Jan 18, 2024 - Health

New limits on prior authorization hailed as good first step

Illustration: Allie Carl/Axios

New federal rules requiring health insurers to streamline requests to cover treatments are being hailed as a good first step toward addressing a problem that's increasingly aggravated patients and doctors.

  • But it may not be Washington's last word on so-called prior authorization, as lawmakers look to jumpstart legislation that would further limit the practice.

The big picture: Health insurers will have to provide coverage decisions on urgent treatment requests within 72 hours for patients in Medicare Advantage, Medicaid or Affordable Care Act plans under federal rules finalized Wednesday. The deadline is seven days for non-urgent requests.

Zoom out: Insurers' requirements for their sign-off on some physician-ordered care is a major tension point with providers and has faced recent scrutiny from Congress.

  • Doctors see prior authorization as undermining their medical judgment and say it delays patients' access to care. But insurers say it prevents unnecessary and low-value care.
  • Several large insurers have also rolled back prior authorization requirements in the past year as regulators signaled their interest in curbing the practice.

Details: The new protocols, which largely take effect in 2026, will cut the review process in half for some insurers, the Biden administration said.

  • Insurers will also have to publicize prior authorization denial rates and provide more specific justifications for denials, which could make it easier for patients and providers to appeal those decisions.
  • Insurers will also have to meet new technical standards to streamline the electronic prior authorization process.
  • The administration didn't spell out specific penalties for noncompliant insurers, but it suggested Medicare Advantage plans could face warning letters or fines.
  • Insurers and providers, who rarely see eye-to-eye on this issue, both offered statements supportive of the new rules.

Yes, but: The new rules don't apply to employer-sponsored insurance plans that cover over 150 million people.

  • Some health care groups still want regulators to adopt faster review standards for prior authorization requests.
  • The American Medical Association called on CMS to apply similar requirements to drugs, which were largely excluded from the new rules.
  • Insurer lobby AHIP said officials should require vendors to include prior authorization functionality in electronic health record systems to ensure easier communication with physicians.

What we're watching: Congress may also take up the issue.

  • The House in 2022 approved reforms to prior authorization in Medicare Advantage, but the legislation stalled over cost concerns. The new rule, expected to save about $15 billion over a decade, could lower the cost of the legislation.
  • A bipartisan group of eight lawmakers who brokered that legislation on Wednesday said that Congress "must act to cement these gains," referring to the new CMS rules.
  • Lawmakers are also scrutinizing high rates of denials in Medicaid-managed care plans and how insurers are reportedly using artificial intelligence to deny medically necessary care.
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