Key points:
- Prior authorization means that healthcare providers must get approval in advance from a health plan before providing a certain service (e.g., procedure or medication).
- The process can be complex and can delay care.
- This regulation means that beginning in 2026, payers must issue a decision within a specific timeframe, depending on the urgency of the request.
- Payers must also provide reasons for any denial of a prior authorization request.
In January 2024, the Centers for Medicare & Medicaid Services (CMS) finalized the CMS Interoperability and Prior Authorization Final Rule (CMS-0057-F). This regulation mandates that Medicare Advantage (MA) organizations, Medicaid and the Children’s Health Insurance Program (CHIP) fee-for-service (FFS) programs, Medicaid managed care plans, CHIP managed care entities, and Qualified Health Plan (QHP) issuers on the Federally-Facilitated Exchanges (FFEs), collectively referred to as “impacted payers,” enhance the digital exchange of healthcare information and streamline the prior authorization process for healthcare services and products. These measures aim to simplify prior authorization, alleviate burdens on patients, healthcare providers, and payers, and are projected to yield estimated savings of about $15 billion over a decade.
Although prior authorization (PA) plays a role in ensuring that medical treatments are necessary and appropriate, as has been emphasized by physician advocacy groups for years, PA can hinder timely access to needed care for patients due to the complex and varied requirements set by different payers and lengthy waits for authorization decisions. The final rule issued by CMS mandates specific payers to make the prior authorization process more efficient. This rule builds upon Medicare Advantage provisions established in the Contract Year 2024 MA and Part D final rule, which introduced continuity of care standards and aimed to minimize interruptions for beneficiaries. In 2026, affected payers (excluding QHP issuers on the FFEs) will be obligated to issue decisions on prior authorizations within 72 hours for urgent requests and within seven days for standard requests related to medical services and items. For some payers, this regulation significantly reduces the timeframe for standard requests by half. Additionally, the rule stipulates that all affected payers must provide clear reasons for any denials of prior authorization requests, aiding in the resubmission or appeal process if necessary. Furthermore, these payers are required to publicly disclose metrics related to prior authorization, similar to the data already available from Medicare FFS, enhancing transparency and accountability in the process.
In addition, the CMS ruling included application programming interface (API) requirements to enhance health data exchange and improve healthcare efficiency. After January 2027, payers must broaden their Patient Access APIs to cover prior authorization data and introduce a Provider Access API for accessing comprehensive patient data. A Payer-to-Payer API will facilitate data exchange with patient consent when transitioning between payers. The rule also introduces an Electronic Prior Authorization measure for clinicians and hospitals under MIPS and the Medicare Promoting Interoperability Program to encourage the use of Prior Authorization APIs. These initiatives aim to streamline the prior authorization process, ensuring better access to health information and enhancing the quality and timeliness of care.
