Policy Brief: Payer Administrative Responsibility in Prior Authorization

Attempts to limit prior authorization quantity and scope have faced enormous push back. This brief puts forth a different path - shift administrative burden to the companies who create it.

HHTF Staff · 2026-06-12

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Healthcare Policy Brief

Payer Administrative Responsibility in Prior Authorization

Hawaiʻi should require payers, pharmacy benefit managers, and utilization review entities to complete their own administrative work before demanding clinical labor from physicians and their staff.

Summary

This proposal does not ban prior authorization. It does not prevent insurers from using formulary management, step therapy, site-of-care review, or medical necessity criteria. It simply requires the entity using prior authorization to operate the process competently. The physician’s job is to answer the clinical question. The insurer’s job is to know what question it is asking.

The Problem

Prior authorization is often defended as medical necessity review, but the burden on physician offices is frequently administrative rather than clinical. Payers send vague requests for “records,” “chart notes,” “medical necessity documentation,” or “additional information,” leaving physician offices to determine which policy applies, what eligibility or benefit issue is involved, which form is required, and what the reviewer is actually asking.

This shifts payer administrative work onto clinicians. The payer holds the benefit rules, formulary rules, claims history, eligibility data, routing information, and policy criteria. Yet physicians and staff are often forced to troubleshoot payer portals, correct payer-held demographic information, resubmit after portal timeouts, or complete preliminary forms before receiving the actual prior authorization request.

A portal does not solve this problem merely by existing. A portal that requires duplicate entry, fails to find the patient, routes the request incorrectly, links to broad policies instead of identifying the unresolved criterion, or asks for “chart notes” without stating the clinical question is not administrative simplification. It is a digital obstacle course.

Current Policy Context

Hawaiʻi has already recognized prior authorization as a policy problem. HB250, enacted as Act 151 in 2025, requires utilization review entities doing business in Hawaiʻi to submit prior authorization data to the State Health Planning and Development Agency.

Federal policy is also moving toward more structured prior authorization. CMS’s 2024 Interoperability and Prior Authorization Final Rule requires affected payers to improve prior authorization processes, implement certain electronic interfaces, provide specific reasons for denials, and report prior authorization metrics.

These reforms are useful, but they do not fully solve the burden-allocation problem. The missing standard is simple: before a payer demands physician labor, the payer must complete its own administrative review and ask a specific, complete, patient-specific question.

Proposed Policy Standard

Hawaiʻi should create a payer administrative responsibility requirement for prior authorization.

Before requesting information from a treating clinician, the payer, PBM, utilization review entity, or delegated agent should be required to verify eligibility, identify the applicable benefit or coverage policy, identify the applicable formulary rule, step therapy rule, site-of-care rule, or medical necessity criterion, review claims and other data reasonably available to the payer, disclose all information requirements reasonably knowable at the outset, and state the specific unresolved clinical question.

General requests for “records,” “chart notes,” “medical necessity documentation,” or “additional information” should not be sufficient. If the payer needs information, it should have to say what it needs and why. The request should identify the exact unresolved criterion and the minimum acceptable answer.

The payer should also be required to provide one complete submission pathway per authorization. The clinician should not have to complete an intake form before receiving the real form. The payer should not be allowed to reveal requirements in stages when those requirements were reasonably knowable at the beginning. A payer should not be permitted to deny a request based on information it never specifically requested.

Portal and Fax Protection

Payers should always be required to accept prior authorization requests by fax or another simple written submission method. Portals may be offered, but they should not be mandatory.

This is not an argument for fax as ideal technology. It is a practical safeguard against making defective payer portals the exclusive path to care. If a payer portal is genuinely faster, clearer, and less duplicative than fax, clinicians will use it. If clinicians choose fax, that is evidence that the portal is not actually reducing administrative burden.

A payer should not delay, deny, reject, or impose additional requirements because a request was submitted by fax rather than through an electronic portal. A payer also should not require clinicians to correct, reconcile, or re-enter payer-held eligibility, demographic, benefit, routing, or enrollment information as a condition of submitting or completing a prior authorization request.

Enforcement

The enforcement mechanism should be case-specific deemed approval.

If a payer fails to follow the required process for an individual prior authorization request, that individual request should be deemed approved. The remedy should apply only to the specific enrollee, medication, service, dose, course of treatment, or episode of care at issue. It should not eliminate the payer’s ability to require prior authorization for other patients or future requests.

For ongoing medications and recurring services, the approval should last at least twelve months and include clinically appropriate titration or continuation identified by the treating clinician. For a discrete test, procedure, admission, or episode of care, the approval should cover the requested service and the clinically necessary related episode.

This remedy is stronger than a fine because it changes the payer’s incentive. If the payer operates the process correctly, prior authorization remains available. If the payer mishandles the individual authorization, the patient and physician should not bear the cost of that failure.

Anticipated Objections

Payers may argue that their portals already do this.

The standard should reject that argument unless the portal provides a patient-specific, request-specific, policy-specific response that identifies the applicable policy, the unresolved clinical criterion, all requirements reasonably knowable at the outset, and the minimum information needed to resolve the request.

Payers may argue that implementation will cost money.

That may be true, especially for entities with poorly structured policies or outdated systems. But the cost is the cost of doing payer administrative work. If a payer chooses to impose prior authorization, step therapy, formulary management, or site-of-care rules, it should be able to identify those rules before interrupting clinical care.

Payers may argue that more data is needed before reform can proceed.

Hawaiʻi has already enacted a prior authorization reporting framework through Act 151. Existing reporting should inform implementation and enforcement, but incomplete or disputed cost estimates should not delay the basic duty to operate prior authorization competently.

Core Legislative Concept

A payer, pharmacy benefit manager, utilization review entity, insurer, health plan, or other entity acting on behalf of a payer, with respect to health coverage subject to the laws or regulatory authority of the State, shall complete its administrative review before requesting information from a treating health care provider for purposes of prior authorization.

Before requesting information, the entity shall verify eligibility, identify the applicable benefit and policy, review data reasonably available to the entity, identify all information requirements reasonably knowable at the outset, and state the specific unresolved clinical question and the minimum information sufficient to answer it.

A general request for records, chart notes, medical necessity documentation, or additional clinical information shall not satisfy this requirement unless the request identifies the specific unresolved clinical criterion.

A payer shall accept prior authorization requests and supporting information by facsimile or another written submission method and shall not require an electronic portal as the exclusive method of submission.

Failure to comply shall result in approval of the individual prior authorization request at issue, limited to the enrollee, medication, item, service, dose, course of treatment, or episode of care that was the subject of the noncompliant request.

Bottom Line

This proposal does not eliminate prior authorization. It assigns responsibility for the administrative work to the party that created the system, controls the rules, holds the data, and profits from utilization management.

Insurers can keep prior authorization if they insist. They should not be allowed to make physician offices operate the machine for them.

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