The Future of Prior Authorizations: Instant and Private Proofs

Current prior authorization (PA) processes are a massive operational sink. They delay care, increase administrative burden, and create adversarial relationships between payers and providers.

• $31B+ in annual administrative waste from manual PA in the US alone.
• ~14 day average delay in care initiation due to PA bottlenecks.
• Creates a negative-sum game where resources are spent on denial/approval logistics instead of patient outcomes.

zk-SNARKs and zk-STARKs enable cryptographic proof of policy compliance without revealing sensitive patient data. This transforms authorization from a manual review into an automated, cryptographic check.

• Prove eligibility & medical necessity without exposing PHI, satisfying HIPAA & GDPR.
• Sub-second verification on-chain or off-chain, replacing multi-day reviews.
• Enables programmable, composable policies that can integrate real-world data oracles like Chainlink.

Instant, private proofs create a new trust layer, aligning incentives. Payers get cryptographic assurance of policy adherence, reducing fraud. Providers get instant, guaranteed reimbursement, improving cash flow.

• Eliminates costly audits for compliant claims, shifting spend to fraud detection.
• Unlocks value-based care by enabling real-time attestation of quality metrics.
• Creates a positive-sum system where efficiency gains are shared across the network.

Healthcare is a legal minefield. Zero-knowledge proofs are cryptographic black boxes to regulators.

• HIPAA compliance requires audit trails; ZK's privacy may be seen as obstruction.
• FDA approval for clinical decision algorithms could take 5-7 years, stalling adoption.
• Liability for an incorrect 'proof' of medical necessity is a legal nightmare no protocol has solved.

A proof is only as good as its input data. Medical records are fragmented and messy.

• Garbage In, Garbage Out: Pulling data from Epic or Cerner requires trusted oracles, creating a centralized point of failure.
• Data Standardization (e.g., FHIR) is incomplete; mapping thousands of plan rules to code is a multi-billion-dollar integration challenge.
• Real-world latency will be dominated by hospital IT APIs, not proof generation.

Incumbents have no incentive to dismantle a system that generates revenue via denials and delays.

• Payers (e.g., UnitedHealth) profit from float and administrative fees; efficiency hurts their bottom line.
• Provider Workflows are entrenched; asking doctors to interact with a crypto wallet is a non-starter.
• The ~$31B prior auth admin market is a moat protected by lobbyists, not technology.

Building a universal system for millions of unique plan rules may be computationally impossible.

• Rule Explosion: A proof for a prior auth may need to verify 100+ conditional clauses, blowing up circuit size.
• Cost Prohibitive: On-chain verification fees, even on L2s like Arbitrum or zkSync, could exceed the cost of a human reviewer for simple cases.
• The system becomes so complex that only the builders can debug it, defeating the purpose of trustlessness.

Today's prior auths are a $31B+ annual administrative burden on US healthcare. They rely on slow, manual fax/phone checks between siloed systems, causing ~10-day delays in care and ~15% claim denials.

• Creates massive patient/provider friction
• Inefficient capital allocation for payers
• Prone to human error and fraud

Replace manual checks with a cryptographic proof that a patient's policy covers a specific service, without revealing the underlying policy details. This leverages zk-SNARKs and zk-STARKs (like Aztec, StarkWare).

• Instant, automated verification (~500ms)
• Privacy-preserving: Payers prove coverage rules without exposing full plan data
• Universal interoperability via standard proof formats

Payers (insurers) become issuers of verifiable credentials (like Ethereum Attestation Service, Verax) on a low-cost L2 (e.g., Base, Polygon). Providers query a decentralized network (e.g., Hyperlane, LayerZero) for attestations.

• Immutable audit trail of all auth decisions
• Modular design separates issuance, proof, and settlement layers
• Enables cross-chain/network policy portability

Once a ZK proof is verified, it can automatically trigger a smart contract for guaranteed payment, creating "if/then" logic for healthcare. This mirrors UniswapX's intent-based swaps or Sablier's streaming payments.

• Eliminates claims adjudication for pre-approved services
• Enables real-time provider reimbursement
• Unlocks parametric insurance and new risk products

Adoption requires proving the system under HIPAA, state insurance law, and CMS guidelines. Early wins will be in non-emergent, high-volume procedures (e.g., MRIs, specialist referrals). Avail or Celestia for data availability may be key for compliance logs.

• Regulatory sandboxes are the first battlefield
• Provider onboarding is harder than tech deployment
• Legal precedent for ZK proofs as valid evidence is needed

With instant, private proofs as primitive, health plans become composable financial products. Patients could permission usage of their proof to shop for care, creating a CowSwap-like batch auction for medical services. Risk pools become tradable assets.

• Dynamic pricing based on real-time proof demand
• Portable coverage across employers and borders
• Capital efficiency for reinsurance markets