The Benefits of Prior Authorization and Precertification

The Benefits of Prior Authorization and Precertification

The Benefits of Prior Authorization and Precertification



The Benefits of Prior Authorization and Precertification

While there are many variables impacting the state of healthcare in the United States, there is one goal that both beneficiaries and insurance providers must realize is important: providing people with the quality healthcare they need. By creating systems that enable more people to access care, people’s quality of life and life expectancy can continue to improve.

In order for the healthcare system to work, essential services and products need to be dispatched as quickly as possible. According to one study by the research firm Altarum, “the economic impact of [the total time] spent on travel and waiting for health care was nearly $1 trillion over the last decade.” Clearly, anything that can help reduce the time it takes to receive necessary services can benefit both providers and beneficiaries alike.

For services and products to be efficiently delivered, insurance companies have recognized the need to come up with clear ways to determine what can be immediately provided and what will be denied (or deferred). Prior authorization—which, in the insurance industry, is synonymous with the term “precertification”—helps expedite this process and ensures that people can have access to the healthcare they truly need.

In this article, we will answer the pressing question “what is prior authorization?” and also discuss why the proliferation of prior authorization policies benefits all involved. By taking the time to understand the importance of these policies, you may able to find a healthcare plan that better fits your specific needs.

What is prior authorization/precertification?

According to, prior authorization (also called preauthorization, prior approval, and precertification), is “A decision by your health insurer or plan that a health care service, treatment plan, prescription drug or durable medical equipment is medically necessary.” These decisions are made by licensed medical professionals who make determinations based on established and professionally recognized criteria and standards.

In other words, prior authorization allows the licensed medical professionals at the insurance company to determine whether you will benefit from receiving a specific product or service. As the United States Government Accountability Office explains, “Prior authorization is a payment approach used by private insurers that generally requires health care providers and suppliers to first demonstrate compliance with coverage and payment rules before certain items or services are provided to patients, rather than after the items or services have been provided.”

What are the benefits of prior authorization?

The Government Accountability Office (GAO) further states, “Many provider, supplier, and beneficiary group officials GAO spoke with reported benefits of prior authorization, such as reducing unnecessary utilization.” In the world of medicine, people often receive treatments that are medically not necessary and, in some cases, can even be harmful for certain patients. When unnecessary treatments are issued, the total cost of healthcare rises—consequently, healthcare plans that incorporate prior authorization can often offer their beneficiaries lower deductibles and/or lower premiums. Within the Medicare system alone, the introduction of prior authorization has saved billions of dollars per year.

Furthermore, prior authorization may help combat unnecessary prescription medications and over medication. A 2018 study published by the Department of Health and Human Services claims “an estimated 10.3 million people aged 12 or older misused opioids in the past year.” Specifically, 9.9 million people misused prescription pain relievers, concluding “Appropriate prescribing of opioids is essential to protecting the health and safety of Medicare beneficiaries.”

The use of prior authorization is also designed to help make the health insurance industry a bit more predictable. By having established clear precedents regarding whether a specific product or service will be covered by an insurance plan, needed treatment can be issued quickly and financial ambiguities can be resolved.

By reducing ambiguities, the beneficiaries of a given healthcare plan can avoid costly out-of-pocket expenses. They can also ensure that they are receiving treatments that have been clinically proven to treat their current condition.

The healthcare insurance landscape is something that is constantly changing. With each passing year, the range and quality of healthcare treatments available continue to evolve, empowering providers to treat certain conditions better than ever before. While the proliferation of prior authorization within the industry does indeed have some drawbacks, it has helped industry leaders allocate resources more efficiently and provide recipients with the care they need.

How do I know whether something is covered by my current insurance plan?

Even with prior authorization policies in place, it can be difficult for many people to know what, exactly, their current healthcare plan covers. This can be especially challenging should a new condition emerge, should you need to switch plans, or should you need to seek alternatives to the current treatments you are receiving.

If you are currently unsure about whether a given condition or ailment is covered by your insurance provider, the first thing you should do is give your health insurance carrier a call. Most carriers have valuable resources available, 24 hours per day. With additional support, your insurance provider will be able to carefully walk you through every component of your policy, helping you better understand what the policy covers (and what, if any, obligations you might have) and plan all current and future treatments.

In some states, carriers are required to disclose whether your current policy will cover a specific treatment option. By having access to more information, you can avoid surprise bills and expenses. These days, there are many different ways to obtain customizable, comprehensive, and affordable health insurance coverage. Even if you currently have a pre-existing condition, there are likely several quality health insurance plans available.


There are many things health insurance providers will need to consider when underwriting a specific policy. Minimizing costs, which prior authorization makes possible, will be among the most important. With prior authorization policies in place, both premiums and deductibles can be kept under control. Furthermore, you can be confident that you will not receive any treatments that are medically unnecessary or potentially harmful.

If you currently have any questions about the use of prior authorization, or about how prior authorization specifically affects your personal health insurance policy, be sure to speak directly to your current insurance provider.

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