Health Plan Payment and Reimbursement

New federal rule aims to eventually ease prior authorization processes

A concurrent effort to address prior authorization in Medicare Advantage is taking place in Congress, with a bill having passed the House of Representatives.

December 9, 2022 8:50 pm

CMS is seeking to improve the prior authorization process in government programs such as Medicare Advantage (MA) and Medicaid, although the core provisions would not begin until 2026.

The agency this week updated a Trump administration proposed rule with new proposals to “improve patient and provider access to health information and streamline processes related to prior authorization for medical items and services,” according to a news release.

MA plans, state Medicaid programs, Medicaid managed care plans and health plans participating in the Affordable Care Act insurance marketplaces would need to implement an HL7 FHIR API to automate the following processes for providers:

  • Determining whether a prior authorization is required
  • Identifying prior authorization information and documentation requirements
  • Facilitating the exchange of prior authorization requests and decisions via electronic health records or practice management systems

HIPAA-covered entities would continue to be required to use the current adopted standard for prior authorization transactions (e.g., X12 278 version 5010).

“It is important to note that a gap remains in our nation’s privacy framework,” Matt Eyles, president and CEO of AHIP, said in a written statement supporting the proposed rule. “Personal health information shared with entities that are not required to comply with HIPAA will not be as robustly protected as other healthcare data. We strongly recommend that CMS work with Congress to address this gap.”

Other requirements for prior authorization

Payers would need to include a specific reason for denying a prior authorization request, regardless of the method used to transmit the decision. A decision would need to be sent within 72 hours for expedited requests and seven calendar days for standard requests, and CMS said it is open to shortening those time frames based on feedback to the proposed rule (comments are due by March 13).

Payers also would need to publicly post aggregated data for certain prior authorization metrics, which providers could consider when selecting payer networks. Among various potential metrics are percentage of prior authorization requests that were approved and denied and the elapsed time between the submission of a request and a decision. Metrics would be posted for both standard and expedited authorizations.

New incentives would be established for hospitals and clinicians to electronically request prior authorization using certified EHR technology. A measure would be added to the Promoting Interoperability Program for hospitals and critical access hospitals and to the Promoting Interoperability category of the Merit-based Incentive Payment System for physician practices.

“While we continue to review the proposed rule in closer detail, we believe it complements our goals of protecting prior authorization’s essential function 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,” Mary Beth Donahue, president and CEO of the Better Medicare Alliance, a pro-MA group, said in a written statement.

Expanding patients’ access to prior authorization info

Under the 2020 Interoperability and Patient Access final rule, MA and Medicaid managed care payers already were obligated to implement an HL7 FHIR patient access API starting in 2021. Under the new proposal, the API would have to include information about patients’ prior authorization decisions by 2026.

The payers covered by the new regulations also would have to build and maintain a provider access API to share a patient’s data with in-network providers that have a treatment relationship with the patient. Upon request, providers would have access to payer data such as patient claims and encounter data (excluding cost information), data elements identified in the United States Core Data for Interoperability version 1, and prior authorization requests and decisions. Patients could opt out of making their data available to providers.

Payers also would have to exchange such data, with patients’ permission, when patients change health plans. Such exchanges also would be mandated if an enrollee has coverage with two or more payers.

Congress also taking steps

The effort to improve prior authorization specifically in Medicare Advantage could be addressed legislatively through the Improving Seniors’ Timely Access to Care Act, which passed the House in September and is under consideration in the Senate (Rep. Suzan DelBene, D-Wash., a lead sponsor of the bill, appeared on an episode of the Voices in Healthcare Finance podcast in November 2021 to discuss the legislation).

Among other elements, the legislation would require MA plans to provide real-time decisions on prior authorization for routinely approved items and services.

Some lawmakers have expressed concern about the budgetary implications of the bill, with the Congressional Budget Office projecting it would increase federal expenditures by more than $5.5 billion through 2027 and $16.2 billion through 2032.

“By placing additional requirements on plans that use prior authorization, we expect H.R. 3173 would result in a greater use of services,” CBO wrote. “We expect Medicare Advantage plans would increase their bids to include the cost of these additional services, which would result in higher payments to plans.”


googletag.cmd.push( function () { googletag.display( 'hfma-gpt-text1' ); } );
googletag.cmd.push( function () { googletag.display( 'hfma-gpt-text2' ); } );
googletag.cmd.push( function () { googletag.display( 'hfma-gpt-text3' ); } );
googletag.cmd.push( function () { googletag.display( 'hfma-gpt-text4' ); } );
googletag.cmd.push( function () { googletag.display( 'hfma-gpt-text5' ); } );
googletag.cmd.push( function () { googletag.display( 'hfma-gpt-text6' ); } );
googletag.cmd.push( function () { googletag.display( 'hfma-gpt-text7' ); } );
googletag.cmd.push( function () { googletag.display( 'hfma-gpt-leaderboard' ); } );