A comprehensive new analysis from KFF has revealed that private insurers across the three largest government-funded or regulated health insurance markets—Medicare Advantage, Medicaid managed care, and the Affordable Care Act (ACA) Marketplace—denied millions of prior authorization requests in 2025, with denial rates reaching as high as 18% in some sectors. The report, which scrutinized data from 14 major insurers representing approximately 71 million enrollees, highlights a growing friction point in the American healthcare system: the balance between cost-containment measures and patient access to prescribed medical care.
The findings come at a pivotal moment for the healthcare industry. Following a landmark 2024 final rule from the Centers for Medicare & Medicaid Services (CMS), payers are now required to publicly disclose prior authorization metrics, including approval and denial rates, on their websites. This regulatory shift was intended to pull back the curtain on a process that has long been criticized by physicians and patients for being opaque and burdensome. However, the KFF analysis suggests that while the data provides a new level of transparency, significant gaps remain that prevent consumers from making fully informed comparisons between plans.
Understanding the Landscape: Denial Rates by Market
The KFF study found that the frequency of denials varies significantly depending on the type of insurance coverage. ACA Marketplace insurers, which operate through the federally facilitated marketplace, posted the highest average denial rate at 18%. Medicaid managed care insurers followed closely with a 14% denial rate for standard prior authorization requests. Medicare Advantage plans—the private alternative to traditional Medicare—had the lowest average denial rate among the three categories at 12%.
Prior authorization is a utilization management tool used by health insurance companies to determine if a prescribed procedure, service, or medication is medically necessary before it is administered. While insurers argue that these checks are essential for controlling costs and preventing unnecessary or unsafe treatments, the high volume of denials has raised concerns among consumer advocates.
The report also highlighted the speed of these determinations. Across all three markets, the median response time for a standard prior authorization request was approximately one business day. For expedited requests—those where a delay could seriously jeopardize a patient’s life or health—the response times were even faster. Medicare Advantage plans showed a median response time of about half a day, while Medicaid managed care and ACA Marketplace plans typically responded within one full day. Interestingly, denial rates for these expedited requests were generally lower than those for standard requests, suggesting that insurers may exercise more leniency or prioritize clinical necessity in urgent scenarios.
Insurer-Specific Variations and the "Black Box" of Medical Necessity
One of the most striking revelations in the KFF analysis is the wide disparity in denial rates between individual insurance companies. These discrepancies suggest that a patient’s likelihood of receiving approved care may depend less on their clinical condition and more on which company manages their policy.
In the Medicare Advantage sector, standard denial rates ranged from a low of 5% at Elevance Health to a high of 17% at UnitedHealth Group. The Medicaid managed care sector saw even more dramatic swings, with L.A. Care Health Plan denying only 2% of requests, while Independence Health Group denied 23%. In the ACA Marketplace, the range spanned from 3% at GuideWell to a staggering 25% at Centene.
Despite this newfound transparency regarding raw numbers, the KFF report noted a critical missing piece of the puzzle: insurers are currently not required to disclose which specific types of services are being denied. This "service-level" data is essential for understanding whether denials are concentrated in high-cost areas like specialty drugs and advanced imaging, or if they are affecting routine diagnostic tests and therapy. Without this granularity, researchers and policymakers struggle to identify whether certain insurers are systematically targeting specific treatments to reduce expenditures.
The Appeal Paradox: High Success Rates Amid Low Volume
The KFF analysis brought to light a significant "appeal paradox" within the prior authorization process. Across all markets, the vast majority of denied requests are never appealed by patients or their healthcare providers. This lack of follow-through is often attributed to the administrative complexity of the appeals process, which can be time-consuming and discouraging for patients already dealing with illness.
However, for those who do choose to fight a denial, the chances of success are remarkably high. In Medicare Advantage, approximately 67% of prior authorization denials were overturned upon appeal. The success rates were also substantial in other sectors, with 47% of denials overturned in Medicaid managed care and 43% in the ACA federally facilitated Marketplace.
This high rate of reversals raises questions about the accuracy of the initial determinations. Critics of the current system, including the American Medical Association (AMA), have argued that high overturn rates suggest that many initial denials are "rubber-stamped" by automated systems or reviewers who may not have the appropriate clinical expertise. The administrative cost of processing these appeals—only to arrive at an approval later—is a significant burden on the healthcare economy.
Regulatory Context and the CMS Interoperability Rule
The data analyzed by KFF is a direct result of the CMS Interoperability and Prior Authorization Final Rule (CMS-0057-F). This regulation was designed to modernize the prior authorization process, which has traditionally relied on outdated technology like fax machines and manual phone calls.
The rule mandates that impacted payers—including Medicare Advantage organizations, state Medicaid agencies, and ACA Marketplace insurers—implement an electronic prior authorization process using Health Level 7 (HL7) Fast Healthcare Interoperability Resources (FHIR) standards. Beyond the technical upgrades, the rule requires insurers to:
- Provide a specific reason for any denial.
- Adhere to shorter decision timeframes (72 hours for urgent requests and seven calendar days for standard requests).
- Publicly report prior authorization metrics on their websites.
While the 2025 data represents a major step forward, KFF researchers pointed out that the lack of a standardized reporting format makes the data difficult for the average consumer to navigate. Insurers often bury these metrics deep within their websites or present them in complex spreadsheets that require technical expertise to interpret.
Industry and Provider Reactions
The healthcare industry remains deeply divided over the utility and execution of prior authorization. Organizations representing insurers, such as AHIP (formerly America’s Health Insurance Plans), maintain that prior authorization is a vital tool for ensuring evidence-based care and protecting patients from the risks associated with unnecessary procedures. They point to the fast median response times cited in the KFF report as evidence that the system is becoming more efficient.
Conversely, the provider community remains skeptical. In a recent survey by the AMA, 94% of physicians reported that prior authorization leads to delays in care, and 80% said it can lead to patients abandoning their treatment entirely. Physicians have also expressed concern that the "commitments" made by insurers in 2023 to reduce prior authorization volumes by 11% have not translated into a noticeable reduction in administrative workload at the clinic level.
The concept of "gold carding"—where providers with a high track record of prior authorization approvals are exempt from certain requirements—has been proposed as a solution. However, implementation has been slow and inconsistent across the private sector.
Implications for the Future of Healthcare Access
The KFF report concludes that while the new transparency requirements are a "valuable first step," they are currently insufficient for direct consumer comparison. For the 2024 regulation to achieve its intended goal of empowering patients, intermediaries—such as consumer advocacy groups, healthcare navigators, and data analytics firms—will likely need to aggregate and "translate" this raw data into user-friendly tools.
Looking ahead to 2026 and 2027, the full implementation of the CMS interoperability standards is expected to further streamline the process. However, the fundamental tension remains: as long as insurers are incentivized to control costs and providers are incentivized to deliver care, prior authorization will remain a contentious battleground.
The high denial rates in the ACA Marketplace and Medicaid managed care, in particular, highlight potential barriers to care for vulnerable populations. As policymakers review the 2025 data, there may be increased pressure to mandate service-level reporting and to standardize the format of these public disclosures to ensure that transparency leads to accountability. For now, the KFF analysis serves as a stark reminder that for millions of Americans, the doctor’s prescription is only the first step in a complex and often uncertain journey toward receiving medical treatment.
