New CMS Final Rule: Is the Burden of Prior Authorization Finally Over?

CMS has released a new final rule affecting interoperability and prior authorization programs. American Medical Association (AMA) President Jesse M. Ehrenfeld, MD, MPH, characterized the rule as “an important win” that will reduce patient care delays as well as the administrative burdens long shouldered by physicians, while saving practices an estimated $15 billion over the next decade.” 

The final rule is designed to ease many of the communication challenges that providers frequently face when dealing with Medicare Advantage or other health plans utilizing prior authorization. Eliminating these barriers is key to ensure that quality care is being provided appropriately to patients, as prior authorization is a common practice affecting more and more patients. For example, Medicare Advantage alone is projected to grow in use from 54 percent of the Medicare-eligible population in 2024 to 60 percent by 2030.1 

The final rule has elements that take effect on January 1, 2026, and January 1, 2027, and will affect, according to the factsheet, the following types of payers:

  • Medicare Advantage (MA) organizations
  • State Medicaid and Children’s Health Insurance Program (CHIP) fee-for-service (FFS) programs
  • Medicaid managed care plans
  • CHIP managed care entities
  • Qualified Health Plan (QHP) issuers on the Federally Facilitated Exchanges (FFEs)

Reducing the Burden of Prior Authorization

Earlier this year, the AMA released data showing that one-third of physicians surveyed had indicated prior authorization delays had resulted in an adverse event for a patient in their care. Highlighting the barriers that patients face, HHS Secretary Xavier Becerra stated in the rule’s press release, “When a doctor says a patient needs a procedure, it is essential that it happens in a timely manner. Too many Americans are left in limbo, waiting for approval from their insurance company.” Understanding the writing on the wall, Cigna and UnitedHealth announced late last year that they would be voluntarily cutting back prior authorization programs in advance of the proposed rule.

CMS will now require impacted payers to maintain certain types of APIs to facilitate a standard electronic exchange of health care data, automating the process with technology. The APIs will have to provide information to patients and providers regarding a patients’ claims, encounter data, and prior authorization. 

Payers would be required to respond to providers’ requests for information from the plan with either an approval, a request for additional information, or a denial with a provided reason. Medicare Advantage timelines for prior authorization will be halved from 14 days to seven days for normal requests and 72 hours for urgent requests. Payers must begin the process internally by 2026 and have a functioning system for providers by January 1, 2027.  

Patient Data Goes With the Patient

Payers will also be responsible for building a “payer-to-payer” API that will facilitate the transfer of health information between payers. The final rule states that CMS is creating an opt-in process for patients to transfer their data to help ensure care continuity during a change in health plans. Payers will be responsible for the system and explaining its benefits to patients by January 1, 2027. 

For more information on prior authorization, we recommend reviewing the factsheet and final rule from CMS. CMS has also announced rate adjustments for Medicare Advantage in the 2025 Medicare Advantage and Part D Advance Notice.