Do Medicare and Medicaid Require Prior Authorization?

Prior authorization (PA) is a utilization management tool requiring insurer approval before certain treatments or drugs are provided. In the US, PA policies differ sharply between Medicare and Medicaid programs. Original (fee-for-service) Medicare has historically imposed minimal PA – most Part A/B services are covered as medically necessary without preapproval [1][2]. In contrast, Medicare Advantage (Part C) and Medicare Part D plans (run by private insurers) almost universally use PA. Nearly all MA plans require PA for at least some services [2], and CMS has recently begun adding PA requirements even in traditional Medicare for select services (e.g. certain home health and surgeries) [2]. Likewise, Part D drug plans frequently impose PA on high-cost specialty medications, step therapy (requiring trials of cheaper drugs first), and other cost-saving protocols. In short, private Medicare plans (MA and Part D) rely on PA extensively, whereas Original Medicare applies it only in limited cases (primarily retrospective claim review) [1][2].

• Original Medicare (Parts A/B): Largely fee-for-service, with virtually no prospective PA except for a few defined services. Historically, coverage limits are enforced by claim denials rather than prior approval [1]. CMS has begun piloting some PA (e.g. for outpatient therapy or home health) but on a small scale [2].
• Medicare Advantage (Part C): Nearly every MA plan now uses PA for a wide range of physician services, procedures, DME, and durable equipment [2]. One survey found that 99% of MA plans required PA for at least some medical services [2]. Plans also use step therapy (especially for Part B-administered drugs like injectables), formulary management, and other controls not used in Original Medicare.
• Medicare Part D (prescription drugs): Part D plans routinely require PA and step therapy for certain drugs. For example, Part D plans may restrict new oncology or rheumatoid arthritis drugs via PA. An HHS-OIG report noted that many Part D enrollees encounter extra authorization steps that can delay access to prescribed drugs [3]. In short, any costlier, high-risk, or specialized prescription often triggers PA in Part D plans, unlike in Medicaid where state rules vary.

Medicaid Prior Authorization: State-by-State Variation

Medicaid is administered jointly by federal and state governments, so PA policies vary widely by state, plan type, and service. Federal law explicitly permits each state’s Medicaid FFS program and Managed Care Organizations (MCOs) to use PA to limit or manage utilization [4]. States may also choose to prohibit PA in certain areas. For example, the District of Columbia’s Medicaid program forbids PA for opioid use disorder (OUD) medications, emergency care, and some transport services [5]. By contrast, many other states still require PA for those services. Key features of Medicaid PA policies include:

• Broad flexibility, wide scope: States decide which services and drugs require PA. Common categories include specialist visits, imaging, DME, rehabilitation, behavioral health services, and non-preferred drugs [4][5]. States cannot impose PA on EPSDT (child preventive) services [5], but for most other benefits the rules vary by jurisdiction. MCOs may follow the state plan or set their own PA criteria within federal guardrails [4].
• State examples – removing PA for access: Some states are actively eliminating PA to expand access. As of early 2024, 28 states have removed PA requirements for hepatitis C treatments [6]. Notably, California and Illinois repealed PA for buprenorphine (an OUD drug) in Medicaid; a study found that after these changes buprenorphine prescriptions significantly increased in Illinois relative to control states [7]. (By contrast, many Medicaid programs still require PA for buprenorphine, and a national analysis found most states’ Medicaid plans needed PA for at least one formulation of buprenorphine [8].)
• State examples – step therapy for biologics: States vary in use of step therapy for specialty drugs. For instance, Illinois plans to ban step-therapy protocols statewide (a rarity) [9], meaning patients need not “fail first” on cheaper drugs. In most other states, however, Medicaid imposes step therapy for high-cost biologic therapies. For example, many state Medicaid formularies require patients with rheumatoid arthritis or psoriasis to try older disease-modifying drugs before approving biologics. (CMS even bars mandatory step therapy for Medicare Part B drugs, but no such federal ban exists for Medicaid.) This variation means access to a new biologic can depend on one’s state – requiring extra visits and documentation where step protocols remain in force.

Overall, Medicaid PA policies are highly fragmented. For some services/states PA is routine, while others forbid it. DC forbids PA for OUD meds [5], 28 states have removed PA for HCV drugs [6], and a few states like California and Illinois have lifted PA for buprenorphine [7]. At the same time, most states still use PA and/or step therapy aggressively for various drugs and services. This patchwork produces real access differences; for example, one GAO review noted only three states (plus DC) had waived PA for MAT/OUD meds, while others lag behind [8].

Operational and Patient Impacts

Prior authorization can curb costs, but at a price. PA processes often impose heavy administrative burdens and can delay patient care. Providers and practices report:

• High workload: Doctors and staff spend significant time on PAs. In one national survey, physician practices averaged 43 PA requests per doctor per week, requiring roughly 12 hours per week of staff work [10]. Many practices hire dedicated staff just to manage PA forms. Even with electronic health records, true ePA integration is limited; in 2022 only ~29% of physicians had EHR systems capable of automated PA submission for medications [10].
• Delays and denials of care: Each PA can delay treatment. Studies show negative consequences: for example, one retrospective study found that Medicare patients prescribed oral cancer drugs waited significantly longer for therapy if prior authorization was needed (a delay associated with worse cancer outcomes) [7]. In Medicaid, the effect is also seen: a multi-state analysis found that Medicaid PA requirements reduced the likelihood of continuous buprenorphine therapy for 6+ months, implying more patients discontinued treatment when PA was required [7].
• Case reports of harm: There are documented patient harms from PA delays. In a dramatic case, a Medicaid patient denied authorization for an antiseizure drug suffered a fatal seizure before approval could be obtained [7]. Delays in stroke, cardiac, and other emergency treatments have similarly been linked to PA red tape in other reports.
• Clinical workarounds and inefficiency: Providers often try to mitigate PA delays. One survey found 69% of physicians said PA requirements led them to start patients on less effective treatments initially, and 68% reported extra office visits just to manage PA requirements [7]. In some cases, clinicians reported altering diagnoses or changing prescriptions solely to fit PA criteria [7], a workaround that may affect care quality.
• Disparities by payer: PA burdens hit Medicaid patients hardest. Studies show Medicaid beneficiaries face far higher PA denial rates than other groups. For example, one multi-state analysis found 46% of Medicaid patients were denied a hepatitis C medication vs only 5% of Medicare patients [10]. In 2019 the HHS OIG reported that Medicaid MCOs denied 12.5% of PA requests they reviewed, twice the 5.7% denial rate in Medicare Advantage plans [10]. These differences suggest Medicaid patients encounter more PA-related access barriers than those with Medicare or private insurance.

In summary, heavy PA use can create significant burdens: it slows care, adds costs to providers, and (when improperly applied) can jeopardize patient outcomes. Studies and provider surveys consistently call PA “administratively burdensome” and point to the risk of inappropriate denials and treatment delays [1][7].

Strategies for Streamlining Prior Authorization

Providers and manufacturers are finding ways to work around PA hurdles:

• Adopt electronic PA (ePA) tools: Encouraging broader use of ePA portals can reduce processing time. Many insurers support standardized ePA formats (some via HL7 FHIR standards) to allow providers to submit requests and documents electronically. Evidence suggests ePA often speeds decision times [10], though full efficiency gains require system integration. Practices can enroll in national ePA services (like CoverMyMeds or Surescripts) to auto-populate requests from their EHRs and track approvals. (CMS has also issued regulations to accelerate ePA for Medicare Part D and MA drugs.)
• Prepare robust evidence dossiers: Medical affairs and market access teams should proactively equip clinicians with clinical and economic evidence to justify PA. Developing an AMCP-format dossier or evidence packet for a drug – including trial data, real-world outcomes, and pharmacoeconomic analyses – can be shared with health plans or used at the point of PA submission. Early engagement (even pre-launch) with payer advisory panels or medical directors under programs like the PIE Act can clarify evidence needs. Ensuring that the PA form’s criteria match published evidence (e.g. NCCN guidelines, FDA label, consensus statements) can speed approvals.
• Stakeholder engagement and education: Clinicians and pharma can work with payers to refine PA criteria. For example, some state Medicaid agencies now require transparency on PA criteria and allow provider or patient input when criteria are written. Medical liaisons can coordinate with plan pharmacists or medical directors to explain a therapy’s unique benefits, potentially securing “clinical override” agreements for certain conditions. Engaging patient advocacy groups can also spotlight harmful PA policies (as seen in recent reforms for HIV and OUD treatments).
• Use expedited and emergency provisions: Federal Medicaid law mandates expedited PA decisions for emergencies, and some states formally allow overnight approvals by phone. Providers should leverage these when delays could be life-threatening (e.g. cancer therapy approvals). Similarly, Medicare programs often have “expedited review” processes for urgent cancer care – knowing and using these channels can avoid routine PA timelines.
• Monitor and appeal effectively: Tracking internal PA metrics (see next section) can highlight problematic patterns. When denials occur, firms can support appeals by gathering any missing documentation or peer-to-peer reviews quickly. If a PA criterion is clinically inappropriate, being prepared to escalate through appeals (with robust supporting literature) may overturn denials. Over time, accumulating data on appeals success can inform whether to renegotiate formulary policies with plans or focus on alternate access programs.

Overall, the key is to make the PA process as transparent and evidence-driven as possible, and to reduce redundant paperwork. Encouraging policymakers and payers to adopt “Gold Card” exceptions (where providers with high approval rates can bypass PA) or standard decision timelines can also reduce routine burden. Meanwhile, educating providers about PA requirements and best practices (e.g. always including full diagnostic notes, using correct diagnosis codes) can prevent common hold-ups.

Key Metrics to Track Prior Authorization Barriers

Organizations should establish KPIs to quantify PA impacts. Useful metrics include:

• Volume metrics: Track the number of PA requests submitted per physician or patient population, and the proportion submitted electronically vs manually. This gauges administrative workload.
• Approval/Denial rates: Percentage of PA requests approved on first submission vs denied. A high denial rate (especially for clearly indicated services) signals overly restrictive criteria. Tracking appeals overturn rates is also critical.
• Turnaround time: Measure the average time from PA submission to final decision, and time to medication dispensing after approval. CMS requires MA plans to respond in 7–14 days; monitoring adherence to such benchmarks is important.
• Patient impact: Time from prescription to fill (days of delay due to PA), or % of patients who abandon therapy waiting for PA. Patient satisfaction surveys or case audits (e.g. missed oncology treatment cycles due to PA) can reveal clinical effects.
• Provider burden: Staff-hours spent on PA processes per week or per provider, and PA-related denied claims or rework. Using surveys (like AMA’s) can benchmark against national averages (e.g. the 43 requests/week, 12 hours/week figure [10]).
• Disparity indicators: Compare PA metrics by payer type and region. For example, track PA denial rates separately for Medicare vs Medicaid vs commercial populations; large gaps (as documented in prior studies [10]) might point to inequities needing policy attention.
• Compliance and appeals: Audit how often required clinical justifications or documentation are incomplete at submission (a preventable cause of delay). Also measure success rates of appeal or peer-to-peer processes as a feedback loop on PA stringency.

By routinely analyzing these KPIs, medical affairs and payer-relations teams can identify where PA is causing the most friction and target interventions (for example, focusing on the most-frequent denied service or the plan with the slowest turnarounds). Over time, improvements in these metrics can be linked to specific strategies (like increased ePA use or new evidence submissions) to demonstrate ROI on streamlining efforts.

References

[1] Anderson KE, Darden M, Jain A. Improving Prior Authorization in Medicare Advantage. JAMA. 2022;328(15):1497–1498.
[2] Gupta R, Fein J, Newhouse JP, Schwartz AL. Comparison of prior authorization across insurers: cross sectional evidence from Medicare Advantage. BMJ. 2024;384:e077797.
[3] HHS OIG. Medicare Part D prior authorization requirements and beneficiary impacts. 2021.
[4] Medicaid & CHIP Payment and Access Commission (MACPAC). Prior Authorization in Medicaid. August 2024.
[5] District of Columbia Medicaid Provider Manual, 2023.
[6] MACPAC Issue Brief. Hepatitis C Treatment Access in Medicaid. 2024.
[7] Keshwani S, Maguire M, Goodin A, et al. Buprenorphine Use Trends Following Removal of Prior Authorization Policies for the Treatment of Opioid Use Disorder in 2 State Medicaid Programs. JAMA Health Forum. 2022;3(6):e221757.
[8] Nguemeni Tiako MJ, Dolan AM, Abrams M, et al. Thematic Analysis of State Medicaid Buprenorphine Prior Authorization Requirements. JAMA Netw Open. 2023;6(6):e2318487.
[9] Illinois General Assembly. House Bill 465. 2024.
[10] American Medical Association. Prior Authorization Physician Survey Report. 2023.