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CMS Finalizes Prior Authorization Rules, Receives Pushback

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Key Insights

  • The Centers for Medicare and Medicaid Services (CMS) recently finalized the “CMS Interoperability and Prior Authorization” rule.
  • CMS Administrator Seema Verma stated that the final rule will free providers “from the burden of piecing together patients’ health histories based on incomplete, half-forgotten snippets of information supplied by the patients themselves, as well as the most onerous elements of prior authorization.”
  • Insurers have criticized the rule for being rushed, expensive, and inadequate.

CMS Finalizes Prior Authorization Rule

CMS recently finalized a rule that revamps the electronic prior authorization process. The rule, proposed on December 10, aims to streamline and improve data exchange between payers, providers, and patients. As a CMS press release noted: “By both increasing data flow, and reducing burden, this proposed rule would give providers more time to focus on their patients, and provide better quality care.”

The rule requires Medicaid, the Children’s Health Insurance Program (CHIP), and Qualified Health Plan (QHP) programs to build, implement, and maintain application programming interfaces (APIs). Medicare Advantage (MA) plans are exempt from the rule, although CMS is “considering” whether to include the plans in “future rulemaking.” The required APIs would enable a given payer’s system to share electronic data with a third-party app while adhering to interoperability standards. Under the new rule, payers will have 72 hours to issue decisions for urgent prior-authorization requests. Furthermore, the rule mandates that payers “provide a specific reason for any denial, which will allow providers some transparency into the process.” Elements of the final rule will go into effect January 1, 2023.

“Each element of this proposed rule would play a key role in reducing onerous administrative burden on our frontline providers while improving patient access to health information,” CMS Administrator Seema Verma said. Administrator Verma estimated the rule would save as much as $5 billion over the next decade.

Final Rule Criticized by Insurer Groups

The final rule, which is part of the “Patients Over Paperwork” initiative, intends to provide care teams with “more time to focus on their patients and provide higher quality care.” However, some insurer groups have criticized the recent ruling.

America’s Health Insurance Plans commented that the then-proposed rule was “flawed … for multiple reasons,” including “unrealistic effective dates” and “competing priorities and demands of the COVID-19 crisis.”

Some provider groups, however, applauded the final rule as prior authorizations are often seen as a needless administrative obstacle. A survey by the American Medical Association (AMA) found that 86 percent of physicians described the burden of prior authorizations as “high or extremely high.” Additionally, one in four doctors say “prior authorization has led to a serious adverse event.”

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