Feds finalize significant prior auth reform regulation

January 23, 2024

The Centers for Medicare and Medicaid Services (CMS) recently finalized comprehensive prior authorization reform regulations. These meaningful reforms apply to Medicare Advantage plans, state Medicaid and Children’s Health Insurance Program (CHIP) fee-for-service programs, Medicaid and CHIP managed care plans, and Qualified Health Plan issuers on the federally-facilitated Exchanges (FFE).

These regulations reflect the bipartisan legislation supported by the California Medical Association (CMA) and authored by California physician Congressman Ami Bera, M.D. and others – HR 3173/S 3108 “Improving Seniors’ Timely Access to Care Act” that unanimously passed the U.S. House of Representatives in September 2022 with more than 375 bipartisan House and Senate cosponsors.

The final rule requires electronic prior authorization processes, shortens the time frames to respond to prior authorization requests, requires the public reporting of certain prior authorization metrics and establishes policies to make the prior authorization process more efficient and transparent.

The rule will require impacted payors (not including QHPs on the FFE) to send prior authorization decisions within 72 hours for urgent requests and seven calendar days for standard requests. For some payors, this new timeframe for standard requests cuts current decision timeframes in half. The rule also requires payors to include a specific reason for denying a prior authorization request, which will help facilitate resubmission of the request or an appeal when needed.

These operational or process-related prior authorization policies are being finalized with a compliance date starting January 1, 2026, and the initial set of metrics must be reported by March 31, 2026.

Other highlights of the final rule include:

  • Allows payors to exempt physicians with a history of high prior authorization approval rates.
  • Mandates appropriate and public clinical evidence to substantiate prior authorization decisions.
  • Requires plans to establish Utilization Management Committees with physicians.
  • Increases public transparency of approvals, denials, overturned decisions and response times.

CMS estimates that efficiencies introduced through these policies will save physician practices and hospitals over $15 billion over a 10-year period.

CMA will be working with the American Medical Association on federal legislation to achieve our remaining prior authorization goal – real time decisions. CMA also continues to support state-level legislation to reform prior authorization, process to ensure that patients receive the care they need — when they need it.

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