Utilization Management

CMS Proposes New Regulations to Streamline and Speed Up Payor Prior Authorization

As its days dwindle down, the Trump administration proposed regulatory changes designed to ease prior authorization rules and improve provider and patient access to medical records. Specifically, the Center for Medicare and Medicaid Services (CMS) proposed rule would Medicaid, the Children’s Health Insurance Plan (CHIP), Qualified Health Plans (QHPs) and other payors to build application program interfaces to support prior authorization and data exchange. Here is a quick briefing on the 347-page rule.

The Diagnostic Challenge

Payors rely on prior authorization requirements to ensure program integrity and winnow out medically unnecessary laboratory tests and other covered health services. However, these requirements are administratively burdensome and time consuming. The all too frequent result is not only significant inconvenience but also harm to patients.

In 2018, the healthcare industry issued a consensus statement stressing the need for reform. But those calls seem to have gone unheeded. In a June 2020 American Medical Association (AMA) survey, more than 9 in 10 physicians said that prior authorization rules regularly delays patient access to medically necessary care. Nearly one in four physicians reported that at least one of their patients had suffered a serious adverse event as a result of prior authorization rules. Another 16 percent said that prior authorization delays resulted in the hospitalization of a patient. “These survey results highlight that practices continue to devote significant time—an average of nearly two business days per week per physician—navigating prior authorization’s administrative obstacles,” sometimes resulting in harm to patients, noted AMA President Dr. Susan Bailey in a statement.

The CMS Proposal

The strategy behind the CMS proposal is not to eliminate payor authorization requirements but make them more transparent and easier to maneuver. The new interfaces would enable providers to determine in advance the documentation each payor requires, streamline documentation processes and facilitate the electronic transmission prior authorization information requests and responses. It contains two key elements:

  1. Mandatory Payor APIs

The plan, which builds on the Interoperability and Patient Access final rule that CMS published in May, calls for payors to create 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. Payor APIs would have to 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.

  1. New Deadlines for Prior Authorization

The proposed rule would also reduce 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. Payors would also have to provide a specific reason for any denial, which will allow providers some transparency into the process. To promote accountability for plans, the rule also requires them to make public certain metrics that demonstrate how many procedures they are authorizing.

Next Steps

Comments on the proposed rule close on Jan. 4. CMS’ plan is to finalize the rules and have them go into effect on Jan. 1, 2023. The agency is also reportedly considering making a parallel proposal for Medicare Advantage plans.


Taken together, these policies could lead to fewer prior authorization denials and appeals while improving communication among payors, providers and patients, according to a CMS statement. But there is a fly in the ointment, namely the use of APIs. This is far from the first time that the administration has pushed for adopting APIs for EHR communication and sharing purposes. However, APIs are also fairly controversial due to privacy concerns. As a result, key players in the healthcare industry have resisted their adoption. And with a new administration set to take the reins, the proposed rule’s future remains very much in doubt. One possibility is that the next CMS will sever the controversial API requirements and leave the prior authorization deadlines and transparency reporting obligations intact.



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