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CMS approves new rule aimed at easing the burdens around prior authorizations

On January 15, Modern Healthcare covered the news that CMS has now approved the rule to regulate how certain health insurers manage prior authorizations—a big win for providers and patients alike.

Despite strong pushback from health insurers, The Centers for Medicare & Medicaid Services (CMS) went ahead and finalized a rule, first proposed in late 2020, that is aimed at regulating the industry. As we’ve explained previously, this new CMS rule will ease the burden that prior authorizations put on providers by forcing streamlined and efficient approval processes.

Ironically, one of the insurance industry’s key arguments against the rule was that it would adversely impact providers. But we think it’s the other way around and want to note that providers have actually voiced strong support for the rule. Furthermore, some news outlets have reported that insurance groups are actively complaining and saying that the burden of tackling prior authorization fell on them (Ah, now their opposition makes sense!).

As a reminder, this rule only applies to certain government insurance plans (e.g., Medicaid, the Children’s Health Insurance Program, and Exchange plans), but it sends a strong message to commercial insurers, indicating that similar regulation is likely in their future as well.

So, with the rule approved, what happens now? Well to start, nothing. These changes don’t take effect until 2023 and won’t be fully implemented until 2024. (If you can believe it, payors are arguing this isn’t enough time to prepare…) But once it’s in place, the rule will bring some big changes.

For starters, insurers must approve or deny urgent prior authorization requests within 24 hours, and within seven calendar days for non-urgent requests. These response times are similar to the rules that Medicare Advantage plans already follow. Mandating response times should help speed up the notoriously slow authorization approval process—which can take weeks, or in some cases, months—and allow patients to get the care they need when they need it.

In addition to speeding up the approval process, insurers will be required to implement application program interfaces (APIs) that make it easier to exchange data. While this means some providers will have to manage several portals (one for each insurer), the APIs will streamline the documentation process, making it easier for providers to submit and receive requests electronically, further speeding up the processes around prior authorizations.

So, what’s the big deal if the rule only impacts a select group of patients (those covered by Medicaid and other government plans)? As we have previously shared, the government is often the first mover in healthcare (shocking, right?). That being said, we can (hopefully) expect this rule to create change across the industry as a whole.

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