What Can Government Do to Help Consumers?
Prior authorization can be a useful tool for protecting patients from low-value care that provides little benefit or might actually harm them. However, the processes insurers currently use lack clear rationales that patients and their providers can understand. Most troubling is that prior authorization is preventing patients from getting the care they need while placing additional burdens on physicians and their staff.
When asked what policymakers might do to help consumers, focus group participants said there should be greater transparency in insurer decision-making with “no ambiguity” in which procedures are covered. Some participants thought there should be external oversight by “another entity outside the insurers themselves” and said there must be clear reasons “why an insurance company is rejecting coverage, particularly when the test or procedure is ordered or recommended by a doctor.” There was also a desire for transparency to see where their premium dollars were going. Said one participant, “They are not using the money to pay for my care, and that is what frustrates me a lot.”
A Patchwork of Inadequate Laws and Regulations
The United States has a dated and patchwork system of regulations governing coverage denials and patients’ right to appeal them. Denial rules for employer plans have not been updated since 2000. In 2010, the ACA extended those rules to apply to all nongrandfathered individual and marketplace plans. While the Biden administration issued a new set of regulations on denials in 2024, these apply only to plans that fall under the jurisdiction of the Centers for Medicare and Medicaid Services (CMS), including marketplace plans in the 30 states that use the federal HealthCare.gov platform. They do not apply to employer plans or marketplace plans in states that run their own marketplaces.
Several states have passed laws that go further than federal requirements. States, however, lack jurisdiction over large, self-insured employers, which employ the majority of Americans.
In 2025, the largest U.S. health insurers announced a voluntary commitment to streamline prior authorization processes, including reducing the number of services subject to prior authorization and honoring preapprovals for a set period when people switch health plans.
Clearly, there is a need to bring order to the fragmented set of laws governing coverage denials. Congress can accomplish this through standardization across all types of insurance and through the expansion and strengthening of rules regarding transparency in coverage decisions, oversight of insurers, and patients’ rights to appeal decisions. Options include:
Expanding the right to appeal. Consumers in nongrandfathered health plans, including employer plans, have the right to appeal coverage denials, and insurers are required to review and reconsider their decisions. If an insurer still denies coverage, patients have the right to an independent third-party review, and the insurer must accept the outcome of that review.
However, federal regulations restrict third-party appeals to denials based on medical necessity, which one study found made up just 5 percent of all denials. The majority of denials are for unspecified reasons, administrative issues, excluded services, and lack of referral or prior authorization. Consumers would be better served if all denials were eligible for external review.
Standardizing and streamlining prior authorization procedures in all health plans. The Biden administration issued a rule in 2024 seeking to increase transparency and standardization of prior authorization procedures for insurers selling plans in the 30 marketplaces that use HealthCare.gov, as well as those in other public programs. Beginning in January 2027, these payers must maintain a secure electronic portal with their list of covered items and services, documentation requirements for prior authorization, and a record of prior authorization requests and responses. CMS recently introduced a new proposed rule that would extend these requirements to prior authorization of prescription drugs.
The federal government could expand both rules to cover all marketplace and employer plans. It also could require much greater transparency about insurer criteria for selecting services that need prior authorization.
Learning from states’ approaches to prior authorization. At least 10 states have implemented a “gold card” approach for providers that reach a threshold level of prior authorization approvals. This enables providers to deliver certain services or prescribe drugs without seeking prior authorization. Several other states have shortened timelines for insurers to respond to prior authorization requests, required reviewers to meet clinical qualifications, or exempted or limited some services from prior authorization review, such as mental health care or care for chronic conditions. Although these state actions do not affect people in self-insured employer plans, they can inform federal policy.
Funding consumer assistance programs. The ACA authorized Consumer Assistance Program (CAP) grants to help states establish or strengthen services for patients to inform them of their rights and help them resolve health plan disputes. In the first year, CAP grants allowed states to recover more than $18 million for patients.
Although federal funding for CAP grants has ended, the programs still exist in 31 states and the District of Columbia and continue to save consumers money (for example, Connecticut recovered $4.3 million for patients in 2021). Reinstating federal funding could help establish CAPs in the 20 states that currently don’t have them.
Reporting health care claim denials and appeals. The ACA requires all nongrandfathered health plans, including all employer plans, to report data on claim denials, the reasons for the denial, and the total number of denied and appealed claims. However, the federal government has limited enforcement to just marketplace plans sold through 30 marketplaces operated by the federal government. The Biden administration’s 2024 rule increases data reporting requirements for these plans, but patients may not be aware that this information is available on an insurer’s website. Expanding public reporting of these decisions to include all marketplace plans and employer plans — and making the data accessible and understandable to consumers on publicly accessible websites — would further the public’s understanding of insurer practices.
