CMS Finalizes Rule to Improve Prior Authorization Process

The Centers for Medicare & Medicaid Services (CMS) finalized the CMS Interoperability and Prior Authorization Final Rule (CMS-0057-F). The new rules are intended to improve prior authorization processes and reduce the burden on patients, providers, and payers, resulting in approximately $15 billion of estimated savings over ten years. The rule sets requirements for Medicare Advantage (MA) organizations, Medicaid and the Children’s Health Insurance Program (CHIP) fee-for-service (FFS) programs, Medicaid managed care plans, CHIP managed care entities, and issuers of Qualified Health Plans (QHPs) offered on the Federally-Facilitated Exchanges (FFEs), (collectively “impacted payers”), to improve the electronic exchange of health information and prior authorization processes for medical items and services.

Among other requirements, some specific components of these rule changes include:

• Streamline Prior Authorization Requests: The final rule establishes requirements for certain payers to streamline the prior authorization process and complements the Medicare Advantage requirements finalized in the Contract Year (CY) 2024 MA and Part D final rule, which add continuity of care requirements and reduce disruptions for beneficiaries.  
• Increase Efficiencies in Electronic Authorization Processes: Impacted payers will be required to implement a Health Level 7 (HL7) Fast Healthcare Interoperability Resources (FHIR®) Prior Authorization application programming interface (API), which can be used to facilitate a more efficient electronic prior authorization process between providers and payers by automating the end-to-end prior authorization process. Medicare FFS has already implemented this technology and has demonstrated much success reducing administrative burden on the healthcare workforce.
• Timeframe to Review and Respond to Prior Authorization Requests: Beginning primarily in 2026, impacted payers (not including QHP issuers on the FFEs) will be required to send prior authorization decisions within 72 hours for expedited/urgent requests and seven (7) calendar days for standard/non-urgent requests for medical items and services. For some payers, this new timeframe for standard requests cuts current decision timeframes in half.
• Justification for Prior Authorization Denial: The rule will require all impacted payers to include a specific reason for denying a prior authorization request, which will help facilitate resubmission of the request or an appeal when needed.
• Increase Transparency with Prior Authorization Metrics: Impacted payers will be required to publicly report prior authorization metrics, similar to the metrics Medicare FFS already makes available.

A Fact Sheet for the CMS-0057-F Final Rule has been made available, for those interested in learning more.