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CMS on Wednesday finalized a new rule that aims to streamline the prior authorization (PA) process — a move that some healthcare organizations say could "improve patient access to care and help clinicians focus on patient care rather than paperwork."
CMS finalizes prior authorization rule
On Wednesday, CMS issued a final rule requiring health plans to streamline their PA processes. The rule was initially proposed in December 2022, and public comments on the rule were collected until March 2023.
Under the final rule, Medicare Advantage (MA) organizations, state Medicaid and CHIP fee-for-service programs, Medicaid managed care plans, and CHIP managed care entities are required to send PA decisions within 72 hours for expedited requests and seven calendar days for standard requests. The rule does not apply to commercial insurers.
"When a doctor says a patient needs a procedure, it is essential that it happens in a timely manner," said HHS Secretary Xavier Becerra. "Too many Americans are left in limbo, waiting for approval from their insurance company. Today the Biden-Harris administration is announcing strong action that will shorten these wait times by streamlining and better digitizing the approval process."
If a PA request is denied, insurers are required to provide a specific reason for the denial. They are also required to publicly report their PA metrics.
According to CMS, the requirement for denials, which doesn't apply to decisions for drugs, "is intended to both facilitate better communication and transparency between payers, providers, and patients, as well as improve providers' ability to resubmit the prior authorization request, if necessary."
The final rule also requires affected insurers to automate their PA processes through an electronic prior authorization application programming interface (API). "Medicare [fee-for-service] has already implemented an electronic prior authorization API, demonstrating the efficiencies other payers could realize," CMS said.
The requirements are expected to go into effect in 2026, except for the API requirement, which was delayed until Jan. 1, 2027, to allow insurers and physicians time to build the automated electronic processes. According to CMS, the final rule is expected to result in an estimated $15 billion in savings over ten years.
Reaction
In response to the final rule, American Hospital Association (AHA) president and CEO Rick Pollack said the organization "commends CMS for removing barriers to patient care by streamlining the prior authorization process."
"With this final rule, CMS addresses a practice that too often has been used in a manner that leads to dangerous delays in patient treatment and clinician burnout in the health care system," Pollack said. "AHA is grateful to CMS for its efforts to improve patient access to care and help clinicians focus on patient care rather than paperwork."
Physician groups such as the American Medical Association and the American Academy of Family Physicians (AAFP) also praised the rule.
"This marks significant progress to address care delays and the administrative burden physicians and their patients face daily," said AAFP president Steven Furr. "Electronic prior authorization will help cut down on the time physicians spend requesting and appealing coverage authorization from plans, as well as provide patients with more visibility into their care."
However, other healthcare organizations expressed concerns about certain aspects of the rule or said that it did not go far enough.
For example, the American College of Rheumatology said it supported the rule, but added that it was "concerned with the inclusion of e-prior authorization measures for merit-based incentive payment system (MIPS)-eligible providers under the performance improvement category, as it will create additional burden for physicians."
Soumi Saha, SVP for government affairs at healthcare group purchasing organization Premier, said the organization was "disappointed by the final rule's lack of acknowledgement that a pathway to real-time prior authorization exists" and that "CMS missed a valuable opportunity to develop incentives to move payers and providers closer to real-time processes using innovative technologies." Saha also said the required deadlines for PA decisions were too long. (Armour, Wall Street Journal, 1/17; Weixel, The Hill, 1/17; Frieden, MedPage Today, 1/17; AHA News, 1/17; CMS press release, 1/17)
How CMS' prior authorization rule will impact stakeholders
By Sally Kim
With CMS finalizing its rule to streamline the prior authorization process, MA, Medicaid, and CHIP plans will have to process PAs within 72 hours for urgent requests and seven days for non-urgent requests. They will also have to give a specific reason for a PA denial and report PA metrics and data to providers, members, and fellow plans. The requirements will start in 2026, though API utilization requirements won't start until 2027.
Stakeholder implications
Plans
The good news is that plans have been working on their PA processes even before this rule. In fact, most PA requests are approved, and because of that, many plans are removing hundreds of PA requirements for procedures with high approval rates.
But speeding up the process to 72 hours or seven days for all PAs won't be easy. For example, HHS noted the new timeframe for standard requests (seven days) is half the time it takes some payers now. To keep up with these shortened timeframes, plans will have to hire more workers and change their internal operations to speed up processing. It will also take plans time to comply with the rule's new API requirements. They will have to decide if they will build these in-house or work with a vendor.
In addition, the ability to share five years of member data with fellow plans could be helpful for plans, because plans could better coordinate care (and therefore manage costs) when a member changes plans.
Providers
Most providers see the final rule as a long overdue salve for PAs. The rule is timely since providers have been voicing their concern about the high administrative burden of PAs right now, especially with the current workforce challenges.
The final rule means that providers should be able to receive approval faster, and therefore administer care to patients faster. It should also mean providers can submit fewer PA requests as they can use the API to determine whether a specific payer requires PA for certain services, as well as any documentation requirements.
However, relying on electronic APIs could also add more work for providers. While plans still need to abide by the new timeframes regardless of how the provider submits the PA request, there is a push towards online PAs through the required APIs. Because APIs are digital, providers will have to learn to submit prior authorization requests online for the fastest turnaround times.
Tech companies
Ultimately, tech companies may bear the biggest responsibility — and potentially see the greatest financial gain — as this final rule goes into effect since they will have to create the necessary APIs for providers, members, and plans.
3 questions for the future
As payers, providers, and vendors prepare for these requirements, there are three questions I am worried about for the future.
1. Is it possible to get the required APIs into EHRs rather than separate portals?
If plans decide to create their own APIs for members, providers, and fellow plans, there could be hundreds of different platforms available, which could make the PA process more difficult and unwieldy. Unless APIs can be built into EHRs or an industry-wide platform, providers will be unlikely to use them.
AHIP has called for vendors to build PA capabilities into their EHRs, saying that "[w]e cannot afford to delay any further when it comes to implementing electronic prior authorization capabilities." However, it's not clear how quickly vendors will be able to build out this technology.
2. Will there be an uptick in denials?
Currently, denials rates are generally in the single digits. There could be an uptick in denials if plans feel they don't have enough time to make an educated PA decision, especially if giving an answer (even if it's a denial) would re-start the seven-day decision period.
3. How do we share data with members without overwhelming them?
Under the final rule, plans are required to share specific data with members, including prior authorization status. Although sharing this data with members sounds great in theory, the amount of data could be overwhelming or worry members unnecessarily when there are already so many confusing elements in healthcare.
Advisory Board's prior authorization resources
Posted on January 19, 2024
Updated on January 19, 2024
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