The Centers for Medicare & Medicaid Services (CMS) recently proposed regulations that would establish additional guardrails on Medicare Advantage plans’ prior authorization practices — including the use of artificial intelligence (AI).

Amid rising concerns that algorithms are being used to improperly delay or deny care, the proposed regulations would remove unnecessary barriers to care resulting from the inappropriate use of prior authorization and internal coverage criteria. 

According to CMS, data reported by Medicare Advantage plans indicate that when appealed, plans overturn 80% of their decisions to deny claims. These data also show that a low percentage of denied claims are appealed, meaning many more would likely be overturned if they were appealed.

A U.S. Senate report released in October 2024 also found the Medicare Advantage insurers deny prior authorization requests for post-acute care following hospital stays at far higher rates than other types of care.

Published by the Senate Homeland Security Committee’s investigative subcommittee, the report looked at the nation's largest Medicare Advantage insurers — UnitedHealthcare, Humana and CVS —  and investigated their practice of “intentionally using prior authorization to boost profits by targeting costly yet critical stays in post-acute care facilities.”  

Key elements of the latest CMS proposal would define the meaning of “internal coverage criteria” to clarify when plans can apply utilization management, ensure plan internal coverage policies are transparent and readily available to the public, ensure plans are making enrollees aware of their right to appeal and address after-the-fact overturns that can impact payment, including for rural hospitals.

Additionally, efforts are underway that will allow CMS to collect detailed information from initial coverage decisions and plan-level appeals to gain a better line of sight on utilization management and prior authorization practices.

The proposed rule would also ensure services are provided equitably, irrespective of delivery method or origin. It clarifies that if plans use AI or automated systems, they must provide equitable access to services and not discriminate based on any factor related to the patient’s health status. 

The proposed rule would also, among other things:

• Provide greater oversight of health plan “medical loss ratios” (MLR) to limit  plan expenditures on profit and overhead, including a prohibition on including administrative costs associated with quality improvement in the MLR
• Expand access to transformative anti-obesity medications under the Medicare Part D and Medicaid programs, helping to ensure more Americans have access to these medications.
• Promote access to behavioral health care providers and improve the administration of supplemental benefits;
• Strengthen existing regulations regarding coverage of and responsibility to provide all reasonable and necessary Medicare Part A and B benefits; and
• Address marketing practices that are misleading to seniors and persons with disabilities.

While CMA is reviewing this lengthy new rule, we applaud the many reforms that protect patients and help physician practices. 

For More Information

• Proposed Rule: CMS-4208-P
• Fact Sheet: Contract Year 2026 Policy and Technical Changes to the Medicare Advantage Program, Medicare Prescription Drug Benefit Program, Medicare Cost Plan Program, and Programs of All-Inclusive Care for the Elderly
• Senate Report: Refusal of Recovery: How Medicare Advantage Insurers Have Denied Patients Access to Post-Acute Care