December 15, 2022

CMS Proposes to Streamline the Prior Authorization Process: Potential Effects on You and Your Patients

There is an across-the-board disdain in medicine for the increased use of prior authorization by insurance companies. I don’t think a single physician actually believes that this bureaucratic process for controlling and potentially limiting “unnecessary” services is good for patients nor benefits the health care system in general. Instead, it is simply an administrative nuisance that has contributed to physician burnout and has harmed patients by needlessly delaying their access to vital services.

In the emergency department (ED) setting, one often doesn’t think about prior authorization, as fortunately, health insurers are legally prohibited from using prior authorization when patients are experiencing medical emergencies. Nevertheless, prior authorization still has a significant impact on you as emergency physicians and the patients you serve.

Many of you have probably experienced a scenario where the patient you are treating in the ED was unable to receive services in other care locations because of a prior authorization denial and came to the ED specifically to receive those services (sometimes at the direction of their primary care physician or a specialist). In this not-so-unique situation, patients (and their referring physician) recognize that they can receive the service easier at the ED without undergoing prior authorization. This clearly is not an appropriate reason for a patient to receive treatment in the ED, but it reflects a fundamental flaw in the health care system resulting from extremely stringent prior authorization protocols.

Prior authorization also affects ED care by contributing to ED boarding. As described in a previous Regs and Eggs blog post, ED boarding is at crisis levels, and ACEP and 34 other organizations wrote a letter to President Biden asking his Administration to convene a summit on this issue with all impacted stakeholders so that we can together collaborate on near- and longer-term solutions. 

ACEP has heard from many of our members that health plans are requiring prior authorization before a patient can be transferred from the hospital to a post-acute facility, like a skilled nursing facility. A key stakeholder in the ED boarding crisis, the American Hospital Association (AHA), has heard the same thing. Back in March 2022, the AHA pointed out in a letter to the Centers for Medicare & Medicaid Services (CMS) that the use of prior authorization among Medicare Advantage (MA) plans was clogging up inpatient beds. As the AHA states, the use of prior authorization is “especially problematic when general acute-care hospital beds have been filled to capacity and while healthcare providers contend with the demands of vaccine distribution and workforce shortages.” The continued use of prior authorization has also “resulted in unintended consequences for patients who were then forced to stay in acute care settings unnecessarily while waiting for health plan administrative processes to authorize the next steps of their care.”

The AHA asked CMS in the letter to prohibit MA plans from conducting prior authorization at least during the remainder of the COVID-19 pandemic. Well, that didn’t happen, and hospitals have become even more filled with patients since then, which in turn has caused longer ED wait times and more boarding in the ED, as individuals have to wait for extended periods (multiple days or even longer) for inpatient beds to become available. And throughout this whole time, MA plans continue to utilize the same prior authorization tactics they have always used—delaying appropriate transfers and causing a ripple effect that has significantly diminished hospitals’ capacity and your ability to treat patients. 

ACEP believes that CMS should in fact prohibit MA plans from requiring prior authorization in order to transfer patients to post-acute facilities and believes that policy could be one short-term solution that could help address the boarding crisis. However, implementing such a policy does not seem to be in the cards for CMS at this moment.

What CMS is focusing on is streamlining the prior authorization process (which is definitely better than nothing!)—and just last week, CMS released a long-awaited proposed regulation that would accomplish this goal. The health policy community has been waiting for this reg to drop, as it could cut in half the Congressional Budget Office's (CBO’s) projection for legislation (which we support!) that would create an electronic prior authorization process for MA plans.

Before describing the proposed reg, let me briefly outline what’s in the legislation, the “Improving Seniors’ Timely Access to Care Act of 2021.” Along with creating an electronic prior authorization process, the legislation would also:

  • Streamline and standardize the prior authorization process for routinely approved services and give clinicians greater access to criteria for prior authorization determinations;
  • Require MA plans to compile annually and publish publicly: (1) a list of services subject to prior authorization; (2) rates of initial approvals and successful appeals; and (3) time delays resulting from prior authorization; and
  • Adopt MA beneficiary protections via federal rule making to improve PA transparency, identifying services with high approval rates, providing continuity of care when changing coverage, and ensuring that PA programs adhere to evidence-based guidelines.

The bill passed the U.S. House of Representatives on September 14, 2022. However, one hold-up that has prevented the bill from being considered by the U.S. Senate has been the CBO score. The CBO estimated in September 2022 that the bill would increase federal spending by $16 billion over ten years. This price tag is significantly more costly than what the bill’s sponsors and the physician community had expected. CBO justifies the estimate by stating that the bill would “result in a greater use of services” by creating “additional requirements on plans that use prior authorization.” Since CMS is already taking care of some of these additional requirements (including requiring an electronic prior authorization process) on the regulatory side, stakeholders believe that the CBO’s cost estimate will likely decrease. A lower CBO cost estimate may pave the way for Senate passage of this critical legislation.

Now, let’s get down to what’s in this new CMS proposed reg. In short, CMS is requiring certain payors (health insurers) to implement an electronic prior authorization process, shortening the time frames for these payors to respond to prior authorization requests, and establishing policies to make the prior authorization process more efficient and transparent. The impacted payors include MA plans, state Medicaid and Children’s Health Insurance Program (CHIP) Fee-for-Service (FFS) programs, Medicaid managed care plans and CHIP managed care entities, and Qualified Health Plan (QHP) issuers on the Federally Facilitated Exchanges (FFEs).

Specifically, these impacted payors would be required to build and maintain a FHIR API (a platform or application) that would “automate the process for providers to determine whether a prior authorization is required, identify prior authorization information and documentation requirements, as well as facilitate the exchange of prior authorization requests and decisions from their electronic health records (EHRs) or practice management system.” 

CMS is also proposing to require impacted payors to include a specific reason when they deny a prior authorization request and to send prior authorization decisions within 72 hours for expedited (i.e., urgent) requests and seven calendar days for standard (i.e., non-urgent) requests. CMS, however, is also seeking comment on alternative time frames with shorter turnaround times, for example, 48 hours for expedited requests and five calendar days for standard requests.

Furthermore, CMS proposes to require these payors to implement standards that would enable data exchange from one payor to another payor when a patient changes health plans. Impacted payors must also publicly report certain prior authorization metrics on their website.

Payors will have plenty of time to implement these prior authorization requirements. If finalized, the policies wouldn’t take effect until January 1, 2026, with the initial set of metrics proposed to be reported by March 31, 2026.

While all these requirements would fall on payors (rightly so), there is one additional requirement that CMS is imposing on physicians. To encourage physicians to adopt the electronic prior authorization processes, this reg would also add a new measure under the Promoting Interoperability performance category of the Merit-based Incentive Payment System (MIPS). Under this proposal, clinicians would be required to report the number of prior authorizations for services that are requested electronically from an API that a payor establishes. Most emergency physicians are exempt from this category of MIPS, so I don’t think this particular policy will have a big impact on you.

Finally, the reg includes five requests for information, focused on:

  • Accelerating the Adoption of Standards Related to Social Risk Factor Data
  • Electronic Exchange of Behavioral Health Information
  • Improving the Electronic Exchange of Information in Medicare Fee-for-Service (FFS)
  • Advancing the Trusted Exchange Framework and Common Agreement (TEFCA)
  • Advancing Interoperability and Improving Prior Authorization Processes for Maternal Health

Overall, ACEP is extremely pleased with this proposed reg, and we hope that CMS moves forward with these policies. Although the effective date of the policies seems far away (2026), we urge payors to start implementing these changes to their prior authorization process as soon as possible. We also hope that the legislation does indeed push the Senate to pass the “Improving Seniors’ Timely Access to Care Act of 2021” and get that bill signed into law.

Comments on the proposed reg are due on March 13, 2023, and ACEP will be reviewing the proposals in greater detail and providing a comprehensive response. If you have any input on the reg or feedback on how prior authorization is affecting your practice and your patients, please reach out to me at

Before concluding, I want to report some late breaking news. Yesterday, CMS issued another proposed reg that addresses prior authorization—this one specifically targeting MA plans. Among other provisions, CMS makes it clear that MA plans CANNOT DENY coverage for services that are covered by Traditional Medicare (which is good!). However, the agency still allows prior authorization to take place in most instances (except for emergencies)—which, unfortunately, will continue to DELAY necessary care. With respect to the issue of transferring patients from hospitals to post-acute facilities that I discussed earlier, CMS states that MA plans cannot deny a transfer if the post-acute services a patient would receive align with Traditional Medicare coverage criteria. However, CMS still says that prior authorization is allowed in these circumstances to “ensure items and services meet Medicare coverage rules; it simply limits the coverage criteria that an MA organization can apply to deny an item or service during those reviews.” This policy isn’t perfect, as prior authorization will still slow down the transfer of patients from hospitals to post-acute facilities—but it is a good start, as MA plans can no longer use inexplicable excuses to initially deny a transfer.

Also of note, the new reg reiterates current law that prohibits MA plans from using prior authorization for emergency services and clarifies that the definition of an emergency includes both physical and mental illnesses. This proposal is important as it makes crystal clear that MA plans cannot require prior authorization if a patient is having a mental health medical emergency.

ACEP will review the MA plan proposed reg in more detail over the coming days, so stay tuned for a more in-depth analysis.

Until next week, this is Jeffrey saying, enjoy reading regs with your eggs!

Want Regs & Eggs delivered fresh? Sign up for our email list.

[ Feedback → ]