Dive Brief:
- The Trump administration wants to create deadlines for federally regulated insurers to respond to prior authorization requests for drugs, along with stricter transparency requirements.
- On Friday, the CMS proposed a rule that would require impacted payers to support electronic prior authorization for drugs, turn around decisions for drugs faster and give providers a specific reason if a prior authorization request for a drug is denied.
- Insurers will have until October 2027 to comply if the rule is finalized.
Dive Insight:
Friday’s proposal builds on a Biden-era rule that puts tighter deadlines on payers to respond to prior authorization requests.
Prior authorization requires doctors to get approval from a patient’s insurer before providing a medical service, like performing a surgery or prescribing a drug. Though insurers argue prior authorization is a necessary evil for keeping a handle on rising medical costs, physicians generally loathe the preapprovals, arguing they add administrative overhead and delay patient care.
Amid rising angst over prior authorizations, regulators in the Biden administration gave payers seven days to respond to standard requests and 72 hours to respond to expedited requests for medical items and services. But they elected not to include drugs, saying that different standards around prior authorizations for medications complicated rulemaking.
The new standards, which went into effect at the start of this year, found support among both payers and providers. But the omission of prior authorizations for drugs was viewed as a gap, given prescription drugs make up a significant portion of requests.
Now, the Trump administration is expanding the requirements to include drugs.
Existing regulation requires Medicaid payers to respond to prior authorization requests for a covered outpatient drug within 24 hours. But that doesn’t necessarily include all drugs, the CMS says in the rule. If there are gaps, regulators are proposing to apply existing timeframes for other services to that subset of drugs.
As a result, Medicaid and Children’s Health Insurance Program insurers would have 24 hours to respond to prior authorization requests for medications.
Affordable Care Act plans will have up to 72 hours to turn around standard requests for drug coverage, or 24 hours for expedited requests, according to the proposed rule. Medicare Advantage plans are already held to those timeframes for drug prior authorizations.
Along with new deadlines to turn around decisions, insurers will also required to publicly report prior authorization metrics for drugs, including approval and denial rates, appeal outcomes and decision timeframes.
Plans would also have to share information on their use of application programming interfaces, tools that allow different systems to send and receive information, so that the government can track the interoperability of prior authorizations decisions.
The proposed rule would also adopt newer standards for data transfers.
The changes will improve continuity of care and patient outcomes, regulators argued in the rule. The CMS said the proposed rule could also create savings for providers by eliminating paperwork and for payers by cutting back on appeals that they need to process, though the industry may have to eat some costs associated with switching over to new data-sharing standards.
Regulators in the last few administrations have looked for ways to nudge insurers to ease up on prior authorizations, amid rising public discontent over some of insurers’ more controversial business practices. However, the CMS can only do so much. Like its 2024 predecessor, Friday’s proposed rule leaves out a significant swath of the insurance landscape: commercial plans, which cover the majority of Americans.
Still, major insurance companies say they’re voluntarily taking steps to pare back onerous prior authorizations, including in employer-sponsored coverage.
Early this month, insurance groups said their members have cut prior authorizations by 11% since pledging to pare back the processes last year.
