Prior authorization is one of the biggest administrative burdens in the U.S. health care system. Marketed as a tool to ensure health services are “medically necessary” and appropriate, it has morphed into a profit-driven maze that payers use to delay, discourage, and deny care— especially in Medicaid, where nearly 1 in 4 adults reported prior authorization issues in 2023.
Prior authorization buries patients and providers in red tape, paperwork, and confusing rules. While payers claim it prevents fraud or or prioritizes patient safety by reducing “unnecessary” treatments, in practice it is about controlling costs. MCOs use it to cut utilization, reduce payouts, and boost profits margins. A former Cigna medical director came forward with a troubling example and said the company pressured doctors to rush through claim reviews–often denying care without even fully looking at patients’ medical records. By turning the process to receive treatment into an obstacle course for providers and patients, insurers count on patients and providers to simply give up, leading to fewer claims and higher profits.
Little John Cupp’s story shows just how deadly these delays can be. In the fall of 2021, Cupp started showing signs of serious heart trouble. When his doctor ordered a heart catheterization to check for blockages, United Healthcare, through its contractor EviCore, denied it as “not medically necessary.” Even after a second request, they refused. Nearly three months later, Cupp was finally approved for a cheaper test that revealed his heart was even weaker. The next day, Cupp went into cardiac arrest and died.
And now, Medicaid cuts threaten to make the problem even worse. If Congress moves forward with funding cuts, states will face shortfalls and plans will be forced to operate on tighter budgets. The result? More barriers—like additional prior authorization requirements and less regulation for automated decision-making—and less access to care for the people who need it most.
Medicaid Faces the Harshest Prior Authorization Burdens
Prior authorization impacts Medicaid beneficiaries more than any other type of insured group, particularly in Medicaid Managed Care Organizations (MCOs), which control access to care for over 75 percent of Medicaid beneficiaries. These prior authorization barriers disproportionately affect people with disabilities and chronic conditions, including 25 percent of adults who seek treatment for mental health conditions.[1]
Its effects are especially severe in Medicaid. Of the 25 percent of Medicaid beneficiaries with prior authorization issues, a staggering 1 in 3 could not get the care their provider recommended. One in 4 experienced a decline in health as a result of these hurdles. These results indicate that prior authorization is applied more frequently in Medicaid than in other insurance types.
In 2023, a Congressional request prompted the HHS Office of the Inspector General to review prior authorization delays in Medicaid. The report revealed that the largest 115 Medicaid MCOs denied more than 2 million of the 17 million prior authorization requests – 12 plans had denial rates above 25 percent.
In response, HHS finalized a rule (“CMS Interoperability and Prior Authorization Final Rule”; CMS-0057-F) requiring Medicaid, CHIP, and Marketplace plans to adopt electronic prior authorization systems, shorten response times, and report basic data on frequency, time to decision, and appeal rates and outcomes. But the rule excludes prescription drugs and job-based insurance and it fails to fix core issues like decision standards and appeals processes. CMS has recently signaled it may not enforce the rule strictly.
Providers Agree that Prior Authorization Delays Care and Leads to Serious, Adverse Outcomes
The time and staffing required to manage prior authorization requests are staggering – not just for consumers, but also for providers. 40% of physicians have hired staff that work exclusively on prior authorization, while the rest spend on average 13 hours each week navigating prior authorization work. Patients are left waiting days, sometimes weeks, for treatments they need. Payers, often via reviewers who lack medical training and credentials, deny the treatment altogether for not being medically necessary, knowing that the vast majority of denials will never be challenged. Meanwhile, health outcomes worsen.
The American Medical Association (AMA) has consistently documented the harms associated with prior authorization. According to a 2024 AMA provider survey:
- 93% of physicians reported that PA causes delays in care.
- Nearly 90% described the burden of PA as “high” or “extremely high.”
- 82% said PA can lead to patients abandoning treatment due to the burden.
- 1 in 4 physicians reported that prior authorization has led to a serious adverse event for a patient in their care – including 23% who said prior authorization processes led to a patient’s hospitalization.
These findings underscore that PA is not merely a nuisance – it is a barrier to care and a contributor to poor health outcomes. Providers overwhelmingly agree that the system is broken, inefficient, and harmful to patients.
Impact of Medicaid Cuts
If Congress moves forward with massive Medicaid cuts, it is only going to make problems with prior authorization worse. Shifting more costs onto states will leave them scrambling to cover shortfalls, and one response will be to tell managed care plans to make do with less. Managed care plans will turn to their familiar playbook, which likely means even more prior authorization, more red tape, more hours on the phones, and more delayed and denied treatments.
To make matters worse, the proposed reconciliation bill would block states from regulating how artificial intelligence (AI) is used in prior authorization for the next decade, just as Medicaid Managed Care Organizations increasingly use automated decision-making tools for medical necessity determinations with little transparency or oversight. These reckless cuts will not reduce “waste” – they’ll create it, worsening delays, denials, and harm to those who can least afford it.
[1] Prior authorization is commonly required for: non-emergency medical transportation, durable medical equipment, behavioral health services, hospital stays, rehabilitation services, nursing facilities, and prescription drugs.
