Prior Auth Processes to Streamline Under Medicare Advantage, Other Federal Programs
By Emma Freer

Physicians who care for patients enrolled in federal health plans can expect shorter prior authorization response times and other process improvements in coming years, thanks to longstanding advocacy by the Texas Medical Association and others in organized medicine.  

The Centers for Medicare & Medicaid Services (CMS) recently finalized new rules related to prior authorization and the electronic exchange of health information under certain Medicare Advantage, Medicaid, and Children’s Health Insurance Program (CHIP) plans. The federal agency estimates the changes will generate $15 billion in savings over the next decade. 

TMA expressed support for the reforms in a March 2023 letter to CMS commenting on the federal agency’s initial proposal.  

“In addition to improving patient access to medical treatment, TMA sincerely thanks CMS for proposing this rule since it recognizes the ongoing and increasing burden of prior authorization on physicians and other health care providers,” then-TMA President Gary Floyd, MD, wrote. 

American Medical Association President Jesse Ehrenfeld, MD, also welcomed the regulatory changes. 

“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,” he said in a Jan. 17 statement. The rule also “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.” 

TMA and AMA also urged CMS to expand the changes to all health plans under its purview and to prescription drugs, but the federal agency has yet to heed these recommendations. 

Under the new rules, beginning in 2026, impacted payers – including Medicare Advantage organizations; Medicaid and CHIP fee-for-service programs; Medicaid managed care plans; and CHIP managed care entities – must: 

• Respond to urgent prior authorization requests within 72 hours and to non-urgent requests within seven calendar days;    
• Include a specific reason for denying a prior authorization request, which CMS says “will help facilitate resubmission of the request or an appeal when needed;” and 
• Publicly report prior authorization metrics. 

Beginning in 2027, impacted payers must take additional steps, including: 

• Implementing a specific application programming interface (API) to automate the prior authorization process;  
• Expanding patient access to information about prior authorizations and physician access to certain retrievable data, including about patients’ claims, encounters, and prior authorizations; and 
• Exchanging, with a patient’s permission, most of this same data when a patient moves between payers or has multiple concurrent payers.  

Lastly, the new rules add a promoting interoperability measure under the Merit-Based Incentive Payment System (MIPS). The measure, which takes effect in the 2027 performance year, will allow participating clinicians to report their use of payers’ prior authorization APIs to submit an electronic prior authorization request. 

Noncompliant payers may face penalties depending on the program.  

“Oversight and compliance procedures and processes vary among ... CMS programs, and CMS may choose from an array of possible enforcement actions, based on the payer’s status in the program, previous compliance actions, and corrective action plans,” according to the final rule.  

The new rules build on previous efforts to reform the prior authorization process.  

Texas’ 2021 “gold card” law inspired copycat legislation in other states as well as the federal Gold Card Act (House Resolution 4968) by U.S. Rep. Michael Burgess, MD (R-Texas). Introduced in July 2023, the federal bill similarly would exempt physicians from prior authorization requirements under Medicare Advantage plans if at least 90% of their requests for specific items and services were approved during the previous plan year.  

For more information on the final rule, check out CMS’ fact sheet. And read all of TMA’s comment letters to state and federal leadership in TMA’s advocacy center.