Between the hearing on Capitol Hill and the HELP Committee’s ongoing review of payor oversight, scrutiny of how payors actually operate is no longer theoretical. Lawmakers are asking pointed questions. Regulators are circling. And insurers’ carefully curated narrative is crashing into the lived experience of patients and providers.
And, payors are feeling pressure where it hurts the most: margins. Medical utilization is in full rebound. ACA subsidies have reshaped risk pools. Cost trends are no longer cooperating the way they did during pandemic years. Shareholders, though, still expect the same returns they’ve enjoyed for years.
Never mind that nearly every national insurance behemoth owns a provider group, a specialty pharmacy, a PBM and/or a constellation of other assets that keep American healthcare dollars circulating within their own ecosystems. Vertical integration has given payors unprecedented control over the flow of care and cash. But apparently, that still isn’t enough.
So, where do they find more money with margins under pressure?
Enter prior authorization—the oldest trick in the playbook—now freshly polished and aggressively redeployed, unearthed by a recent report from Modern Healthcare.
The article details that payors are increasingly leaning on prior authorization as a margin-protection strategy, particularly in Medicare Advantage. The impact is painfully familiar to health systems: care delayed, physicians buried in paperwork, and patients stuck waiting while forms bounce back-and-forh. Prior authorization doesn’t just slow care—it quietly keeps dollars within the insurance ecosystem by increasing denials, discouraging utilization, and wearing providers down through sheer administrative exhaustion.
What makes this moment especially galling is the contradiction. Despite denying, on average, more than 1 in 10 Medicare Advantage preapproval requests, AHIP and Blue Cross Blue Shield Association (along with more than 40 other companies) offer lip service about “streamlining” and “simplifying” the process. If that were true, payors wouldn’t be hiring entire teams just to manage authorizations, appeals, and denials. The data in comparison to the day-to-day reality are telling a very different story.
Providers: take note. Winning concessions at the negotiating table around timely claims payment or greater constraints around prior authorization requirements isn’t actually helping your operations. Fewer opportunities for denials in one area mean payors will scrutinize harder where they still have authority. The squeeze doesn’t stop—it shifts.
Systems that walk into negotiations focused solely on rate increases are missing the bigger picture. Administrative burden is no longer a side issue; it’s a core economic lever. Payors have known it and they’ve used it. And now it’s getting more aggressive.
It’s time providers get tactical. Administrative friction—prior authorization volume, denial patterns, turnaround time and enforcement mechanisms—must be front and center in managed care negotiations. Systems that fail to address these pressure points will find themselves “winning” on paper while losing in practice.
Insurers might be under the microscope, but don’t expect them to change behavior voluntarily. Until incentives shift, prior authorization will remain a weapon of choice. Now, providers have to decide whether they’re ready to stop absorbing the cost and start pushing back where it counts.
