Prior Authorization
A process where a health insurer must approve a treatment, service, or drug before covering it. AI has made this a focus of regulator and clinician scrutiny.
Prior authorization requires a health care provider to obtain approval from a health insurer before a service, treatment, or prescription is covered. Insurers use the process to control costs and reduce unnecessary care, but it is also one of the most complained-about administrative burdens in health care.
AI has made prior authorization a regulatory flashpoint. Automated systems can approve or deny requests faster than human reviewers, but they can also accelerate errors or apply opaque criteria. California’s SB 1120 requires that a licensed clinician make the final medical-necessity determination. The NAIC evaluation tool counts claims and utilization review among the operational areas it asks about and leaves the risk criteria to the insurance company, so whether a prior-authorization model reaches Exhibit C is the insurer’s own classification call.
Can a human reviewer with the right clinical authority override the AI, and is the reason for that decision written down? Those two questions carry the governance weight for health insurers. See our analysis of AI in health insurance governance and agentic AI in claims.