CMS Issues New Rule Expediting Prior Authorization Decisions in Federal Programs

In late January, the Centers for Medicare and Medicaid Services (CMS) issued a final rule requiring most federally funded health plans to expedite prior authorization decisions, which patients and physicians have long viewed as a burden that delays necessary care.

Beginning in 2026, payers will be required to send prior authorization decisions within 72 hours for urgent requests and seven calendar days for standard (nonurgent) requests for medical items and services. For denied requests, the rule requires payers to include a specific reason for the denial, which will help facilitate resubmission of the request or an appeal when needed.

Payers will also be required to publicly report prior authorization metrics, similar to the metrics that Medicare fee-for-service plans already make available.

Finally, the rule requires payers to use a standardized format for electronic prior authorization decisions, improving efficiency of communication between health plans and physicians.

The two-year delay in implementation is due to the fact that the rule will require extensive changes on the part of payers in their prior authorization processes.

The programs impacted by the new rule include Medicare, Medicaid, and the Children’s Health Insurance Program. Qualified Health Plans offered on the federally facilitated health exchanges are not affected by the prior authorization rule but will be required to adopt the standardized data format for prior authorization. According to CMS, the new timeframe for responding to standard requests will cut current decision timeframes in half in some plans.

“When a doctor says a patient needs a procedure, it is essential that it happens in a timely manner,” said Health and Human Services Secretary Xavier Becerra in a statement. “Too many Americans are left in limbo, waiting for approval from their insurance company. Today the Biden-Harris Administration is announcing strong action that will shorten these wait times by streamlining and better digitizing the approval process.”

APA, along with the AMA and other medical groups, has long advocated for reform of the prior authorization process. “This is an important victory for patients and physicians,” said APA CEO and Medical Director Saul Levin, M.D., M.P.A.

In a March 2023 letter to CMS Administrator Chiquita Brooks-Lasure, Levin said, “The [prior authorization] process currently serves as a barrier to care, impeding access to appropriate services and potentially increasing the cost of care. It should not be used routinely but rather selectively when needed to ensure quality care.”

In a statement issued by the AMA, AMA President Jesse Ehrenfeld, M.D., M.P.H., said, “Today’s final rule requires impacted plans to support an electronic prior authorization process that is embedded within physicians’ electronic health records, bringing much-needed automation and efficiency to the current time-consuming, manual workflow. The AMA also appreciates that the rule will significantly enhance transparency around prior authorization by requiring specific denial reasons and public reporting of program metrics as well as requiring that prior authorization information be available to patients to help them become more informed decision-makers.

“The AMA commends the Biden Administration for its prior authorization reforms that prioritize patients’ access to care and reduce administrative burdens for physicians and their staff.” ■