HR Leverage: New Prior Authorization Rules Bring Opportunities

Major insurers are loosening prior authorization rules, reducing delays for care and forging a path for HR leaders to cut health care costs. Humana plans to drop requirements for a third of outpatient services by 2026, while UnitedHealth, the largest insurance provider by revenue, will scale back required approvals for roughly 80 drugs this year. Even if your company isn't a direct client, these moves create leverage to re-evaluate your total rewards strategy.

These updates may touch only part of the market, but they create a valuable data point for HR executives seeking to benchmark costs and anticipate insurer moves.

The Challenge of Prior Authorizations 

Prior authorizations are intended to manage health care costs, but they often create significant hurdles for employees and their families. When a needed treatment is delayed pending an insurer's approval, an employee's health can decline, potentially requiring more intensive and costly care later. In fact, reports from provider groups such as the American Academy of Allergy, Asthma & Immunology and the American Medical Association (AMA) show prior authorizations playing a large role in adverse medical outcomes.

These delays also affect productivity. More than half (53%) of physicians reported prior authorizations have negatively impacted their patients' job performance, according to the AMA. Patients themselves can feel stressed or anxious, with 35% of adults surveyed by the PAN Foundation's Center for Patient Research reporting prior authorization requirements created increased stress or anxiety. Left unchecked, these costs can hurt business accretion, or the steady growth of an organization.  

Counting the Cost of Care

Health care is a significant expense for organizations, and often a crucial part of a total rewards program that attracts and retains talent. It is also a balancing act, especially as the average cost of employer-sponsored health care plans is expected to exceed $16,000 per employee in 2025, a 9% jump from 2024, according to Aon, an insurance broker and risk management consulting firm. This puts immense pressure on HR to find savings while still supporting total rewards that help drive retention. 

"No option is off the table for us related to the effective management of cost in our organization while still meeting the core needs of our employee population," explained Jim Link, SHRM-SCP, chief human resources officer at SHRM, during a recent webinar. 

Many employers have already found ways to cut costs while attempting to meet the core needs of employees. Wellness programs are a prime example. The share of organizations spending on wellness programs with resources is down 3% from 2024 to just 39% of firms, and down 14% from 2021, when 53% of firms surveyed spent money on wellness programs with resources, according to SHRM's 2025 Benefits Survey. 

There is a limit to this, however. Cutting a program once is not a repeatable strategy — you can't eliminate the same benefit year after year to offset rising costs.

Employers balancing costs with robust total rewards must also consider the employee experience. According to a 2024 survey by MetLife, 61% of workers said their benefits reduce financial stress — a reminder that cutting too deeply can backfire. Recent changes to prior-authorization rules create a fresh opportunity to rein in expenses. The savings and usage data these changes generate can guide smarter total-rewards decisions and give employers stronger feedback to share with insurance brokers.

Toolkit: Essential Health Care Cost Management Strategies

Drive Toward Opportunity

Both employees and employers stand to gain from the new prior-authorization rules, raising the stakes for getting this right. Lower administrative hurdles can ease stress and improve care for workers, while the potential cost savings give organizations fresh leverage to control health-care spending. Whether the payoff comes immediately or over time, the moment calls for a deliberate strategy to strengthen total benefits.

1. Get Smart with Metrics 
Identify where costs are high for total rewards and explore mitigation options. For example, Link explained that as an organization, SHRM tries to limit pharmaceutical spending to less than 30% of overall health care costs. "I would encourage folks looking at high numbers to look at other solution sets, whether it's utilizing PBMs, utilizing rebates, or engaging their broker," Link said.

2. Reassess Your Role as an Employer 
In a review of studies that evaluated the impact of employer-led efforts to improve the value of health spending, researchers identified employers, employees, and the details of benefits design as key players in the success of health benefits initiatives. Understanding the impact these three players have can help employers make decisions about offerings that consider factors such as patient engagement and plan details, rather than simply focusing on cutting high-cost line items in the total rewards budget. 

3. Leverage Other Organizations' Experiences 
While most solutions are not one-size-fits-all, every solution offers a chance to take what can work and apply it to the problem. Connecting with other HR executives in your network or speaking with a SHRM Knowledge Advisor can help contextualize where your healthcare spending sits compared to other organizations, empowering you with the information needed to make the best decisions.

Connect with a Knowledge Advisor

A Strategic Opportunity for HR Leaders

The move to reduce prior authorizations is more than a simple policy update; it's a strategic opening for HR. By engaging with metrics, reviewing your role as an employer, and evaluating others' experiences, you can uncover savings that can help protect other essential employee benefits. This proactive approach supports employee well-being and productivity while cementing business accretion as an HR mindset, supporting the organization's growth and financial health.