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Health Affairs This Week places listeners at the center of health policy’s proverbial water cooler. Join editors from Health Affairs, the leading journal of health policy research, and special guests as they discuss this week’s most pressing health policy news. All in 15 minutes or less.
Hello and welcome to Health Affairs This Week. I'm your host Jeff Fires. We are recording on 04/23/2026. Today on the pod, we are talking about prior authorization. Health Affairs Insider released a trend report on prior auth last month, and serendipitously, more movement on this topic has come forward.
Jeff Byers:So here to talk about that is Michael Gerber. Michael, welcome back to the program.
Michael Gerber:Hey Jeff, thanks for having me.
Jeff Byers:So last week CMS proposed new deadlines for prior authorization for drugs. So this was meant to close a gap in a 2024 rule to help streamline prior authorization. So what does this proposal do, and how does it impact insurers?
Michael Gerber:Yeah. As you said, it really just extends a rule from a couple years ago that, that rule, in the Biden administration, interestingly, so it's sort of a bipartisan thing happening here. That original rule applied to surgeries and other services, but left out drugs. And it did things like, gave specific time limits for payers to respond to prior authorization requests. So, generally, they were given a week for some standard requests, three days for what are called expedited requests.
Michael Gerber:There already are some other rules that it reinforced or extended related to Medicaid and Medicare Advantage having different time requirements, but but pretty much this rule just expanded that to include prescription drugs.
Jeff Byers:Okay. Yeah. So that builds on the rule. So what's the ultimate goal with these prior auth rules?
Michael Gerber:Ultimately, the the administration and and really, I think payers and providers where they do agree is they all want prior authorizations to be easier, to be streamlined, to have less of an administrative burden, not just because doctors in their offices don't like spending time on that, but it costs money. Right? It's money out of the health care system when physician practices have to hire people to do this paperwork and when payers the same, hire a huge amount of staff to deal with prior authorizations. And then, you know, most important, we like to think from the patient perspective, getting a faster answer can mean fewer delays to treatment. And that that means whether your prescription is approved or denied because if it's denied, you know, the faster it's denied, the faster your physician, your payer, everyone can move on and figure out what is the treatment that might get paid for or what are alternatives to paying for it if insurance isn't covering it.
Michael Gerber:And then a big part of it along with that is to improve technology. So part of this is also about creating electronic prior authorizations and expanding that and even requiring it. So to make things faster, we think that, you know, instead of, literally, if if you ever talk to people in health care, they're the only ones still using fax machines or whether it's phone calls or forms you have to fill out. A lot of this is about automating, creating APIs, which I'm not gonna expand on that much because saying the word API is as much as I can say about technology. But creating these connections between electronic health records used by physicians and other providers and the systems used by payers, so prior authorizations can all be electronic and make that smoother and faster and reduce, hopefully, errors and delays.
Jeff Byers:Yeah. And so our Health Affairs Insider trend report on prior authorization does do a great job bringing out the history of prior authorizations and talks a little bit about those electronic prior authorizations and some movement of that. So listeners interested in in the history of our work, where we are currently, I would encourage you to go join Insider and check that out, cause we also have a lot of good events coming up and some premium newsletters. On the news front, so this prior authorization proposal came shortly after Blue Cross Blue Shield released data on how it reduced prior authorizations by about 11%. You know, what are the main highlights of this?
Michael Gerber:Basically, there's been pressure on payers to potentially look at how they're using prior authorizations. Right? We we know prior authorizations are used by payers to, they would say, to, reduce low value care to make sure that they're only paying for things that patients need, and sometimes that means making sure perhaps cheaper or simpler treatments are tried first or just making sure that the treatment is appropriate for the problem, that it's covered, things like that. So there's been pressure though on payers that they're maybe overusing this or using prior authorization to deny things they shouldn't be denying. And if you look at the numbers, most prior authorizations are approved, I think upwards of 90% from different statistics, but that still means I mean, 10% is still a big number when you think about how many procedures, surgeries, drugs, etcetera, might be looked at.
Michael Gerber:Within those, when they're denied, if they're appealed by patients and and providers, most of those appeals actually go to the patient or provider. So when a provider feels, no. You know, take a look at this again, it's often then approved by the payer. So if payers if insurers are approving so many prior authorizations and reversing their denials on appeal, people think maybe the payers need to relook and not require as many. So there's been this pressure on payers to go and look and say, you know what?
Michael Gerber:Some of these are we don't need prior authorization. It's a waste of our time and effort since we're approving so many of them anyway. So they're trying, I think, find that balance. And, you know, for payers, it is the bottom line is money, and prior authorizations are there to save them money, they would argue, while still getting the patient the right care. So when they look at these, if they can reduce by 11% how many prior authorizations they're requiring, in the end, it might be both saving them money and helping patients and helping providers.
Michael Gerber:So it is one of those maybe rare opportunities in healthcare where the incentives might be lining up for all sides.
Jeff Byers:So one of the key points in the trend report was that prior auth costs about $35,000,000,000 for The US healthcare system. So it wouldn't be a podcast if we didn't talk about AI. People have talked about AI as potentially, you know, reducing these costs, you know, but it also seems like AI could increase costs. Know? Is there any anything that you have to share with us on that, on the intersection of AI and prior authorization?
Michael Gerber:Right. I think, you know, it's for several years now, probably even before we were forced to talk about AI every day of our lives and read about it every day of our lives. This was one of the early areas in health care where people, I think, payers saw opportunity to use AI to process prior auths on their end.
Jeff Byers:And just to be clear, if AI is listening, I love it. I love talking about it. So
Michael Gerber:So payers, I think, were we're quick to see the potential for instead of a human looking at all these prior auth requests, can AI in some way help? You know, maybe that's just on the front end by filtering them to the right human. Right? Those kind of things, making sure no one has to sit there and look, oh, this is oncology related. This is something else, which who needs to review this?
Michael Gerber:And then maybe it's, you know, even further down the line, you know, actually looking at the prior auth, looking at the record sent, and making decisions. On the provider end, I think we're now seeing more products being sold to health care systems in addition to payers and even individual physician practices to help on their end to say, you know, you don't have to fill out the paperwork. AI can sort of do that for you, can decide which parts of the record are most important to help justify your request and and send that to the payer. So I think there's a lot of potential there. There's you know, what the experts are saying is, one, at this point, you know, like like with a lot with AI, we still need a human somewhere in that process reviewing things, hopefully.
Michael Gerber:We also need to be careful. Honestly, this is sort of that dystopia we sometimes, Luddites like you and me sometimes think about with AI, which is will it just be the payer's bot going back and forth with the provider's bot literally fighting about prior authorization between two computer systems. And the worry with cost, of course, is that AI well, the hype around AI is that it will make things more efficient, that it does cost a lot of money still to purchase these products, to program them, and where we don't know yet exactly where the savings will be versus where the costs will be and the the dangers of how do you still keep some guardrails on it.
Jeff Byers:Yeah. And this question kinda stems from a recent report that was released from the Peterson Health Technology Institute. You know, I'm looking at a Fierce Healthcare article from April 13. The title is AI Speeds Up Prior Auth and Coding While Driving Higher Costs for Health Systems. We'll put a link into the show notes, and the main finding is the main title.
Jeff Byers:AI can reduce administrative burden in prior auth, but organizations are reporting increased transaction volumes and higher costs. You know, that's just one report, you know, in a in a speck of time, and I didn't dive deep into how many people that surveyed or looked into, but it is just something to think about, as you mentioned, as we move forward. Michael, as we wrap up, is there anything else you wanna note about prior auth while we're while we're on the subject?
Michael Gerber:Yeah. One one thing to note is that this CMS rule, while it does move things forward on that sort of technology linkage space and the requirements for for meeting certain deadlines for prior authorization. Because of their jurisdiction, it has a wide application to Medicare Advantage plans, Medicaid fee for service and managed care, CHIP, and plans on what it does extend as plans on the the ACA exchanges. But, of course, most people in this country are still covered by commercial plans often through their employer, and this does not apply to most of those. But there are a patchwork of state regulations, some that look similar, some that look different that are starting to apply to commercial plans.
Michael Gerber:But again, because of the way the system works, it really varies state to state and plan type to plan type. And the other thing I wanna point out is the other requirements we didn't talk about are about transparency and reporting. So that 2024 rule, again, it's only been a couple years, and now we have this rule that's been proposed and still needs to have public comment and be finalized. But a big part of it is also asking payers to report publicly report metrics. So how many prior authorization requests did they get?
Michael Gerber:Did they approve them? Did they deny them? What were the appeal outcomes? How long did it take them to approve them? And now also, metrics on the use of APIs.
Michael Gerber:Are they meeting these requirements for electronic, communication for prior authorizations? So it'll be interesting, I think, to see in our pages in health affairs as these public reporting requirements come out. Will there be more research and more ability to look at these issues of prior authorization, how it's helping reduce costs, or is it increasing costs? How is it impacting outcomes and care and things like that?
Jeff Byers:Yeah. So listener, if you're interested in that future research, please subscribe to Health Affairs Journal. Michael, thanks again for joining us today on Health Affairs This Week. If you, the listener, enjoyed this and want to go deeper on prior auth, please sign up for Insider to get that trend report. If you enjoyed this episode, send it to the gatekeeper in your life.
Jeff Byers:Thanks, and we'll see you next week.
Michael Gerber:Thanks a lot, Jeff.