Background
New federal rules are being finalized in 2023 that will promote transparency and accessibility of health information and support consumers in health care decision-making. A key component of these new rules will address information and processes related to prior authorization for items and services, including:
- Electronic access to information for patients on prior authorization requests and decisions;
- Electronic access to information for providers on when prior authorization is required and what information is required to accompany a prior authorization request;
- Electronic exchange of prior authorization requests and decisions between providers and payers; and
- Electronic exchange of prior authorization information across payers.
Patients deserve access to safe, effective, and affordable care. Yet independent studies show – and doctors agree – that differences in how care is provided to patients can lead to inappropriate, unnecessary, and more costly medical treatments that can harm patients. Medical management tools like prior authorization can help ensure the care patients receive is safe, effective, and affordable.
Health insurance providers recognize that the traditional manual prior authorization process can be burdensome to doctors and patients alike. In fact, in 2018, stakeholders representing providers, pharmacists, and insurance providers developed a Consensus Statement recommending opportunities to improve the prior authorization process. Since then, health insurance providers have taken extensive steps to improve prior authorization for patients and providers, including through the use of electronic prior authorization technology to streamline the prior authorization process.
New Federal Provisions on Prior Authorization:
Proposed federal regulations require impacted payers to build electronic prior authorization systems to communicate prior authorization information and efficiently process prior authorization requests. Several key requirements of the rules include:
- Prior Authorization Response Timeframes: The proposed rule would require impacted payers to send a prior authorization decision within 72 hours for expedited or urgent requests and reduces the time frame from 14 to 7 calendar days for standard or non-urgent requests.
- Prior Authorization Reason for Denial: The proposed rule calls for payers to specify a reason when they deny a prior authorization request in a standardized, interoperable format.
- Electronic Process for Requests and Decisions: Impacted payers would be required to build standardized electronic prior authorization systems to communicate when prior authorization is needed, what documentation is necessary, and communicate both requests and decisions including reason for denial, if applicable.
Prior Authorization Public Reporting: The proposed rule would require impacted payers to annually report certain prior authorization metrics on the payer’s website. This publicly reported information would include:
- a list of all items and services that require prior authorization;
- the percentage of standard prior authorization requests approved, aggregated for all items and services;
- the percentage of standard prior authorization requests denied, aggregated for all items and services;
- the percentage of standard prior authorization requests approved after appeal, aggregated for all items and services;
- the percentage of prior authorization requests for which the timeframe for review was extended and the request was approved,
aggregated for all items and services; - the percentage of expedited prior authorization requests approved, aggregated for all items and services;
- the percentage of expedited prior authorization requests denied, aggregated for all items and services;
- the average and median timeframe between the submission of a standard prior authorization request and a decision,
aggregated for all items and services; and - the average and median timeframe between submission of an expedited prior authorization request and a decision, aggregated
for all items and services.
Request to States:
To avoid conflicting requirements, states should defer any legislative or regulatory action on prior authorization while these new federal rules are being finalized. Once implemented, the federal rules and associated standards will provide a level of consistency and uniformity with which states can align. While the new federal rules apply only to certain impacted payers, the Centers for Medicare & Medicaid Services (CMS) encourages all payers to consider voluntary adoption to promote further consistency and uniformity.
States should parallel the proposed federal rules encouraging provider adoption of the electronic prior authorization systems that payers are required to offer. In addition to CMS’ proposal to track provider adoption of electronic prior authorization through performance measurement, a companion regulation is expected soon from the Office of the Coordinator for Health Information Technology that would require electronic health records to build in the capability for eligible clinicians and hospitals.
Realizing the full benefits of health information technology and data sharing can significantly improve the prior authorization process by making it more efficient and transparent. To maximize these benefits, states should align with the new federal rules on prior authorization to promote consistency across products and an improved experience and better outcomes for patients and providers.