Updated on: December 14, 2020

News Alert: CMS Announces Proposed Changes to Prior Authorization Process

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Original story posted on: December 11, 2020

Federal officials are putting an emphasis on streamlining and improving the information exchange process involving payors, providers, and patients.

Federal officials this week announced proposed changes to the prior authorization process, addressing an issue that providers nationwide have long and consistently ranked among their most onerous.

The Centers for Medicare & Medicaid Services (CMS) said its proposed rule would improve the electronic exchange of healthcare data among payors, providers, and patients, and streamline processes related to prior authorization to reduce administrative burden.

“The COVID-19 pandemic has shone a harsh light on many longstanding inefficiencies in the healthcare system – including the lack of data sharing and access,” the agency said in a press release. 

“This proposed rule ushers in a new era of quality and lower costs in healthcare, as payors and providers will now have access to complete patient histories, reducing unnecessary care and allowing for more coordinated and seamless patient care. Each element of this proposed rule would play a key role in reducing onerous administrative burden on our frontline providers while improving patient access to health information,” CMS Administrator Seema Verma said in a statement. “Prior authorization is a necessary and important tool for payors to ensure program integrity, but there is a better way to make the process work more efficiently to ensure that care is not delayed and we are not increasing administrative costs for the whole system.” 

“Prior authorization is not only a leading source of burden, it is also a primary source of provider burnout, and takes time away from treating patients,” Verma added. “If just a quarter of providers took advantage of the new electronic solutions that this proposal would make available, the proposed rule would save between $1 billion and $5 billion over the next ten years. With the pandemic placing even greater strain on our healthcare system, the policies in this rule are more vital than ever.”

The rule would require payors enrolled in Medicaid, the Children’s Health Insurance Program (CHIP), and Quality Health Plan (QHP) programs to build application programming interfaces (APIs) to support data exchange and prior authorization; such interfaces allow two systems (or a payor’s system and a third-party app) to communicate and share data electronically. Payors would also be required to implement and maintain the APIs using the Health Level 7 (HL7) Fast Healthcare Interoperability Resources (FHIR) standard.

CMS defines prior authorization as an administrative process used in healthcare for providers to request approval from payors to provide a medical service, prescription, or supply, with the process taking place before a service is rendered.

Specifically, officials said the proposed changes “could allow providers to know in advance what documentation would be needed for each different health insurance payor, streamline the documentation process, and enable providers to send prior authorization requests and receive responses electronically, directly from the provider’s EHR (electronic health record) or other practice management system.” CMS added that the proposal would also reduce the amount of time providers wait to receive prior authorization decisions from payors – a maximum of 72 hours for urgent requests and seven calendar days for non-urgent requests is what’s initially being suggested, with the exception of QHP issuers. Payors would also be required to provide a specific reason for any denial, and also to make public certain metrics that demonstrate how many procedures they are authorizing. 

“These policies, taken together, could lead to fewer prior authorization denials and appeals, while improving communication and understanding between payors, providers, and patients,” CMS’s press release read. “They are the result of numerous listening sessions with plans and providers aimed at crafting a new process that balances the need for greater efficiency and consistency in prior authorization and its important role in preventing fraud, abuse, and unnecessary expenditures.”

While Medicare Advantage (MA) plans are not included in the proposal, CMS said it is considering whether to do so in future rulemaking – something Dr. Ronald Hirsch (MD, FACP, CHCQM), vice president of the Regulations and Education Group at R1 Physician Advisory Services and a member of the Advisory Board of the American College of Physician Advisors, said would be an excellent idea.

“I am delighted to see CMS address one of the most frustrating tasks faced by providers, but I would hope they would include Medicare Advantage plans,” Hirsch said. “MA enrollment accounts for 36 percent of all Medicare beneficiaries, but probably 90 percent of the administrative hassle. I would urge readers to ask CMS to include MA plans once the comment period opens.”

The proposed rule is available to review online at: https://www.cms.gov/files/document/121020-reducing-provider-and-patient-burden-cms-9123-p.pdf.  The comment period will close on Jan. 4, 2021.

For a copy of the Fact Sheet associated with the proposed rule, go online to: https://www.cms.gov/newsroom/fact-sheets/reducing-provider-and-patient-burden-improving-prior-authorization-processes-and-promoting-patients.

For more information on the CMS proposed rule, go to: https://www.cms.gov/Regulations-and-Guidance/Guidance/Interoperability/index.

Mark Spivey

Mark Spivey is a national correspondent for RACmonitor.com, ICD10monitor.com, and Auditor Monitor who has been writing and editing material about the federal oversight of American healthcare for more than a decade. He can be reached at mcspivey@hotmail.com.

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