CMS Finalizes Prior Authorization Rule

From Becker’s

CMS has finalized a rule to streamline the prior authorization process and improve the electronic exchange of health information that it estimates will save $15 billion over 10 years.

The requirements generally apply to Medicare Advantage organizations, state Medicaid and Children’s Health Insurance Program agencies, Medicaid managed care plans, CHIP-managed care entities and qualified health plan insurers on the federally facilitated exchanges, according to a Jan. 17 CMS news release. The agency proposed the rule in December 2022.

Beginning primarily in 2026, certain payers will be required to include a specific reason when denying requests, publicly report certain prior authorization metrics and send decisions within 72 hours for urgent requests and seven calendar days for standard requests.

The rule also requires affected payers to implement a Health Level 7 Fast Healthcare Interoperability Resources standard application programming interface to support electronic prior authorization.

“Together, these new requirements for the prior authorization process will reduce administrative burden on the healthcare workforce, empower clinicians to spend more time providing direct care to their patients and prevent avoidable delays in care for patients,” CMS said in the release.

The rule also finalizes API requirements to “increase health data exchange and foster a more efficient healthcare system for all.” CMS is delaying the dates for compliance from generally Jan. 1, 2026, to Jan. 1, 2027. Beginning in January 2027, affected payers will 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. CMS is requiring affected payers to exchange, with a patient’s permission, most of the same data using a payer-to-payer FHIR API when a patient moves between payers or has multiple concurrent payers.

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

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