What Prior Authorization Means for Medicare Advantage Plans...and How It's Changing

There are a lot of reasons why 30.8 million people have chosen to enroll in a Medicare Advantage plan.  

These plans from private insurance carriers substitute for the medical and hospital coverage of Original Medicare (Medicare Parts A and B). Most feature Part D prescription drug coverage, and they may include other supplemental benefits like dental, vision, and hearing. Medicare Advantage plans also set limits on out-of-pocket spending, and 73% of people on a plan with drug coverage pay no monthly premiums beyond the standard Part B premium. 

However, you are likely to make tradeoffs when it comes to flexibility. People on Medicare Advantage plans often have to see doctors and visit pharmacies within a provider network to get the most out of their benefits. In addition, plans can require prior authorization, which means your doctor must get approval from your insurance carrier to have a certain service or medication covered. 

Recent changes in the federal rules for Medicare Advantage plans include steps to limit prior authorization requirements and speed up the process. By understanding these policies, you can make more informed decisions about your healthcare. 

How Prior Authorization Can Affect Your Care 

Sometimes called preauthorization or precertification, prior authorization has become a very common step toward getting coverage for complex or expensive care through private health insurance. According to the health policy nonprofit KFF, 99% of the people on Medicare Advantage plans in 2022 were enrolled in plans that sometimes required prior authorization. Original Medicare also requires these steps in some situations, such as to verify that certain outpatient surgeries have medical, rather than cosmetic, purposes.  

In a survey from the American Medical Association, doctors said they completed an average of 45 requests for prior authorization per week. 

The exact process depends on the carrier and the services involved, but generally a healthcare provider submits clinical information and documentation to illustrate why a specific procedure, test, or prescription is medically necessary. According to insurers, prior authorization enables them to: 

• Coordinate care between multiple providers and facilities. 
• Keep care affordable by avoiding wasteful spending and prioritizing lower-cost alternatives when possible. 
• Protect patients from overly risky procedures or drugs. 
• Improve outcomes by verifying that providers follow the most current clinical guidelines. 

2024 Updates to Prior Authorization Rules 

For 2024, the Centers for Medicare and Medicaid Services (CMS), the federal agency that administers Medicare, issued rules that affect prior authorization in Medicare Advantage plans. 

CMS clarified that Medicare Advantage plans can’t require prior authorization for a service or devices that Original Medicare has already decided should be covered. Original Medicare follows coverage determinations established by CMS or by a local Medicare Administrative Contractor selected by CMS that present specific criteria, and Medicare Advantage plans should match that guidance without adding more steps to the process. For prescription drugs and in treatment situations that don’t clearly meet the established criteria, though, companies can still require prior authorization. 

CMS also set rules to support coordination among multiple healthcare providers and avoid disruptions to treatment, even if you switch Medicare Advantage plans. The agency said that patients on a Medicare Advantage coordinated care plan who change their plans can’t be required to go through prior authorization for the treatment they’ve already been receiving for at least 90 days.  

What’s Next for Prior Authorization in Medicare Advantage? 

Looking ahead, CMS will continue to work with insurance carriers to make prior authorization more efficient. For example, a policy set to take full effect in 2026 establishes time limits for carriers to make prior authorization decisions: within 72 hours for urgent needs or one week for other requests. If the insurer does decide to deny a request, they will need to provide specific explanations for their reasoning. 

By the beginning of 2027, Medicare Advantage carriers must set up standardized electronic tools for handling prior authorization requests. These applications are meant to improve communication between healthcare providers and insurers, providing easy access to lists of covered items and services as well as the documentation requirements for prior authorization reviews. This rule will ensure that carriers have a quick, consistent way to communicate their decisions and the reasoning behind them. 

While these new rules harness technology to speed up prior authorization, CMS is also placing limits on how much carriers can rely on artificial intelligence. Healthcare providers and insurance carriers are allowed to use software tools for purposes like verifying that they have met all prior authorization requirements and estimating the length of a patient’s hospital stay. However, all the established rules about prior authorization will still apply, and people must be involved in making any decisions about medical needs. 

Prior authorization is a complicated process that can affect the healthcare you receive. As you explore options for testing, treatment, and medications with your healthcare providers, it’s important to be aware of the steps a Medicare Advantage plan or other private insurance may take to confirm that your care is medically necessary and well-coordinated. 

About GoHealth 

GoHealth is a leading health insurance marketplace and Medicare-focused digital health company. Enrolling in a health insurance plan can be confusing for customers, and the seemingly small differences between plans can lead to significant out-of-pocket costs or lack of access to critical medicines and even providers. GoHealth combines cutting-edge technology, data science, and deep industry expertise to build trusted relationships with consumers and match them with the healthcare policy and carrier that is right for them. Since its inception, GoHealth has enrolled millions of people in Medicare plans and individual and family plans. For more information, visit GoHealth.com.