What is prior authorization and which party makes the decision?

• A. A process requiring plan approval before coverage; the plan or its designee approves or denies
• B. A patient self-approves a drug for coverage
• C. A pharmacist approves every prescription
• D. A state agency approves all medications before dispensing

Answer: (A)

Prior authorization is a process where approval for coverage is obtained from the payer before a drug or service will be covered. The decision is made by the plan or its designee (such as a pharmacy benefits manager or medical director), who reviews clinical information to determine medical necessity and appropriateness. This upfront step helps control costs and ensures that high-cost or specialized treatments are used appropriately.

It’s not something a patient self-approves, nor does a pharmacist approve every prescription, and it isn’t a state agency approving all medications before dispensing. The plan or its designee holds the authority to approve or deny coverage.