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CMS Proposes Rule to Streamline Prior Authorization

In a new rule, the Centers for Medicare & Medicaid Services (CMS) proposes changes to improve patients’ access to their electronic health information and reduce burden on providers related to prior authorization.

The rule replaces proposals from a similar 2020 CMS rule and incorporates feedback received on that proposed rule. The rule’s provisions apply to Medicare Advantage (MA) organizations, Medicaid managed care plans and Children’s Health Insurance Program (CHIP) managed care entities, state Medicaid and CHIP fee-for-service (FFS) programs, and qualified health plan (QHP) issuers on the federally facilitated exchanges, collectively referred to as impacted payers.

The rule seeks to leverage application programming interfaces (APIs) by building on requirements in the 2020 final rule on interoperability and patient access, which required that payers implement APIs to increase health information exchange. APIs are platforms that allow mobile applications to access information in an electronic health record or other database.

The proposed rule would require impacted payers to create a provider access API to allow better payer-to-provider data sharing of:

  • Claims and encounter data.
  • Data elements in the United States Core Data for Interoperability dataset.
  • Active and pending prior authorization decisions.

CMS also proposes that impacted payers include prior authorization decisions in patient access APIs.

Finally, the rule would require payer-to-payer data exchange when a patient changes health plans or when a patient has concurrent coverage with multiple payers.

Prior Authorization Policies

CMS also proposes policies to streamline prior authorization, which is a process for health care providers to request approval from payers before providing and being reimbursed for a service. To reduce prior authorization wait times and minimize provider burden, CMS proposes that impacted payers comply with new requirements:

  • CMS proposes to require payers to develop a prior authorization requirements, documentation, and decision (PARDD) API. This API would automate the provider prior authorization process and facilitate integration of prior authorization requests and data from the electronic health record.
  • Impacted payers would be required to provide a specific reason for prior authorization denials.
  • CMS proposes to require impacted payers, except for QHPs, to send prior authorization decisions to providers within 72 hours for urgent requests and seven calendar days for non-urgent requests. CMS seeks comment on the possibility of shorter timeframes, such as 48 hours for urgent requests and five calendar days for non-urgent requests.
  • The agency proposes to require payers to publicly report prior authorization metrics annually.

The prior authorization policies would take effect Jan. 1, 2026, if finalized. Impacted payers would report the first set of metrics by March 31, 2026.

CMS proposes new measures for hospitals under the Promoting Interoperability Program and eligible clinicians under the Promoting Interoperability category of the Merit-based Incentive Payment System (MIPS) to report on the use of electronic prior authorization. Under this proposal, MIPS-eligible clinicians, eligible hospitals, and critical access hospitals would be required to report the number of prior authorizations for medical items and services (excluding drugs) that are requested electronically from a PARDD API using data from certified EHR technology.

Request for Information

Additionally, the rule requests information in five areas:

  • Advancing the electronic exchange of behavioral health information.
  • Current barriers to adopting standards related to social risk factors, as well as opportunities to adopt such standards.
  • Improving the electronic exchange of information in Medicare FFS.
  • Advancing the Trusted Exchange Framework and Common Agreement.
  • Advancing interoperability and improving prior authorization processes to improve maternal health outcomes.

Comments on the rule are due March 13, 2023.

Contact Senior Director of Policy Erin O’Malley at eomalley@essentialhospitals.org or 202.585.0127 with questions.

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About the Author

Shahid Zaman is a senior policy analyst at America's Essential Hospitals.

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