CMS announces new prior authorization, interoperability rule

© Timon - stock.adobe.com

Prior authorizations for medical care will become quicker and easier, while saving money, according to the U.S. Centers for Medicare & Medicaid Services (CMS).

A new rule governing prior authorizations (PAs) and interoperability will help save $15 billion over 10 years while smoothing out processes for patients, physicians and payers. CMS announced the rule, known as the CMS Interoperability and Prior Authorization Final Rule (CMS-0057-F), on Jan. 17, 2024.

“CMS is committed to breaking down barriers in the health care system to make it easier for doctors and nurses to provide the care that people need to stay healthy,” CMS Administrator Chiquita Brooks-LaSure said in a news release. “Increasing efficiency and enabling health care data to flow freely and securely between patients, providers, and payers and streamlining prior authorization processes supports better health outcomes and a better health care experience for all.”

The PA process “can help ensure medical care is necessary and appropriate” for patients, the CMS announcement said. But it also can create obstacles to care when physicians and other clinicians face complex, varying requirements and lengthy waits from payers.

“When a doctor says a patient needs a procedure, it is essential that it happens in a timely manner,” said HHS Secretary Xavier Becerra. “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.”

New requirements

The new rule involves 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). CMS refers to those entities as impacted payers.

Starting in 2026, payers must:

• Send PA decisions within 72 hours for expedited, urgent requests.
• Send PA decision within within a week for standard requests, which are not urgent.
• Include a specific reason for denying PA requests to help facilitate resubmissions or appeals when needed.
• Publicly report PA metrics, similar to metrics already available through Medicare FFS.
• Implement a Health Level 7 Fast Healthcare Interoperability Resources (FHIR) Prior Authorization application programming interface (API) that automates the end-to-end PA process. The API is meant to create a more efficient electronic PA process.

Additional regs are coming

The CMS announcement stated HHS will announce “the use of enforcement discretion for the Health Insurance Portability and Accountability Act of 1996 X12 278 prior authorization transaction standard to promote efficiency in the prior authorization process.”

“Covered entities that implement an all-FHIR-based Prior Authorization API pursuant to the CMS Interoperability and Prior Authorization Final Rule (CMS-0057-F) who do not use the X12 278 standard as part of their API implementation will not be enforced against under HIPAA Administrative Simplification, thus allowing limited flexibility for covered entities to use a FHIR-only or FHIR and X12 combination API to meet the requirements of the CMS Interoperability and Prior Authorization final rule,” the CMS announcement said. “Covered entities may also choose to make available an X12-only prior authorization transaction. HHS will continue to evaluate the HIPAA prior authorization transaction standards for future rulemaking.”

API compliance deadline

CMS also will delay the deadline to comply with API policies from Jan. 1, 2026, to Jan. 1, 2027. Impacted payers will be required to expand current Patient Access APIs to include information about prior authorizations. Provider Access APIs must allow providers to access data about patient claims, encounters, and clinical and PA data. With a patient’s permission, impacted payers must exchange most of the same data using a Payer-toPayer FHIR AOU when patients move between payers or have multiple concurrent payers, according to CMS.

Along with the rule, CMS published an online fact sheet about the upcoming changes.