New Rule Expands Access to Health Information and Improves Prior Authorization Process

The Centers for Medicare and Medicaid Services (CMS) has finalized the CMS Interoperability and Prior Authorization Final Rule that 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) to improve the electronic exchange of health information and prior authorization processes for medical items and services. Together, these policies are intended to improve prior authorization processes and reduce burden on patients, providers and payers, resulting in approximately $15 billion of estimated savings over 10 years.

This final rule establishes requirements for certain payers to streamline the prior authorization process and complements the MA requirements finalized in the 2024 MA and Part D final rule, which add continuity of care requirements and reduce disruptions for beneficiaries. 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 requests and seven calendar days for standard requests for medical items and services. For some payers, this new time frame for standard requests cuts current decision time frames in half. The rule also requires 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. Finally, impacted payers will be required to publicly report prior authorization metrics, similar to the metrics Medicare FFS already makes available.

The rule also requires impacted payers to implement a Health Level 7 Fast Healthcare Interoperability Resources 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 an electronic prior authorization API, demonstrating the efficiencies other payers could realize by implementing such an API. 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.