CMS Delays Payer-to-Payer Data Exchange but Prior Authorization Rules Remain on Track

On Sept. 17, the Centers for Medicare & Medicaid Services (CMS) announced that it’s delaying an interoperability rule governing how payors are expected to exchange with one another. However, the decision doesn’t affect other parts of the interoperability rule, including provisions imposing payer prior authorization limits on certain Medicare and Medicaid health plans. Here’s a quick briefing on what is and isn’t changing.

The Interoperability Rule

Originally slated to take effect on Jan. 1, 2022, the payer-to-payer portions of the interoperability rule require insurance companies that do business with CMS, including Medicare Advantage carriers and Medicaid managed care organizations, to exchange data at the request of patients, as well as incorporate the data they receive from other payers into the health records of members.

However, insurance companies pushed back, complaining citing implementation challenges created by the rule’s failure to establish an exchange mechanism or technical standard for exchanging data, leaving payers to accept data in whatever format they were sent.

CMS heard the message and announced that it is exercising “enforcement discretion” and temporarily delaying the data exchange requirement. Sticking to the Jan. 1 enforcement schedule would create the “potential for negative outcomes that [would] impede, rather than support” interoperable payer-to-payer data exchange,” according to the email announcing the delay.

The agency didn’t give a date, but instead said enforcement would begin once “future rulemaking is finalized.” The implication is that CMS will develop the specific mechanism and exchange guidelines that payers say they need to share data more easily and effectively.

Not surprisingly, insurers expressed their approval for the delay. “Despite the continuing pandemic, health insurance providers are diligently implementing the many provisions of the interoperability rule, and we appreciate CMS recognizing the difficulty of standing up this new technology,” according to an America’s Health Insurance Plan spokesperson.

The data exchange enforcement delay is only the latest setback in interoperability rule implementation. The COVID-19 pandemic forced CMS and the Office of the National Coordinator for Health Information Technology (ONC) to postpone initial implementation last June. The first phase of the ONC rule did take effect in early April.

Prior Authorization Requirements Remain on Track

In the frequently asked questions document accompanying announcing the delay of the data exchange requirements, CMS clarified that the delay doesn’t apply to other provisions of the interoperability final rule issued in the final months of the Trump administration. Among these, the provisions affecting payer preauthorization arguably have the greatest impact on labs.

Specifically, the final rule requires Medicaid, the Children’s Health Insurance Plan (CHIP), Qualified Health Plans (QHPs) and other plans—but not Medicare Advantage plans—to build application programming interfaces (APIs) on their systems that enable electronic health records (EHR) and other information systems to talk to each other or third-party applications.

The APIs are designed to make payer authorization requirements more transparent and easy to maneuver by enabling providers to determine in advance the documentation each payer requires, streamline documentation processes and facilitate the electronic transmission prior authorization information requests and responses.

APIs are somewhat controversial due to their privacy and data security implications. Payer APIs under the final rule must meet the Health Level 7 (HL7) Fast Healthcare Interoperability Resources (FHIR) standard. The FHIR standard is a technology solution that helps bridge the gaps between systems so that both systems can understand and use the data they exchange.

The final rule also reduces the wait time for prior authorization decisions by requiring payors (other than QHP issuers on Federally Facilitated Exchanges (FFEs)) to issue decisions on urgent requests within 72 hours, and non-urgent requests within seven calendar days. Payers must also provide a specific reason for any denial, to give providers some transparency into the process. To promote accountability for plans, the rule also requires payers to make public certain metrics that demonstrate how many procedures they’re authorizing.

Reauthorization Transparency Bill for Medicare Advantage Plans

In May 2021, a bipartisan group in the House of Representatives led by Rep. Susan DelBene (D-Wash.), Mike Kelly (R-Pa.), Ami Bera (D-Calif.) and Larry Bucshon (R-Ind.) reintroduced a bill imposing similar requirements on Medicare Advantage plans. In addition to requiring Medicare Advantage plans to establish electronic prior authorization programs and provide “real-time decisions” for certain services designated by the HHS secretary, the bill would boost prior authorization transparency by obligating plans to:

  • Submit annual reports to HHS listing which of their services require prior approval, as well as data on how many requests were approved, denied and overturned after initial denials in the previous plan year;
  • Report the average and median amount of time between the submission of a prior authorization request and a determination from the plan; and
  • Make the above information available to their contract providers along with a statement of their criteria for making prior authorization determinations.


Prior authorization has been a perennial source of friction between payers and physicians, labs and other providers. While payers have a legitimate need to ensure program integrity and manage utilization of covered health services, requiring prior authorization often imposes significant administrative burdens on providers and delays patients from receiving the care they need.

The American Medical Association (AMA) has done an effective job of keeping the issue on the agenda, including via a 2020 survey in which two of five polled physicians reporting that prior authorization delays access to necessary care, with 15 percent reporting it always happens, 39 percent saying it happens often and 40 percent saying it happens sometimes.









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