The new policies aim to shorten wait times and reduce burden on patients, providers, and payers.
The Centers for Medicare & Medicaid Services (CMS) on Wednesday finalized a rule to improve the electronic exchange of health information and prior authorization processes for medical items and services.
The CMS Interoperability and Prior Authorization Final Rule applies to Medicare Advantage organizations, Medicaid and the Children’s Health Insurance Program (CHIP) fee-for-service (FFS) programs, Medicaid managed care plans, CHIP managed care entities, and issuers of Qualified Health Plans (QHPs) offered on the Federally-Facilitated Exchanges (FFEs). The agency estimates that the policies will result in approximately $15 billion of estimated savings over 10 years.
“When a doctor says a patient needs a procedure, it is essential that it happens in a timely manner,” said HHS Secretary Xavier Becerra in an announcement. “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.”
Prior authorization can help ensure medical care is necessary and appropriate, but critics note that it can also be an obstacle to necessary patient care when providers must navigate complex and widely varying payer requirements or face long waits for prior authorization decisions.
CMS said the final rule establishes requirements for certain payers to streamline the prior authorization process and complements the Medicare Advantage requirements finalized in the Contract Year (CY) 2024 MA and Part D final rule, which add continuity of care requirements and reduce disruptions for beneficiaries.
Beginning primarily in 2026, impacted payers (except for QHP issuers on the FFEs) must:
- Send prior authorization decisions within 72 hours for expedited (i.e., urgent) requests
- Send prior authorization decisions within seven calendar days for standard (i.e., non-urgent) requests for medical items and services
- Include a specific reason for denying a prior authorization request
- Publicly report prior authorization metrics, similar to the metrics Medicare FFS already makes available
- Implement a Health Level 7 (HL7®) Fast Healthcare Interoperability Resources (FHIR®) Prior Authorization application programming interface (API) to facilitate a more efficient electronic prior authorization process between providers and payers by automating the end-to-end prior authorization process
CMS said these new requirements for the prior authorization process will reduce administrative burden on the health care workforce, empower clinicians to spend more time providing direct care to their patients, and prevent avoidable delays in care for patients.
In addition, the agency said it is finalizing API requirements to increase health data exchange and foster a more efficient health care system for all. However, it is delaying the dates for compliance with the API policies from January 1, 2026, to January 1, 2027. In addition to the Prior Authorization API, beginning January 2027, impacted payers must expand their current Patient Access API to include information about prior authorizations and to implement a Provider Access API that providers can use to retrieve their patients’ claims, encounter, clinical, and prior authorization data.