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, and the NAIC evaluation tool treats claims and health AI decisions as high-risk for examination.
For health insurers, the governance question is whether a human reviewer with the right clinical authority can override the AI and whether the reason for the decision is documented. See our analysis of AI in health insurance governance and agentic AI in claims.