CMS expects big savings from prior auth rule

WASHINGTON – CMS has finalized a rule that sets requirements for Medicare Advantage organizations and other programs to improve the electronic exchange of health information and prior authorization processes and reduce burden on patients, providers and payers. 

The agency estimates its Interoperability and Prior Authorization Final Rule (CMS-0057-F) will result in $15 billion in estimated savings over 10 years. 

“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.” 

Beginning primarily in 2026, impacted payers will be required to send prior authorization decisions within 72 hours for expedited (i.e., urgent) requests and seven calendar days for standard (i.e., non-urgent) requests for medical items and services. For some payers, this new timeframe for standard requests cuts current decision timeframes in half, CMS says. 

The rule also requires all impacted payers to include a specific reason for denying a prior authorization request, which will help facilitate resubmission of the request or an appeal when needed; and publicly report prior authorization metrics. 

Additionally, the rule requires impacted payers to implement a Health Level 7 (HL7) Fast Healthcare Interoperability Resources (FHIR) Prior Authorization application programming interface (API), which can be used to facilitate a more efficient electronic prior authorization process between providers and payers by automating the end-to-end prior authorization process. 

The final rule is available to review here. 

The fact sheet for this final rule is available here.