What Is a Prior Authorization Requirement?

What a Prior Authorization Requirement Means

A prior authorization requirement is a payer policy mandating that specific services, procedures, medications, or levels of care receive formal approval before the provider renders them or submits a claim. The provider or facility submits a precertification request with clinical documentation, and the payer reviews it against medical necessity and plan benefit criteria. If authorization is not obtained or the authorization number is not included on the claim, the payer typically denies payment citing CARC code 197 or code 15.

Why Prior Authorization Requirements Matter

Prior authorization is one of the most common and most preventable sources of claim denials in outpatient and facility billing. Payers use authorization requirements to control utilization and costs on high-dollar services including imaging, surgery, specialty pharmacy, and inpatient admissions. For revenue cycle teams, authorization denials represent a mix of true process failures and recoverable denials where authorization was actually obtained but not properly linked to the claim. Industry data shows authorization-related denials account for approximately 12 percent of all commercial denials.

How Prior Authorization Affects Your Claim

When a claim arrives without a valid authorization number for a service that requires one, the payer's claims system automatically denies or pend the line item. The remittance shows a denial reason referencing missing or invalid precertification. Even when authorization was granted, failure to enter the correct authorization number, date range, or approved units on the claim triggers the same denial. Retroactive authorization may be available for true emergencies or when the payer failed to respond to a timely authorization request within mandated timeframes — typically 72 hours for urgent requests and 15 days for standard requests under many state regulations.

What to Do About a Prior Authorization Denial

Check whether authorization was obtained and whether the authorization number was correctly entered on the claim. If authorization exists but was not linked, submit a corrected claim with the valid authorization number. If authorization was denied or never requested, evaluate whether retroactive authorization applies for emergency services or payer non-response. File a first-level appeal with the authorization approval letter, clinical documentation supporting medical necessity, and evidence of timely submission if the payer missed response deadlines. Upload your denial to Denial Appeal Pro to generate an appeal letter mapped to your specific authorization denial reason.

Frequently Asked Questions

Which services typically require prior authorization?

Common prior authorization requirements apply to advanced imaging such as MRI and CT scans, inpatient admissions, specialty drugs, durable medical equipment, and many surgical procedures. Each payer publishes its own authorization list in provider manuals.

Can I appeal a denial for missing prior authorization?

Yes, in several situations. If authorization was obtained but not linked to the claim, retroactive authorization may be granted for emergencies, or the payer failed to respond within required timeframes, an appeal with supporting documentation can overturn the denial.

How long is a prior authorization valid?

Authorization validity periods vary by payer and service type, typically ranging from 30 to 180 days from the approval date. Always verify the authorized date range and number of approved units before rendering the service.

What CARC code indicates a prior authorization denial?

Prior authorization denials commonly appear with CARC code 197 for precertification or authorization absent, and CARC code 15 for authorization number missing or invalid. Check the accompanying RARC remark code for specific payer instructions.