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New rule aims to streamline prior authorization

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Jan 17, 2024
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Illustration: Sarah Grillo/Axios

CMS finalized a rule today aimed at streamlining the prior authorization process for medical goods and services — a perennial cause for physicians who say it imposes excessive administrative burdens and have repeatedly pressed Congress for relief.

Why it matters: The new requirements could save about $15 billion over a decade and significantly reduce the cost of a Medicare Advantage prior authorization fix.

Driving the news: Under the rule, federally funded insurers starting in 2026 would have 72 hours to approve or deny urgent requests for procedures, services or prescriptions and seven days to consider standard requests. Some MA plans and Medicaid managed care plans now have up to 14 days for a standard decision.

  • The payers also would be required to include a specific reason for denying a request, to facilitate resubmission of the request or an appeal.
  • The rule also lays out technical standards to ensure a more efficient electronic prior authorization process.
  • Managed care organizations would also have to publicly post prior authorization denial rates.

Flashback: The House in 2022 passed a prior authorization reform package that later stalled over cost concerns.

  • Since then, there's been increased scrutiny of Medicaid managed care plans, some of which were found to have high rates of prior authorization denials.

The other side: Insurers say prior authorization is needed to control costs and make sure care is effective and efficient.

  • AHIP, the big Washington trade group for health plans, backs electronic prior authorization as a way to improve the system.
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