Is It Time to Fix the Practice of Prior Authorization by Health Plans?

June 17, 2025

Prior authorization has been described by health insurance companies as a necessary cost-control measure that avoids medically unnecessary services and medications or identifies less expensive approaches.

During the American Medical Association annual meeting in Chicago, Emily Carroll, senior counsel at the AMA, and Greg Pepe, founding partner at Neubert, Pepe & Monteith, P.C., summarized research that emphasizes the need to reform the ways in which health plans are allowed to use the practice of prior authorization. The attorneys’ presentation pulled data from three years of research by the AMA, as they also discussed unique legal impediments associated with challenging these practices.

What does the AMA prior authorization physician survey tell us?

• As undertaken by many health plans, prior authorization delays necessary and often critical care to patients, with 94% of doctors reporting significant delays in patient care when a health plan insists on prior authorization.
• More than a third (35%) of doctors report that initial prior authorization denials of care are rarely or never based on clinical criteria, nor reviewed by a doctor with credentials in the same specialty. Many physicians suspect the denials are driven by AI created logarithms.
• Research indicates that the push-back from health plans denying care due to prior authorization failures result in 56% of patients reporting that they will “sometimes” forego or postpone treatment due to the delays, denials, and overall burden of navigating the prior authorization system. Another 22% report they “often” abandon their own care.
• Roughly 25% of doctors report that prior authorization delays and denials have led to serious adverse events for their patients.
• The survey tells us that 27% of doctors report that prior authorizations are often or always denied, and 95% say that prior authorizations somewhat or significantly increase physician burnout.
• More than 1 in 3 doctors hire staff to work exclusively on prior authorizations and, on average, practices complete 43 prior authorizations per week.

The negative impact or prior authorization is not restricted to the doctor’s office. The survey shows that 53% of physicians with patients in the workforce report that prior authorizations impact patient job performance.

The costs to the healthcare system itself are negative: additional office visits are reported by 68% of physicians; 29% report hospitalizations, 42% report immediate care/ER visits; and 69% report ineffective initial treatment (e.g., due to step therapy requirements).

How would the survey address the negative impact of prior authorizations?

The survey proposes several approaches to improve patient and physician experiences:

• Reducing prior authorizations by eliminating those for care with high approval rates.
• Ensuring denials would be made by physicians of the same specialty, licensed it the same state, with experience treating the same condition.
• Collecting data to illustrate rates of approval, denials, appeals, and response times and making that information available to patents, providers, and policy makers.
• Increasing response times to 24 hours for urgent care/48 for nonurgent care.

The AMA released a consensus statement in 2018 to address five reform categories but, according to the 2022 update, Measuring Progress in Improving Prior Authorization, 80% of physicians report the number of medical service prior authorizations required has increased.

Is there legal recourse to reform prior authorization use?

The original dialogue between physician and patient has become a trialogue, with health insurance companies using cost to determine the appropriate care. As a result, a quadrilogue formed to include attorneys.

“This is a complex area of the law,” Attorney Pepe explained to presentation attendees. “Few practitioners would be aware of how the Employee Retirement Income Security Act (ERISA) laws shield health plans from liability for abuses of this practice, making it next to impossible for a single patient to challenge a decision of a health plan in this area, by requiring all challenges to be brought in federal court.”

Any state legislature considering legal reforms would need to know how ERISA, signed into law by President Gerald Ford on September 2, 1974, was originally written to protect employees from company abuse of pension systems. The law now extends to all employee benefits, including health insurance.

A recently resolved case illustrates the issue perfectly: Dwyer v. United Health Care, decided in September, 2024, involved a young woman dealing with a severe eating disorder. She was admitted into a residential treatment facility where she was monitored almost hourly to ensure she was eating properly, without purging, and attending her counselling sessions. After a week, United decided that she was well enough to be discharged to an intensive outpatient setting, ignoring vehement opposition from the girl’s doctors.

The girl’s father paid for her inpatient care out-of-pocket and filed an ERISA lawsuit against United, which took four years to resolve. A federal court determined that United had failed to meaningfully engage with the girl’s father and her doctors. Further, United gave no credence to the doctors’ recommendations for the girl’s care. The court also cited repeated instances of “similar denial letters issued by United across the country,” with the court’s assessment that important health care decisions were being made by someone other than a qualified physician. The court went so far as to say, “This is the core of meaningful dialogue: if benefits are denied and the claimant provides potential counterevidence from medical opinions, the reviewer must respond to the opinions. This back-and-forth is how civilized people communicate with each other regarding important matters.”

Obviously, the use of prior authorization has a way to go before the AMA is satisfied with its influence on patient care. Attorneys Carroll and Pepe hope their presentation would encourage doctors and their medical associations to work with their patients as a unified team, including experienced attorneys when necessary, to ensure the right treatment is obtained and reimbursed.

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