Fixing Prior Authorization: CMS Takes a Step in the Right Direction
By Jarrod Fowler, MHA, FMA Director of Health Care Policy and Innovation | Updated Dec. 14, 2022


On Dec. 6, CMS released a proposed rule to regulate prior authorization across Medicare Advantage plans, state Medicaid and CHIP plans, and plans sold on the federally facilitated exchange. Issues with prior authorization have gained prominence at the national level recently, with HR 3173 passing in the U.S. House of Representatives earlier this year. HR 3173 has drawn bipartisan support and, if enacted, would regulate prior authorization under Medicare Advantage specifically. Unfortunately, the legislation looks unlikely to pass the Senate before the end of the year and therefore will have to be reintroduced in the next Congress.

The need to address prior authorization
According to the latest prior authorization policy brief from the AMA, 93% of physicians report care delays resulting from prior authorization. Additionally, 82% of physicians report that prior authorization can lead to treatment abandonment. Among other findings, 24% of physicians reported that prior authorization has led to a patient being hospitalized, and 51% of physicians reported that prior authorization has interfered with a patient’s ability to perform their job responsibilities.

Eighty-eight percent of physicians describe the prior authorization burden as high or extremely high, and 40% have staff members who work exclusively on prior authorizations. Physicians complete an average of 41 prior authorizations per week.

What CMS’ new proposed rule does
First and foremost, the proposed rule is far from being a complete solution to prior authorization. The changes won’t take effect until 2026, and commercial health plans sold outside of the exchange won’t be subject to any new requirements. Still, the new rule could provide momentum for additional action at the state and federal levels and is generally a step in the right direction.

Starting in 2026, the aforementioned health plans would have to maintain electronic interfaces to automate the process for providers to determine whether a prior authorization is required, identify the corresponding requirements, and facilitate the exchange of such requests and decisions across EHRs and practice management systems. Additionally, payors would have to include a specific reason when they deny a prior authorization request. Furthermore, impacted payors would have to publicly report certain prior authorization metrics, including, but not limited to:

  • A list of all items and services that require prior authorization
  • The percentage of standard prior authorization requests that were approved, aggregated for all items and services
  • The percentage of standard prior authorization requests that were denied, aggregated for all items and services
  • The percentage of standard prior authorization requests that were approved after appeal, aggregated for all items and services
  • The average and median time that elapsed between the submission of a request and a determination by the payor, plan, or issuer for standard prior authorizations, aggregated for all items and services

Finally, with the exception of plans sold on the exchange, impacted payors would have to send prior authorization decisions within 72 hours for expedited (urgent) requests and seven calendar days for non-urgent requests. CMS is also soliciting feedback on whether these timeframes should be shorter (e.g., 48 hours for urgent requests).

What’s next?

The rule is still subject to a comment period and must be finalized. And, as previously stated, the rule has important limitations and would not take effect until 2026. Still, it’s a step in the right direction for CMS to acknowledge the burden prior authorization imposes and the rule may help build momentum for more change. As always, the FMA will continue fighting to reign in onerous and excessive prior authorization requirements so that physicians can practice medicine as effectively as possible.