New Federal Regulations Streamline and Speed Up Payor Prior Authorization

In its final days, the Trump administration finalized (and, in the eyes of many in the health care industry, rushed) regulatory changes designed to ease prior authorization rules and improve provider and patient access to medical records. Specifically, the CMS final rule requires Medicaid, the Children’s Health Insurance Plan (CHIP), Qualified Health Plans (QHPs) and other plans—but not Medicare Advantage plans—to build application program interfaces to support prior authorization and data exchange. In case you don’t feel like reading the entire 433-page rule, here’s a quick overview.

Does Prior Authorization Impede Medical Care?

Payors rely on prior authorization requirements to ensure program integrity and winnow out medically unnecessary lab tests and other covered health services. However, these requirements are administratively burdensome and time consuming. The all too frequent result is not only significant inconvenience but also actual harm to patients.

In 2018, the healthcare industry issued a consensus statement stressing the need for reform. But those calls seem to have gone unheeded. In a June 2020 American Medical Association (AMA) survey, more than 9 in 10 physicians said that prior authorization rules regularly delay patient access to medically necessary care. Nearly one in four physicians reported that at least one of their patients had suffered a serious adverse event as a result of prior authorization rules. Another 16 percent said that prior authorization delays resulted in the hospitalization of at least one patient. “These survey results highlight that practices continue to devote significant time—an average of nearly two business days per week per physician—navigating prior authorization’s administrative obstacles,” sometimes resulting in harm to patients, noted AMA President Dr. Susan Bailey in a statement.

The CMS Rule

The strategy behind the CMS rule is not to eliminate payor authorization requirements but make them more transparent and easier to maneuver. The new interfaces would enable providers to determine in advance the documentation each payor requires, streamline documentation processes and facilitate the electronic transmission prior authorization information requests and responses. The rule contains two key elements:

1. Mandatory Payor APIs

The rule, which builds on the Interoperability and Patient Access final rule that CMS published in May 2020, calls for payors to create application programming interfaces (APIs) on their systems that enable electronic health records (EHR) and other information systems to talk to each other or third-party applications. Payor APIs would have to meet the Health Level 7 (HL7) Fast Healthcare Interoperability Resources (FHIR) standard. The FHIR standard is a technology solution that helps bridge the gaps between systems so that both systems can understand and use the data they exchange.

2. New Deadlines for Prior Authorization

The final rule also reduces the wait time for prior authorization decisions by requiring payors (other than QHP issuers on Federally Facilitated Exchanges (FFEs)) to issue decisions on urgent requests within 72 hours and non-urgent requests within seven calendar days. Payors must also provide a specific reason for any denial, to give providers some transparency into the process. To promote accountability for plans, the rule also requires payors to make public certain metrics that demonstrate how many procedures they’re authorizing.

Operation Warp Speed?

CMS moved at warp speed to bring these rules to fruition by ending comments on the proposed rule on Jan. 4, 2021, a mere 22 days after posting it (a period that spanned the Christmas and New Year’s holidays) and then finalizing the rule just eight days after that. So, provider groups can be forgiven for criticizing the agency with rushing through such an important rule without giving them ample time to study and comment on it. The rule will be implemented in stages over two years, starting on Jan. 1, 2023.

Takeaway

Taken together, these policies could lead to fewer prior authorization denials and appeals while improving communication among payors, providers and patients, according to a CMS statement. The biggest criticism is the omission of Medicare Advantage plans, which creates the potential to create treatment misalignment and dysfunction for dual Medicare- and Medicaid-eligible patients. CMS indicated that it was planning to create a parallel rule for Medicare Advantage plans but, alas, never did—at least during this administration.

The other fly in the ointment is the use of APIs. This is far from the first time that the Trump administration pushed for adopting APIs for EHR communication and sharing purposes. However, APIs are also fairly controversial due to privacy concerns. As a result, key players in the healthcare industry have resisted their adoption. And now that a new administration has taken the reins, the rule’s future remains in doubt. One possibility is that the next CMS will sever the controversial API requirements and leave the prior authorization deadlines and transparency reporting obligations intact, while potentially extending them to Medicare Advantage Plans.