Prior Authorization and Referrals

Prior authorization and referrals are two distinct gatekeeping mechanisms in US health insurance. Both can affect whether and how much your insurance will pay for care. Understanding how each works — and how to navigate the process when one is required — can prevent delayed care and unexpected bills.

What prior authorization is and why it exists

Prior authorization (also called precertification, predetermination, or pre-approval) is a requirement that your insurance company approve certain medical services, procedures, or drugs before you receive them. Without this approval, the insurer may decline to cover the cost.

Insurers use prior authorization to review whether a proposed service is medically necessary according to their clinical criteria and whether a less expensive alternative should be tried first. Critics argue it delays care and creates administrative burden for providers and patients alike; federal and state legislators have been working to streamline and limit the scope of prior authorization requirements, particularly for Medicare Advantage plans.

Services commonly requiring prior authorization include:

• Elective surgeries and procedures
• Advanced imaging (MRI, CT scans)
• Specialty medications, particularly high-cost biologics
• Inpatient hospital admissions (non-emergency)
• Extended physical therapy or rehabilitation
• Durable medical equipment (wheelchairs, CPAP devices)
• Home health services

Who initiates prior authorization

Responsibility for requesting prior authorization generally falls on the ordering provider — the doctor or provider who is prescribing or recommending the service. The provider’s office submits a prior authorization request to your insurer, typically with clinical documentation supporting the medical necessity of the service.

As a patient, you play a supporting role: making sure your provider knows your specific insurance plan and plan name (not just the insurer) so they submit the request to the right entity, providing complete insurance information, and following up with both the provider and insurer if you have not received a decision by the expected date.

Understanding denials and how to appeal

When a prior authorization is denied, the insurer must notify you and your provider in writing with the reason for the denial. Common reasons include:

• The service does not meet the plan’s medical necessity criteria
• Step therapy requirements were not met (must try a lower-cost option first)
• The service is excluded from your plan’s covered benefits
• The clinical documentation was insufficient or missing

You have the right to appeal any prior authorization denial. The internal appeal process is the first step: you or your provider submits a request for reconsideration with additional clinical documentation. If the internal appeal is denied, you can request an external review by an independent third party — this right is protected by federal law for most plans.

In urgent situations where waiting for a standard decision could harm your health, you can request an expedited prior authorization. Insurers must respond to urgent requests within a shorter timeframe than standard requests.

How the HMO referral process works

In an HMO plan, your primary care physician (PCP) is the gateway to specialist care. If your PCP determines that you need to see a specialist, they issue a referral — a formal order or recommendation that authorizes you to see a specific specialist or type of specialist and that the HMO will cover. Without that referral, a specialist visit typically will not be covered.

The referral may be for a specific specialist by name or for a category of specialist (such as a cardiologist or orthopedist) — the rules vary by plan. Some HMO plans allow self-referrals for specific categories such as obstetrics or mental health. Ask your insurer for specifics.

Referrals may have time limits (valid for a certain number of visits within a defined period) and may specify in-network providers only. If you need ongoing specialist care, your PCP may need to issue repeat referrals.

Prior authorization and referrals in PPO plans

PPO plans do not generally require referrals to see specialists, which is one of the primary reasons people choose them over HMOs. However, PPO plans may still require prior authorization for specific services or procedures regardless of whether a referral is needed.

The absence of a referral requirement does not mean your plan will automatically cover any specialist you see. The specialist must still be in-network for in-network cost-sharing to apply, and any services the specialist orders may be subject to their own prior authorization requirements.

Keeping records

Always document prior authorization decisions. When authorization is approved, save the authorization number and the service or drug it covers. If the service changes in any way — the dates shift, the procedure evolves — confirm with your insurer whether the original authorization still applies. Billing errors can occur when services are performed after an authorization expires or for a slightly different procedure than what was authorized.