New CMS rules aim to speed up prior authorizations

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The federal government is addressing delays caused by insurers requiring prior authorization for many procedures and prescription medications. Experts say speeding up the process can aid patients and cut health care costs.

“Cancer biology doesn’t wait for bureaucracy” and delays can result in “catastrophic outcomes,” Fumiko Chino, M.D., a radiation oncologist at Memorial Sloan Kettering Cancer Center in New York, said during a recent webinar on prior authorization held by KFF, formerly known as the Kaiser Family Foundation.

Even physicians who provide care that is less urgent can feel the burden of prior authorization. The process can “divert valuable time and resources away from direct patient care,” Steven P. Furr, M.D., president of the American Academy of Family Physicians and a family physician in Jackson, Alabama, told Managed Healthcare Executive, a sister publication to Medical Economics.

Furr testified before Congress in 2023 about the harm that prior authorizations can cause patients and physicians. “I told lawmakers that from my experience, I know that some insurance plans made it extremely difficult to receive prior authorization for necessary tests such as MRIs, nerve conduction studies, or cardiac stress tests and that it can be easier to refer patients to a specialist and let them order the test. This should not be the case — especially given that family physicians have long-term, trusting relationships with their patients,” Furr said.

However, insurers have long argued that prior authorization is important for controlling health care costs and wasteful care. Troyen Brennan, M.D., M.P.H., an adjunct professor of health policy and management at the Harvard T.H. Chan School of Public Health and a former chief medical officer at Aetna and CVS Caremark, said during the KFF webinar that the goal of prior authorization is to “reduce ineffective care,” with 15% to 30% of care estimated to be ineffective.

New CMS rules

The Centers for Medicare and Medicaid Services issued new rules in January to address prior authorization concerns. The rules apply only to Medicare Advantage plans, Medicaid and Children’s Health Insurance programs, and health plans on the federal health exchanges.

Starting in 2026, those insurers will be required to make prior authorization decisions within 72 hours for urgent requests and within seven days for nonurgent ones. That cuts by half the approval time frame for nonurgent requests. Payers also must disclose why they are denying a request and report prior authorization metrics. Starting in 2027, insurers must implement a prior authorization application programming interface, which is designed to create a more efficient process between providers and payers through automation. According to the U.S. Department of Health and Human Services the changes will save an estimated $15 billion over 10 years.

A 2023 KFF study found that 35 million prior authorization requests were submitted to Medicare Advantage insurers in 2021 and more than 2 million were fully or partially denied. Only 11% of denials were appealed. For those that did go to appeal, in more than 80% of cases the denials were fully or partially overturned.

Prior authorization and other administrative burdens “are a fierce contributor to burnout and play a role in driving physicians away from the workforce and worsening physician shortages,” and many practices have to hire professionals just to deal with the requests, Furr said. Family physicians have long asked for policies that would streamline prior authorizations, according to Furr.

Brennan said that “reasonable insurers” publish their prior authorization criteria and that approving drugs is easier because payers make those determinations based on a medication’s indicated use. Prior authorization processes vary from payer to payer, Chino said, and some use outdated templates for providing care. Their formularies change, so something that is approved one year may not be allowed the next. Chino said that with transparency surrounding denials, providers “can pivot” when seeking approval for patient care.

Anna Howard, J.D., principal, policy development, for the American Cancer Society Cancer Action Network, said during the KFF webinar that the prior authorization process “can lead to higher costs per patient” due to delays and called the system “penny-wise and pound-foolish.” By not receiving approval for what their doctors believe is the best form of care, patients may have to go with their second-best option or with treatments that don’t take comorbidities or side effects into account, Howard said.

Using artificial intelligence

Insurers seem interested in changes that would harness artificial intelligence for some aspects of prior authorization. AHIP, the trade association for health insurers, said in an email to Managed Healthcare Executive that health plans have been focusing on broader use of electronic prior authorization. A 2022 AHIP survey of more than two dozen commercial health plans found that 75% were using electronic prior authorization to streamline prescription medication requests and almost 90% were using it to streamline requests for medical services.

“The whole process could be completely automated today,” Brennan said, which would help lower insurers’ costs. But Howard questioned whether the data being used in the algorithms are the most current available.

Some states are already taking matters into their own hands. Almost 90 bills related to prior authorization were pending in 30 states, the American Medical Association reported in 2023. “There’s been a lot of activity at the state level in the past two to three years,” said Kaye Pestaina, J.D., vice president and director of the program on patient and consumer protection for KFF.

Some states have set deadlines for prior authorization decisions. In New Jersey, for example, the time frame to approve requests is 24 hours for urgent requests and 72 hours for standard ones, Pestaina says. Others are looking to apply rules to commercial insurers, state-based marketplaces and employer-sponsored plans. There are also proposals to set rules for “gold carding” programs that require health plans to waive the prior authorization process for providers who have a good track record of having their prior authorization requests go through.