CMS Finalizes Rule Streamlining Prior Authorization Process

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The Centers for Medicare and Medicaid Services finalized the CMS Interoperability and Prior Authorization Rule on Wednesday. CMS said the rule will improve the prior authorization process and save about $15 billion over 10 years.

The rule applies to Medicare Advantage organizations, Medicaid and the Children’s Health Insurance Program (CHIP) fee-for-service programs, Medicaid managed care plans, CHIP managed care entities, and issuers of Qualified Health Plans offered on the Federally-Facilitated Exchanges.

Starting primarily in 2026, affected payers will have to send prior authorization decisions within 72 hours for urgent requests and seven days for non-urgent requests. CMS said that this cuts non-urgent prior authorization decision timelines in half for some payers. Payers will also have to specifically state why they denied a prior authorization request.

“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 a statement. “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.” 

Under the rule, payers will also have to implement a Health Level 7 Fast Healthcare Interoperability Resources Prior Authorization application programming interface (API). This will create a more streamlined electronic prior authorization process between providers and payers.

In addition, CMS is finalizing API requirements to “increase health data exchange and foster a more efficient health care system for all.” CMS said it is delaying the dates for API policy compliance from January 1, 2026, to January 1, 2027. Starting in January 2027, payers will also be required to 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.”

The rule also includes a new electronic prior authorization measure for eligible clinicians under the Merit-based Incentive Payment System Promoting Interoperability performance category and eligible hospitals and critical access hospitals in the Medicare Promoting Interoperability Program.

Several organizations applauded the finalization of the rule, including the American Hospital Association (AHA).

“With this final rule, CMS addresses a practice that too often has been used in a manner that leads to dangerous delays in patient treatment and clinician burnout in the health care system,” said Rick Pollack, president and CEO of the organization, in a statement. “AHA is grateful to CMS for its efforts to improve patient access to care and help clinicians focus on patient care rather than paperwork.”

The Better Medicare Alliance also came out in support of the rule.

“Better Medicare Alliance applauds CMS for its leadership in modernizing the prior authorization process and ensuring interoperability works for everyone. We believe these changes serve our shared goals of protecting prior authorization’s essential function in coordinating high-value care while also ensuring beneficiaries continue to receive the care they need when they need it,” said Mary Beth Donahue, president and CEO of the Better Medicare Alliance.

Photo: gustavofrazao, Getty Images

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