Electronic prior authorization plan from feds hailed as 'positive step'

Hospitals, doctors, and medical groups have pointed to prior authorization as one of their biggest frustrations, but President Biden’s administration has introduced a new proposal that may bring some relief.

Healthcare leaders expressed optimism for the measures, even though they won’t occur overnight and won't solve all the problems.

The Centers for Medicare & Medicaid Services proposed a new rule directing some payers to move to electronic prior authorization by 2026. The rule would also require certain insurers to respond to prior authorization requests more quickly, and to make requests more transparent. CMS unveiled the proposal this week, and the public will have 90 days to comment on the proposal.

In the process known as prior authorization, doctors and healthcare organizations must get approval from insurers before moving forward with treatments or procedures. Physicians, healthcare leaders and medical groups say the process hurts patient care and delays necessary treatments. Healthcare leaders also say the time-consuming process is a major cause of physician burnout.

Insurers counter that prior authorization is a necessary process to ensure that health systems aren’t moving forward with costly treatments or procedures that may not be medically necessary. They argue that the process helps curb wasteful spending and procedures patients don’t truly need.

The CMS rule also calls for improved sharing of health data to improve patient and provider access to health information. The rule also requires insurers to share data with each other, making it easier to access patient information when patients change payers, CMS said.

CMS Administrator Chiquita Brooks-LaSure said the proposals would improve access to healthcare and make it “easier for clinicians to provide that care.”

“The prior authorization and interoperability proposals we are announcing today would streamline the prior authorization process and promote health care data sharing to improve the care experience across providers, patients, and caregivers – helping us to address avoidable delays in patient care and achieve better health outcomes for all,” she said in a statement Tuesday.

Details on the rules

The proposals would affect Medicare Advantage organizations, state Medicaid and CHIP Fee-for-Service programs, Medicaid managed care plans, Children’s Health Insurance Program managed care entities, and Qualified Health Plan issuers on Federally Facilitated Exchanges.

The CMS proposed rule replaces an earlier plan introduced under former President Trump’s administration.

Under the proposal, payers would have to include specific reasons for denying authorization requests. Payers would also have to publicly report prior authorization metrics, CMS said.

Payers would have to send decisions within 72 hours for urgent authorization requests, and seven calendar days for standard requests, which CMS said is twice as fast as the current Medicare Advantage response time limit. CMS said it is seeking comments on alternative time frames with shorter turnaround times, such as 48 hours for expedited requests and five calendar days for standard requests.

CMS is also proposing an electronic prior authorization measure for hospitals, which would require eligible hospitals to report the number of prior authorizations that are requested electronically.

‘Important steps’

Ashley Thompson, senior vice president of public policy analysis and development for the American Hospital Association, said the proposals represent “important steps to remove inappropriate barriers to patient care by streamlining the prior authorization process for some health insurance plans.”

“Prior authorization is often used in a manner that results in dangerous delays in care for patients, burdens health care providers and adds unnecessary costs to the health care system,” Thompson said in a statement.

Health systems and hospitals especially appreciate that Medicare Advantage plans were included in the proposal, Thompson said. Health systems said the increasingly popular Medicare Advantage plans have added onerous authorization burdens for providers.

About 28 million Americans are enrolled in Medicare Advantage plans, lawmakers say. Medicare Advantage plans are likely to cover more than half of all Medicare-eligible beneficiaries nationwide by 2025, according to a report by Trella Health.

Hospitals and other healthcare advocates are pushing Congress to finalize legislation to streamline prior authorization requirements for Medicare Advantage plans before the legislative session concludes at the end of the year.

Under the bill, Medicare Advantage plans would be required to tell the CMS  how often they are using prior authorization and the rate of approvals and denials. The U.S. Department of Health and Human Services would have to set up a process for “real-time” decisions for services that are typically approved. The House has approved the bill, dubbed the Improving Seniors’ Timely Access to Care Act, but the measure still needs Senate approval.

The Medical Groups Management Association said it is encouraged by the CMS proposal, and the inclusion of Medicare Advantage plans in the rules, said Anders Gilberg, the MGMA’s senior vice president of government affairs.

“An alarming number of medical groups report completing prior authorization requests via paper forms, over the phone, or through varying proprietary online payer portals,” Gilberg said in a statement.

“The onerous methods of completing these requests, coupled with the increasing volume is unsustainable,” Gilberg said. “An electronic prior authorization program, if implemented appropriately, has the potential to alleviate administrative burden and allow practices to reinvest resources in patient care. This is a positive step forward for both medical groups and the patients they treat.”

Tochi Iroku-Malize, president of the American Academy of Family Physicians,  said, “We are pleased by HHS’ proposed rule to streamline prior authorization processes, but comprehensive reform is needed to reduce the volume of prior authorizations, and ensure patients’ timely access to care.”

“The rule is good news for family physicians and an important first step in alleviating burden and improving patient access to care,” Iroku-Malize said in a statement.

Some requests are still manual

While healthcare organizations are doing more administrative tasks electronically, progress with prior authorization has come more slowly.

Only 26% of prior authorization requests were handled fully electronically in 2021, while 39% of prior authorizations were partially electronic, according to a report from the Council for Affordable Quality Healthcare (CAQH). More than one third of prior authorization transactions (35%) were fully manual, meaning they were submitted by phone, fax, email or mail, CAQH said.

The American Medical Association has been pushing for reforms in prior authorization. Nearly all doctors (93%) said prior authorization leads to delays in patient care, while 91% said it had a negative impact on patient outcomes, according to an AMA poll released in February 2022.

An MGMA survey in March found nearly 4 in 5 respondents (79%) said prior authorization demands were getting worse. Some physicians said they have staff solely working on authorization requests.

In its announcement of its proposals, CMS said prior authorization plays an important role in reducing some healthcare costs and deterring unnecessary treatments, but “patients, providers, and payers alike have experienced burden from the process.”

“It has also been identified as a major source of provider burnout, and can become a health risk for patients if inefficiencies in the process cause care to be delayed,” CMS said.