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AAO-HNS Summary of CMS Interoperability and Prior Authorization Final Rule

AAO-HNS Summary of CMS Interoperability and Prior Authorization Final Rule

On January 17, the Centers for Medicare & Medicaid Services (CMS) released the Interoperability and Prior Authorization Final Rule. The rule includes important reforms to prior authorization to cut patient care delays and electronically streamline the process for physicians. This rule was initially proposed in December 2022 and the Academy strongly urged CMS to implement its prior authorization provisions.

The final rule addresses prior authorization for medical services in these government-regulated health plans:

  • Medicare Advantage
  • State Medicaid and Children’s Health Insurance Program (CHIP) fee-for-service programs
  • Medicaid managed care plans and CHIP managed care entities
  • Qualified health plan issuers on the federally facilitated exchanges

We applaud CMS for taking bold steps toward reducing administrative burden for physicians and preventing payers from delaying the care that patients need. The changes implemented by this rule will save physician practices an estimated $15 billion over 10 years, according to the U.S. Department of Health and Human Services. Below is a high-level summary of the key provisions most directly impacting physicians and their patients.

Prior Authorization API and Improving the Prior Authorization Process

This rule requires impacted payers to implement and maintain a Prior Authorization Application Programming Interfaces (API) that is populated with its list of covered items and services, can identify documentation requirements for prior authorization approval, and supports a prior authorization request and response. These Prior Authorization APIs must also communicate whether the payer approves the prior authorization request (and the date or circumstance under which the authorization ends), denies the prior authorization request (and a specific reason for the denial), or requests more information. This requirement must be implemented beginning January 1, 2027.

On top of the Prior Authorization API, this rule also makes critical changes to the timeframe payers must respond to a prior authorization request and the information they must share when making a decision. Specifically, a payer must send prior authorization decisions within 72 hours for expedited (i.e., urgent) requests and seven calendar days for standard (i.e., nonurgent) requests. This requirement will ensure that patients and providers receive payer decisions in a timely manner so that a patient’s care is not unnecessarily delayed.

Further, payers must provide a specific reason for denied prior authorization decisions, regardless of the method used to send the prior authorization request. Such decisions may be communicated via portal, fax, email, mail, or phone. This requirement will give patients and providers much needed clarity when a payer denies a prior authorization request and increase the chance that an appeal will succeed.

Payers will also be required to publicly report certain prior authorization metrics annually by posting them on their website.

All of these process-related provisions will go into effect on January 1, 2026.

Patient and Provider Access APIs

One of the critical elements of this final rule is that payers will be required to maintain a Provider Access Application Programming Interface (API) and a Patient Access API. The purpose of these APIs is to give patients and providers much more information regarding a payer’s prior authorization rules and requirements. They will also give providers easier access to patient data.

In Patient Access APIs, the payers will be required to provide information about prior authorization requirements. In addition to giving patients access to more of their data, this will help patients understand their payer’s prior authorization process and its impact on their care.

In Provider Access APIs, payers will be required to share patient data with in-network providers with whom the patient has a treatment relationship. Impacted payers will be required to make the following data available via the Provider Access API: individual claims and encounter data (without provider remittances and enrollee cost-sharing information); data classes and data elements in the United States Core Data for Interoperability (USCDI); and specified prior authorization information. Patients will be able to opt-out of this data sharing, but payers will be required to provide patients with plain language information about the benefits of this data sharing.

These requirements must be implemented by January 1, 2027.

Electronic Prior Authorization Measure for MIPS Eligible Clinicians

Unfortunately, this rule also places requirements on providers participating in the Medicare Merit-Based Incentive Payment System (MIPS). The rule creates a new measure titled, “Electronic Prior Authorization,” to the Health Information Exchange (HIE) objective for the MIPS Promoting Interoperability performance category and the Medicare Promoting Interoperability Program. Providers will be required to begin reporting the measure during the 2027 Calendar Year (CY) performance period/CY 2029 MIPS payment year.

Specifically, MIPS eligible clinicians must attest “yes” to requesting a prior authorization electronically via a Prior Authorization API using data from certified electronic health record technology (CEHRT) for at least one medical item or service (excluding drugs) ordered during the CY 2027 performance period or (if applicable) report an exclusion.

The Academy and other physician organizations strongly opposed this measure in the proposed rule and argued that placing more reporting requirements on physicians will not meaningfully improve patient care or access.

Exclusion of Drugs from Final Rule

One important thing to note is that nothing in this final rule applies to drugs. This rule does not affect the prior authorization processes for Medicare Part B or Part D drugs (e.g., prescription drugs that may be self-administered, administered by a provider, or that may be dispensed or administered in a pharmacy or hospital). This carve out is significant as Part B drugs are often the treatments most subjected to stringent prior authorization and step therapy protocols. Again, the Academy and other physician organizations argued against the exclusion of drugs from this rule and urged CMS to consider the fact that drugs can be inextricably linked to other provider services and that getting approval for specialty drugs is often the biggest culprit for patient care delays.

However, based on the overwhelming number of comments, CMS says it will consider options for future rulemaking to address improvements to the prior authorization processes for drugs.

Improving Seniors Timely Access to Care Act

This final rule has come after much advocacy from the Academy and other physician organizations regarding the need for prior authorization reform and reducing administrative burden to improve patient access. Specifically, this rule closely mirrors legislation that the Academy has continually urged Congress to pass – the Improving Seniors Timely Access to Care Act.

This legislation, much like the rule, would modernize how Medicare Advantage plans and healthcare providers use prior authorization by establishing an electronic program and expanding patient protections. Specifically, the bill would require plans to (1) establish an electronic prior authorization program that meets specified standards, including the ability to provide real-time decisions in response to requests for items and services that are routinely approved; (2) annually publish specified prior authorization information, including the percentage of requests approved and the average response time; and (3) meet other standards, as set by CMS, relating to the quality and timeliness of prior authorization determinations.

The final rule does deviate from the bill in at least two important ways. First, the rule does not require payers to provide real-time decision making via the electronic prior authorization program. Second, the bill would require plans to reply to prior authorization requests on a faster timeline than the final rule – 24 hours for urgent requests and 72 hours for nonurgent requests. The Academy believes the shorter timeframes in the legislation are more appropriate but still acknowledges that CMS is taking steps in the right direction.

The Improving Seniors Timely Access to Care Act is the most popular healthcare bill in the entire Congress with 380 cosponsors in the House and Senate and endorsements from over 500 organizations representing patients, healthcare providers, insurers, and manufacturers in the medical industry. The bill passed the House of Representatives in the previous Congress, but it did not pass the Senate. This was due largely to the cost of implementing its provisions.

The good news is that, with this final rule in place, much of what is in that bill will already be implemented by CMS. This means that the actual cost of the bill will be reduced significantly and it will have a much higher chance of passing Congress this time around. Passing this bill is still a major priority for the Academy, as we want to see these changes codified into law, not just in rulemaking that can potentially be changed by a future administration. We will be working closely with the sponsors of this legislation to get it reintroduced, passed through both chambers, and signed into law. This is an important focus of the Academy’s goal to increase access to care for patients, particularly seniors, and reduce the administrative burden for physicians.

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