
While PA was originally intended for high-cost or high-risk procedures, insurers have increasingly applied it to routine, low-risk treatments such as generic prescriptions, imaging, and physical therapy.
For example, a UnitedHealthcare policy requiring prior auth for nearly 50 types of endoscopic procedures faced massive backlash in 2023. Though the policy was eventually delayed, the message was clear: insurers are expanding PA use—not scaling it back.
This overreach contributes to care delays and administrative bloat without clear evidence of cost savings or improved outcomes.
2. Failure to Embrace Automation and Interoperability
It appears the health insurance industry is failing on prior authorization reform. Despite CMS mandates and industry standards promoting electronic prior authorization (ePA), adoption remains slow. Many providers still rely on fax machines, manual forms, and long call center queues to obtain authorizations.
Only 26% of prior authorization requests were fully electronic as of 2023, according to the CAQH Index. That means providers are still wasting countless hours chasing down approvals using outdated methods—burdening both administrative staff and physicians.
The technology to streamline PA exists, but insurers have not made meaningful investments to implement it at scale.
3. Lack of Transparency and Consistency
Insurers frequently change their PA requirements without sufficient notice, and their criteria are often unclear, arbitrary, or vary between plans.
For example:
- What one insurer approves instantly, another may deny outright.
- Appeals processes are opaque and time-consuming.
- Medical necessity criteria are often hidden behind complex documentation.
This lack of transparency erodes trust and puts providers in a constant state of confusion, forcing them to divert time from patient care to decoding insurance rules.
4. Delays That Compromise Patient Care
The AMA reports that 89% of physicians say prior authorization interferes with continuity of care. Treatment delays—sometimes lasting days or even weeks—can worsen conditions, delay diagnoses, and increase ER visits.
In cancer care, for example, even short delays in chemotherapy or imaging can significantly affect patient outcomes. Yet these services are routinely held up by insurance approval processes.
While some states are pushing legislation to limit PA response times, the industry continues to lag behind on enforcing standards or accountability.
The Human and Financial Toll
For Patients:
- Care Delays: Timely treatments are postponed, leading to worsened health outcomes.
- Mental Stress: Patients must navigate confusing insurer protocols, appeals, and denials.
- Out-of-Pocket Costs: When coverage is denied or delayed, patients often pay out-of-pocket or forgo care.
For Providers:
- Burnout: Doctors and staff spend hours weekly on PA paperwork.
- Revenue Loss: Delays and denials lead to lost reimbursements or canceled appointments.
- Distrust: Frustration with insurers damages provider-payer relationships.
A 2024 MGMA survey found that medical practices spend an average of 14 hours per week per physician on prior authorization tasks, costing thousands in labor each year.
Calls for Change: What Reform Could Look Like
Several efforts are underway to address the PA crisis:
Federal Legislation
- The Improving Seniors’ Timely Access to Care Act, reintroduced in Congress, would require Medicare Advantage plans to streamline PA, increase transparency, and establish real-time electronic systems.
- CMS Final Rule on ePA (2025): Mandates that payers implement standardized, electronic prior authorization capabilities by 2026.
State-Level Reforms
States like Texas, Michigan, and Washington have enacted laws requiring quicker response times, gold-carding, and improved transparency from insurers.
However, progress is patchy and varies widely by geography.
Why Insurers Are Resisting Reform
Despite public commitments, insurers resist PA reform due to several motivations:
- Cost Containment: PA gives insurers control over utilization and spending—even if it comes at the cost of care delays.
- Data Silos: Lack of interoperability prevents seamless integration with provider EHRs.
- Profit Incentives: Every delay in treatment or denial of coverage potentially saves insurers money, especially in the short term.
In essence, systemic inefficiency benefits insurers financially, creating little incentive for meaningful reform without regulatory pressure.
What Needs to Happen Next
To address the PA crisis, real accountability and systemic change are needed. This includes:
- Mandating real-time electronic prior authorization (ePA) across all payers.
- Public dashboards showing PA response times and denial rates by insurer.
- Automatic approval for services routinely authorized (>90% approval rates).
- Independent audits of insurer PA practices.
- Provider-payer collaboration on standardized medical necessity guidelines.
Most importantly, reforms must center on the patient—ensuring timely, equitable access to medically necessary care.
Conclusion
The health insurance industry failing on prior authorization reform has become a critical issue. While payers claim that prior authorization (PA) ensures clinical appropriateness and cost-efficiency, the reality is a system plagued by delays, denials, and dysfunction. As the burden grows, so too does the urgency for real reform—driven by policy, technology, and transparency.
Until that happens, patients will continue to suffer, and providers will remain trapped in a cycle of administrative complexity that ultimately undermines the quality of American healthcare.