What Is Prior Authorization?

What Prior Authorization Means

Prior authorization, also called precertification or pre-approval, is a utilization management process requiring a health care provider to obtain advance approval from the patient's insurance plan before delivering specific services, procedures, medications, or equipment. The payer reviews clinical information to determine whether the requested service meets its medical necessity and coverage criteria. If approved, the payer issues an authorization number valid for a defined period and number of units. If denied, the provider must either appeal the authorization decision or inform the patient that the service may not be covered. Prior authorization requirements vary by payer, plan type, and service category.

Why Prior Authorization Matters

Prior authorization is the single most preventable cause of claim denials in modern health care. When a service is rendered without required prior auth, the resulting claim denial assigns CARC 197 and typically results in zero payment regardless of medical necessity. Revenue cycle teams spend significant staff time obtaining authorizations, tracking expiration dates, and resolving auth-related denials after the fact. CMS and state regulators have increasingly scrutinized prior auth practices, requiring faster decision timeframes and greater transparency. For patients, a prior auth denial can delay critical treatment by days or weeks while the appeal process runs its course.

How Prior Authorization Affects Your Claim

During claims adjudication, the payer's system checks whether a valid authorization number is linked to the claim for services on its prior auth list. If no authorization is on file, the claim receives CARC 197 and is denied regardless of whether the service was medically appropriate. Even when authorization was obtained, mismatches between the authorized procedure code, date range, or provider NPI and the submitted claim can trigger denial. Authorization numbers must be included on the claim form in the designated field, and the service date must fall within the authorization's effective period. A single digit error in the authorization number is enough to cause a denial that requires manual correction and resubmission.

What to Do About a Prior Authorization Denial

Check whether authorization was actually obtained and whether the authorization number was correctly submitted on the claim. If auth was approved but not linked, submit a corrected claim with the authorization number. If auth was never obtained, request retroactive authorization citing emergent circumstances or payer processing delays. If auth was denied before service, appeal the authorization decision with clinical documentation demonstrating medical necessity under the payer's coverage policy. File within the plan's appeal deadline and reference the specific payer policy criteria the service meets. Upload your CARC 197 denial to Denial Appeal Pro for instant analysis and appeal letter generation mapped to your payer's authorization requirements.

Frequently Asked Questions

What is CARC 197 and how does it relate to prior authorization?

CARC 197 indicates a claim was denied because precertification, authorization, or pre-treatment approval was not obtained. It is the most common CARC code assigned to prior authorization failures and signals that the payer has no record of approved authorization for the service.

Can prior authorization be obtained retroactively?

Some payers allow retroactive authorization for emergent or urgent services where prior auth was not possible before treatment. Policies vary by payer and plan, and retroactive auth is never guaranteed — document the clinical urgency that prevented advance approval.

How long does prior authorization approval take?

Standard prior auth requests must be decided within 14 days for most commercial plans under ACA rules. Urgent requests must be decided within 72 hours. Medicare Advantage and Medicaid managed care plans follow similar but plan-specific timelines.

What services typically require prior authorization?

Common prior auth requirements apply to advanced imaging like MRI and CT scans, inpatient admissions, specialty drugs, durable medical equipment, bariatric surgery, and many outpatient procedures. Each payer publishes its own prior auth list.