Medical billing isn’t just about sending claims. It’s about protecting revenue, preventing denials, and making sure providers get paid for the care they give. Prior authorization sits right at the center of that. And if your practice gets it wrong—even once—you can lose hundreds or thousands of dollars on a single encounter.
That’s why many practices trust A2Z Billings to take over authorization tasks—so their teams can stop chasing paperwork and focus on patient care.
In this guide, you’ll learn exactly what prior authorization is, who handles it, why it exists, how long it takes, and how to avoid retro authorizations and preventable claim denials.
Let’s get into it.
What Is Prior Authorization in Simple Words?
Prior authorization means getting approval from the insurance company before providing a service, procedure, test, or medication.
Think of it like asking,
“Will you pay for this?”
—before your provider does the work.
If the payer doesn’t approve it first, they will likely deny the claim, and the practice gets stuck either appealing or writing off the cost.
What Is Prior Authorization in Healthcare?
In healthcare, prior authorization acts as a cost-control checkpoint.
Insurance companies want to confirm:
- The service is medically necessary
- The treatment fits their policy
- The correct provider is rendering the service
- No cheaper or safer alternative exists
- Previous required steps (like trying lower-cost meds) were completed
It’s frustrating for providers, but from the payer’s perspective, it’s a quality and cost filter.
Who Is Responsible for Getting Pre-Authorization?
The responsibility is clear:
The provider’s office is responsible for obtaining prior authorization.
Not the patient.
Not the pharmacy.
Not the insurance company.
The provider—or their billing/authorization team—must request it.
This includes:
- Hospitals
- Clinics
- Specialty practices
- Pharmacies (for certain drugs)
- Billing companies acting on behalf of providers
If the practice doesn’t initiate it, the payer won’t approve payment.
What Is Retro Authorization in Medical Billing?
Retro authorization means requesting authorization after the service has already been provided.
This usually happens when:
- The provider forgot to request prior auth
- The patient didn’t provide accurate insurance info
- The case was urgent
- A service was misclassified
- The authorization expired
- The provider changed mid-treatment
Retro auth is not guaranteed.
Some payers deny it automatically.
Others require heavy documentation and still may refuse.
Retro auth = high risk + low approval + revenue loss.
Types of Authorization in Healthcare
Different medical scenarios require different authorization paths:
1. Prior Authorization (Before Service)
Approval before the treatment or procedure.
2. Concurrent Authorization (During Care)
Used for inpatient care—payers approve the ongoing stay day by day.
3. Retro Authorization (After Service)
Requested after care is provided—least reliable.
4. Medication Authorization
Required for high-cost drugs or meds outside the formulary.
5. Imaging Authorization
Required for CT scans, MRIs, PET scans, etc.
6. Surgical Authorization
Pre-op approval for minor and major surgeries.
What Is a Prior Authorization for Medication?
Medication prior authorizations are common for:
- Specialty drugs
- High-cost injectables
- Biologics
- Medications not on the formulary
- Drugs with step-therapy requirements
The provider or pharmacy submits clinical notes proving why the patient needs that specific medication.
Once approved, the pharmacy can dispense the drug.
What Is a Prior Authorization Form?
A prior authorization form is the document used to request approval.
It generally includes:
- Patient information
- Diagnosis codes (ICD-10)
- Procedure codes (CPT/HCPCS)
- Medical necessity notes
- Provider details
- Past treatments tried
- Supporting clinical records
- Insurance policy number
Some payers accept digital submission; others still require fax (a constant headache for practices).
Prior Authorization Cheat Sheet
Here’s a practical mini-guide your team can use daily:
Start authorization immediately after provider recommends treatment.
Verify insurance coverage first.
Check payer portal for requirements.
Submit CPT + ICD-10 codes accurately.
Attach clinical notes—don’t wait for payers to request them.
Track every request daily.
Follow up within 24–48 hours.
Never assume approval—always confirm via portal/letter.
Document the authorization number in the patient’s chart.
This alone helps avoid 70% of preventable denials.
Why Would You Need Prior Authorization?
Insurance companies require prior authorization to:
- Confirm medical necessity
- Reduce overuse of expensive procedures
- Ensure the patient meets criteria
- Prevent duplicate services
- Verify referrals or specialist involvement
- Confirm provider network status
- Control costs for high-risk medications
- Manage inpatient admissions
If any of these apply, expect to need prior auth.
What Comes First: Authorization or Coding?
Authorization comes before coding is finalized, but the team must know which codes will be billed.
Most practices use temporary CPT and ICD-10 codes to submit auth requests.
Once the service is rendered, final coding is applied.
The Prior Authorization Process in Medical Billing (Step-by-Step)
The prior authorization process can be simple or painfully long depending on the payer.
Here’s how it typically works:
Step 1: Coverage & Eligibility Check
The team confirms:
- Active insurance
- Plan coverage
- Copay, coinsurance
- Out-of-network rules
- Prior authorization requirements
Many issues begin right here when eligibility isn’t checked carefully.
Step 2: Collect Required Info
This includes:
- Patient demographics
- Insurance card
- CPT + ICD-10 codes
- Clinical notes
- Provider NPI and TIN
- Prior treatments
- Referral (if needed)
Step 3: Submit the Prior Authorization Request
Requests are submitted via:
- Online payer portals
- Fax
- Phone
- Clearinghouse
- EHR integration
The payer assigns a reference number and starts reviewing.
Step 4: Payer Review
The insurance company reviews:
- Medical necessity
- Clinical documentation
- Provider credentials
- Treatment guidelines
- Previous attempts or required steps
This can take anywhere from hours to weeks.
Step 5: Approval, Denial, or Request for More Info
You will receive one of the following:
Approved
You get an authorization number and validity period.
Denied
You can appeal with stronger documentation.
Request for Information (RFI)
The payer wants more notes, labs, imaging, or history.
Step 6: Document the Authorization
The approval number goes into:
- EHR
- Billing software
- Patient chart
- Claim notes
Claims without the correct auth number = automatic denial.
Step 7: Claim Submission
Once the service is done, the final claim is submitted with:
- CPT codes
- ICD-10 codes
- Authorization reference
The claim gets processed smoothly—if all the steps were followed correctly.
Benefits of Prior Authorization
Most people see prior auth as a burden. But done right, it helps practices:
1. Prevent Claim Denials
Authorization protects revenue upfront.
2. Ensure Proper Reimbursement
Payers cannot deny approved services unless there’s fraud or error.
3. Provide Predictable Cash Flow
No surprises, fewer write-offs.
4. Improve Medical Necessity Compliance
Authorization forces correct documentation.
5. Protect Patients from Unexpected Bills
Patients appreciate billing transparency.
6. Reduce Retro Auth Stress
Good workflows prevent emergency appeals.
Why Prior Authorization Delays Cost Practices Money
Every delay creates:
- Staff overtime
- Appointment rescheduling
- Slower revenue cycle
- Higher denial rates
- Lost patients
- Provider frustration
A smooth authorization workflow means faster approvals, fewer denials, and predictable revenue.
Why Many Practices Outsource Prior Authorizations
Because doing it yourself is heavy:
- Different rules for every payer
- Different portal logins
- Daily follow-ups
- On-hold calls
- Fax delays
- Missing notes
- Expired authorizations
- Untrained staff
Your practice loses money long before the claim is even submitted.
That’s why many providers partner with experts who handle prior auth daily and know exactly what payers want.
While prior authorization may appear as just a minor checkbox in medical billing, it can have a considerable effect on your practice’s financial health. Do it well, and the revenue will flow. Do it poorly, and you will be stuck with denials, appeals, and staff frustration at best.
If your clinic is looking for dependable, timely, and precise authorization support, A2Z Billings enables providers to manage the entire process, from checking authorization requirements to submitting claims, ensuring you do not lose money because of authorizations that you missed or that were submitted late.
FAQs
- How long does prior authorization take?
Anywhere from a few hours to several weeks. It depends on the payer, procedure, and documentation provided.
- Can a provider start treatment without authorization?
They can—but insurance may refuse payment. Providers usually wait unless it’s an emergency.
- Is prior authorization needed for every insurance plan?
No. Requirements vary by payer and plan. Always check the portal before scheduling.
- What happens if I forget to get authorization?
You’ll need retro authorization, which is not guaranteed and often denied.
- Do patients have to request prior authorization?
No. The provider’s office handles it. Patients may assist by providing updated insurance info.
- Can authorization expire?
Yes. Many last 30–90 days. If it expires, you need a new one.
- Why do insurance companies require authorization at all?
To confirm medical necessity and control costs for high-risk or high-expense care.
- What if my prior authorization is denied?
You can appeal with stronger medical notes or proof of necessity.
- Do medications require prior authorization too?
Yes—especially specialty meds or drugs outside the formulary.
- What information is needed to submit an authorization?
CPT codes, ICD-10 codes, clinical notes, provider details, and insurance information.