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CMS Builds on Interoperability and Finalizes New Prior Authorization Requirements

January 21, 2021

The Centers for Medicare & Medicaid Services (CMS) recently issued its final rule designed to improve the electronic sharing of health care data among payors, providers, and patients (commonly referred to as interoperability), and ensure patients receive timely approval for care.

Last week, CMS published its final rule on prior authorization and interoperability that requires payors with plans in Medicaid, the Children’s Health Insurance Program (CHIP), and the federal marketplace to create digital platforms that give providers and patients access to prior authorization data, such as previous and pending decisions and other claims data. The new rule also shortens the timeline for payors to review requests for urgent and non-urgent care.

CMS officials said this new rule should lead to fewer repeated requests for prior authorizations, reduce costs, and alleviate the administrative burden on hospitals and other frontline providers.

Some key features of this new CMS rule effective January 1, 2024 are:

  • Reduced decision timelines: Beginning in 2024, payors will have a maximum of 72 hours to make prior authorization decisions on urgent requests and seven calendar days for non-urgent requests. All payors subject to the rule are required to provide a specific reason for any denial
  • Sharing health care data: The rule requires payors to create platforms that give providers and patients access to important information about pending and active prior authorization decisions and other claims data, such as lab results. This information can be connected with a provider’s electronic health record to help patients understand where their care stands in the approval process
  • Required insurers: The payors regulated under this rule include Medicaid and CHIP managed care plans, state Medicaid and CHIP fee-for-service programs, and issuers of individual market plans on the federally facilitated exchanges. Medicare Advantage plans are not included, but CMS will consider adding those plans during future rulemaking, officials said

In Pennsylvania and across the country, prior authorization has been identified as a key target area for health care reform. Prior authorization requires patients to get pre-approval from their health insurer before they can get certain non-emergent medical tests, be admitted to the hospital, or receive prescription drugs or medical equipment.

This process was originally designed to reduce the overuse of expensive health care services, but it has evolved into an administrative roadblock for patients to receive care in a timely manner and a tool for insurers to control costs or avoid paying for medically necessary care.

HAP advocates for state and federal policies that streamline the prior authorization process and ensure patients have access to the care they need to live healthy lives. Last year, HAP joined a coalition of more than 400 organizations advocating for federal legislation that would improve the prior authorization process under Medicare Advantage by:

  • Establishing an electronic prior authorization process
  • Minimizing the use of prior authorization for routinely approved care and services
  • Requiring regular reports from Medicare Advantage plans on their use of prior authorization and rates of delay and denial
  • Prohibiting the use of prior authorization for medically necessary services performed during pre-approved surgeries or invasive procedures

This legislative effort was led by Congressman Mike Kelly (R, PA-16) and earned the unanimous support of all eighteen members of the Pennsylvania Congressional Delegation during the 116th Congress.

During 2021, HAP will continue to partner with hospitals and health systems as they implement federal and state rules on prior authorization, while advocating for regulatory and legislative initiatives that enable timely access to care.

For more information, contact Laura Stevens Kent, HAP’s senior vice president, strategic integration or Jolene Calla, HAP’s vice president, health care finance and insurance.