A Prior Authorization (PA) is also considered a cost control measure for the MCOs.

A Prior Authorization (PA) is also considered a cost control measure for the MCOs.

• A. True
• B. False
• C. Not sure
• D. Not applicable

Answer: (A)

Prior authorization is a policy tool used by managed care organizations to ensure medical necessity and appropriate use of services before payment is approved. By requiring pre-approval for high-cost or high-utilization items—such as specialty medications, advanced imaging, or certain procedures—MCOs can prevent overuse and steer patients toward evidence-based, cost-effective options. This gatekeeping helps control overall spending, supports formulary adherence, and strengthens negotiations with providers on appropriate care. That combination of protecting patients while managing budget makes prioritization through prior authorization a clear cost-control measure, so the statement is true.

Prior authorization is a policy tool used by managed care organizations to ensure medical necessity and appropriate use of services before payment is approved. By requiring pre-approval for high-cost or high-utilization items—such as specialty medications, advanced imaging, or certain procedures—MCOs can prevent overuse and steer patients toward evidence-based, cost-effective options. This gatekeeping helps control overall spending, supports formulary adherence, and strengthens negotiations with providers on appropriate care. That combination of protecting patients while managing budget makes prioritization through prior authorization a clear cost-control measure, so the statement is true.