Amid nuanced arguments about cost control, treatment guidelines, and the realities of a for-profit healthcare system, some believe the facts show that prior authorization serves no defensible purpose.

That’s the thrust of a new, emphatic report from the American Economic Liberties Project (AELP). Ban Prior Authorization: Ending Big Medicine’s Strategy to Boost Profits by Denying Medically Necessary Care dissects the practice as applied to Medicare, Medicaid, and private group health.

Founded in 2020, the AELP is a non-profit, non-partisan research and advocacy organization focused on antitrust and corporate accountability issues in healthcare and other sectors.

Drawing on data from the Centers for Medicare and Medicaid Services, the American Medical Association (AMA), federal investigative reports, and more, AELP eviscerates the notion that prior authorization effectively controls costs and ensures appropriate care.

Instead, the report argues that prior authorization not only precludes necessary care and worsens health outcomes; it also adds a layer of expensive administrative friction that far outweighs any theoretical cost-cutting or efficiency gains.

…unless, of course, you count the cost savings generated by depriving people of medically appropriate and necessary care.

While the AELP confined its report to Medicare and group health, workers’ comp is also a prime example of how allowing payers to dictate medical decisions can pervert care delivery.

The nation’s largest comp market, California, has strict Utilization Review (UR) requirements, by which everything from a splint to an X-ray to spinal surgery is subject to payer approval. The result is one of the least efficient and most expensive healthcare systems in existence, where workers remain injured longer and significant percentages of employer premiums fund “cost control” rather than care.

Prior Auth: A Drag on Healthcare

Ban Prior Authorization takes aim at the usual arguments for giving payers the final say over a patient’s care, starting with the notion that it makes healthcare systems more efficient (as if a layer of redundant bureaucracy ever has).

According to the report, prior authorization alone generates about 650 million hours of administrative work each year for physicians nationwide, the equivalent of the annual workload of over 99,000 physicians. With the nationwide physician shortage estimated at 84,930, eliminating prior authorization would theoretically close that workload gap:

“Physicians and their teams now spend so much time on prior authorization that it consumes the equivalent of 99,290 full-time physician and advanced practice clinician workloads — more than the nation’s current physician shortage…”

Those hundreds of millions of work hours are worth as much as $32.7 billion annually, all in service of a system that may prevent a significant amount of valid care as it targets fraud and abuse.

Citing a 2025 AMA survey, the AELP notes that 26% of physicians report that prior authorization led to a “serious adverse event for a patient in their care, including hospitalization, permanent impairment, birth defect, or death.”

Moreover, appeals data demonstrate the prevalence of invalid treatment denials. Citing a former Chief Medical Officer for UnitedHealthcare who reviewed prior authorization data on Medicare Advantage plans under both United and Humana, the AELP notes the majority of appeals against those denials are successful (though the percentage of denials that face appeals is small).

In 2025, 58% of appeals against United’s denials were successful, and 65% of appeals against Humana denials were successful.

By extrapolating the overturn rate to all denials in the 2025 data for United and Humana, the numbers suggest that prior authorization is really only “controlling costs” for payers:

“Using a conservative estimate of $100 per claim — applied to each denied case at the same overturn rate seen in actual appeals (58% for UnitedHealthcare; 65% for Humana) — the numbers are striking. Combined, across just two Medicare Advantage plans, wrongly denied and unappealed claims generated an estimated $100 million per year in avoided costs.”

The AELP is not alone in its concern about whether prior authorization prevents necessary care. Wendell Potter of HEALTH CARE un-covered reports on a Bloomberg Law study of 2025 prior authorization data from Aetna, Centene, Elevance, Humana, and United, showing that patients win their prior authorization appeals about half the time, collectively. Some individual plans saw 90% of appealed denials overturned.

While most treatment denials are never appealed, the fact that so many appeals are successful suggests, at the very least, that payers are erring on the side of denial.

CA Comp: A Cautionary Authorization Hellscape

In California’s UR system, doctors who treat injured workers must navigate an administrative labyrinth that requires them to fax treatment requests and medical documents to payers to obtain authorization. Some payers ignore these requests or issue bloated, illegible, or nonsensical UR decisions denying care.

daisyData show that historically, the hundreds of payers in our system collectively approve only around 70% of physician-requested treatment, a figure that’s implausible at best.

Wide variations in approval rates from payer to payer suggest that the payer involved is the primary determinant of whether care gets approved, rather than medical necessity. The largest payer in our system, Sedgwick, previously boasted of derailing more than 50% of treatment requests to produce a “return on investment” for its clients.

Both AELP and Bloomberg find sky-high denial overturn rates across the biggest healthcare companies in the nation. Yet in California, Independent Medical Review, the process by which injured workers can appeal treatment denials, overturned only 10.2% of treatment denials in 2025.

Make that make sense.

We’ve seen the results of a system that defers overwhelmingly to payers in medical decision-making, and they’re ugly. Anyone who doubts AELP’s conclusions regarding the Medicare and private health markets needs only look to California to see what happens when payers can overrule treating physicians.

Solutions for CA and the Nation

Ban Prior Authorization’s primary policy recommendation is right there in the title. However, the report recognizes that there may be cases where it is an appropriate check on invalid treatment utilization.

To wit, AELP offers a series of general authorization recommendations that we believe would also radically improve treatment utilization in workers’ comp. They include:

• Allowing prior authorization requirements only when a government agency produces written, evidence-based documentation that the provider and/or treatment is particularly prone to waste or abuse (e.g., provider history of fraud, experimental treatment, or overprescription relative to clinical effectiveness).
• Requiring all prior authorization decisions to be made by independent third parties, with no financial benefit tied to denial rates.
• Ban payers from owning/investing in companies that adjudicate authorization requests.
• Ban treatment request adjudication by AI technology.
• Require payers to conduct peer-to-peer communications only with physicians board-certified in the same specialties and subspecialties as the requesting physician.
• Institute a 24-hour “shot clock”; non-response to authorization requests = automatic approval.
• Institute standardized electronic authorization request and response systems with records accessible to all parties, including the patient.
• Guarantee of coverage: once care is approved, the payer must cover it, without exception.

Except in extremely narrow circumstances, there’s no data-backed, legitimate benefit to overruling treating doctors and placing a wall of bureaucracy between patients and the care they need.

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