What to Know About CMS’ Proposed Changes to Prior Authorization Rules

The sharpening focus of the healthcare industry and the federal government on prior authorization and interoperability is amping up the pressure on payers. This heightened attention reflects ongoing efforts to ease patients’ access to their own healthcare records, share information among providers and payers, and simplify prior authorization of healthcare services and treatments—with a better patient experience as a primary goal.

On December 6, 2022, the Centers for Medicare & Medicaid Services (CMS) issued a proposed rule that aims to streamline prior authorization processes and improve patients’ and providers’ access to health information. Certain payers would be required to implement electronic prior authorization systems by 2026.

“CMS is committed to strengthening access to quality care and making it easier for clinicians to provide that care,” CMS Administrator Chiquita Brooks-LaSure said in announcing the proposal. “The prior authorization and interoperability proposals we are announcing … would streamline the prior authorization process and promote health care data sharing to improve the care experience across providers, patients, and caregivers—helping us to address avoidable delays in patient care and achieve better health outcomes for all.”

Now is the time for payers and others to offer their input. March 13 is the deadline to submit comments on the proposed policies, which, if finalized, would take effect January 1, 2026. The initial set of proposed metrics would need to be reported by March 31, 2026.

Raising the Stakes

The new proposal replaces a previous one published in December 2020—and passed by CMS in January 2021—that had been set to take effect in January 2023. The earlier proposal applied only to Medicaid and Children’s Health Insurance Program (CHIP) managed care plans and fee-for-service programs, individual market Qualified Health Plans, and plans purchased on the federally facilitated exchanges under the Affordable Care Act. Concerns about costs, a short deadline and the exclusion of Medicare Advantage (MA) plans ultimately led to the withdrawal of that proposal, according to a Fierce Healthcare report.

The new version expands the scope to also include MA plans. The Better Medicare Alliance, an advocacy group funded by UnitedHealthcare, Aetna and Humana, praised the proposal. The rule “complements our goals of protecting prior authorizations in coordinating safe, effective, high-value care while also building on the Medicare Advantage community’s work streamlining this clinical tool to better serve its 30 million diverse enrollees,” said Mary Beth Donahue, president and CEO of the group, which lobbies for MA policy.

Specific requirements of the latest proposal include:

• Implementation of a Fast Healthcare Interoperability Resources (FHIR) application programming interface (API) to support electronic prior authorization
• Inclusion of a specific reason when an affected payer denies a prior authorization request
• Public reporting of annual metrics to CMS
• Speedier decisions on requests: within 72 hours for expedited, or urgent, requests and within seven calendar days for standard, or non-urgent, ones
• Multiple policies to improve access to health data, including expanding the current Patient Access API to include information on prior authorization decisions and facilitating patient data exchanges between payers
• The sharing of information to accelerate the adoption of standards for social risk factor data, or social determinants of health

CMS estimates that these proposed policies could save physician practices more than $15 billion over 10 years by introducing new efficiencies.

Why Prior Authorization Matters

Many providers and the American Medical Association have criticized the increase in prior authorization requests as an unwarranted administrative burden and an obstacle to timely care. Properly used, however, it plays an important role in controlling costs, preventing unnecessary tests and procedures, and ensuring that patients receive the right care at the right time. Key challenges for payers are to restrict its use to services that require reviews for medical necessity or policy reviews, and to speed up the process.

Regardless of the specifics that ultimately emerge from this latest CMS proposal, payers would be advised to continue their movement toward a more judicious set of internal requirements. In a previous blog post, we offered four guidelines for simplifying prior authorization processes. In a nutshell:

1. Reevaluate services that require prior authorization, eliminating it for routine procedures.
2. Leverage electronic tools to make the process easier.
3. Accelerate with automation.
4. Be proactive.

Automation of prior authorization processes can yield multiple benefits, including administrative savings, increased patient/provider satisfaction, and focused care on at-risk individuals and populations.

Interoperability, the ability of different electronic medical records to effectively share data with one another, is essential to expedited prior authorization as well as to collaborative care in general. It speeds up referrals and approvals, which are necessary for much care to begin, and then it keeps those involved on the same page once that care has begun. (We recently identified increased operability as one of five focus areas for healthcare innovation.)

At Medecision, we are committed to helping payers and other healthcare organizations adapt to the evolving standards for prior authorization and interoperability.

Next Steps for Payers

•  Offer your input on the proposed rules to CMS by the fast-approaching deadline of 11:59 p.m. EDT March 13. You can also read previous public comments.
• Access your copy of our tip sheet “10 Strategies for Advancing Your Utilization Management Performance.”
• Contact a Medecision expert to learn about solutions that support your efforts in improving prior authorization, interoperability and utilization management.
• Subscribe to the Medecision blog for more healthcare trends and strategies like this.