CMS has issued a new rule meant to streamline prior authorization by requiring certain payers to implement an electronic prior authorization process and respond to requests more quickly. The rule would also require payers to put in place standardized data exchange processes, to help them exchange data when a patient changes health insurers. If finalized, the policies would take effect in 2026. The rule, which the CMS estimates will save hospitals and doctor’s offices more than $15 billion over 10 years, replaces one proposed in the final days of the Trump administration that was controversial with health insurers.
More on Proposed Rule
The Proposed Rule, among other proposals, provides for new rules and standards for a payer-to-payer data exchange. Notably, CMS proposes that its electronic prior authorization requirements would also apply to Medicare Advantage organizations (“MAOs”) – a significant change from the previous iteration of the rule, which only included state Medicaid and Children’s Health Insurance Program (“CHIP”) agencies, Medicaid and CHIP managed care plans, and plans on the Affordable Care Act exchanges.
CMS’s Interoperability and Patient Access final rule finalized a policy to require payers, including MAOs, to exchange data with other payers, but did not require a specific mechanism for the data exchange. Rather, CMS required impacted payers to receive data in whatever format it was sent and accept data in the form and format it was received, which ultimately complicated implementation by requiring payers to accept data in different formats.
CMS found that the lack of technical specifications for the data exchange requirement was creating challenges for implementation, which could have created differences in implementation across the industry, poor data quality, operational challenges, and increased administrative burden. CMS noted that differences in implementation approaches could have created gaps in patient health information that would have conflicted directly with the intended goal of interoperable payer-to-payer data exchange.
As a result, CMS is again proposing to require impacted payers, including MAOs, to implement a data exchange using a Fast Healthcare Interoperability Resources (“FHIR”) Application Programming Interface (“API”), but with changes to the December 2020 proposed rule. It anticipates that these proposals will lead to greater uniformity in implementation and ultimately lead to payers having more complete information available to share with patients and providers.
In terms of prior authorization, CMS defines it as the process through which a healthcare provider obtains approval from a payer before providing care. Prior authorization requirements are established by payers to help control costs and ensure payment accuracy by verifying that an item or service is medically necessary, meets coverage criteria, and is consistent with standards of care before the item or service is provided. CMS states that while the process has a role in healthcare, it “has also been identified as a major source of provider burnout, and can become a health risk for patients if inefficiencies in the process cause care to be delayed.”
In a press release, CMS Administrator Chiquita Brooks-LaSure stated that the prior authorization proposals will “streamline the prior authorization process and promote health care data sharing to improve the care experience across providers, patients, and caregivers – helping us to address avoidable delays in patient care and achieve better health outcomes for all.”
Citing the ongoing impact that prior authorization has on patient care, health system costs, and administrative burdens for providers, CMS seeks to streamline the prior authorization process in the Proposed Rule by requiring the implementation and maintenance of an API, timeframes for decisions and communications, providing clear reasoning for denials, and public reporting.
Payers and Providers Applaud Rule
“We applaud CMS for putting patients first with a proposed rule that allows them to easily to share their data with entities of their choosing,” said Matt Eyles, president and CEO of insurance lobby AHIP, in a statement.
AHIP said it was especially pleased that physicians and hospitals will be incentivized to adopt electronic prior authorization processes to meet certain quality measures in Medicare, but that the CMS needs to do more to protect health data shared with entities that aren’t required to comply with HIPAA.
Medical Group Management Association’s Anders Gilberg, senior vice president of government affairs, issued a statement applauding the proposed rule. “MGMA is encouraged to see that CMS heeded our call to include Medicare Advantage plans in the scope of this proposed rule,” Gilberg said. “An alarming number of medical groups report completing prior authorization requests via paper forms, over the phone, or through varying proprietary online payer portals. The onerous methods of completing these requests, coupled with the increasing volume is unsustainable. An electronic prior authorization program, if implemented appropriately, has the potential to alleviate administrative burden and allow practices to reinvest resources in patient care. This is a positive step forward for both medical groups and the patients they treat. We look forward to working with CMS to refine and finalize this rule.”
Ashley Thompson, the American Hospital Association’s senior vice president of public policy analysis and development, issued a statement saying, “The AHA commends CMS for taking important steps to remove inappropriate barriers to patient care by streamlining the prior authorization process for some health insurance plans. Hospitals and health systems especially appreciate that CMS included Medicare Advantage plans in these requirements, as the AHA has urged. Prior authorization is often used in a manner that results in dangerous delays in care for patients, burdens health care providers and adds unnecessary costs to the healthcare system. The AHA looks forward to carefully reviewing the proposed rule, and we continue to urge the Senate to pass the Improving Seniors’ Timely Access to Care Act to codify these protections in law.”