$15 billion win for physicians on prior authorization

. 4 MIN READ
By
Kevin B. O'Reilly , Senior News Editor

AMA News Wire

$15 billion win for physicians on prior authorization

Jan 18, 2024

What’s the news: Under the leadership of Administrator Chiquita Brooks-LaSure, the Centers for Medicare & Medicaid Services (CMS) has released a final rule making important reforms to prior authorization to cut patient care delays and electronically streamline the process for physicians. Together, the changes will save physician practices an estimated $15 billion over 10 years, according to the U.S. Department of Health and Human Services (HHS).

Fixing prior authorization

Prior authorization is costly, inefficient and responsible for patient care delays. The AMA stands up to insurance companies to eliminate care delays, patient harm and practice hassles.

The rule addresses prior authorization for medical services in these government-regulated health plans:

  • Medicare Advantage.
  • State Medicaid and Children’s Health Insurance Program (CHIP) fee-for-service programs.
  • Medicaid managed care plans and CHIP managed care entities.
  • Qualified health plan issuers on the federally facilitated exchanges.

As a direct result of advocacy from the AMA and other physician organizations, CMS has taken significant steps toward rightsizing the prior authorization process by addressing both technological and operational requirements. The AMA is grateful that the Biden administration is prioritizing such a critical issue for patients and physicians.

“When a doctor says a patient needs a procedure, it is essential that it happens in a timely manner,” said HHS Secretary Xavier Becerra. “Too many Americans are left in limbo, waiting for approval from their insurance company.” The administration’s action, he said, “will shorten these wait times by streamlining and better digitizing the approval process.”

CMS did the right thing in “heeding patients and the physician community in a final rule that makes important reforms in government-regulated health plans’ prior authorization programs for medical services,” said AMA President Jesse M. Ehrenfeld, MD, MPH.

The rule, he noted, “requires impacted plans to support an electronic prior authorization process that is embedded within physicians’ electronic health records, bringing much-needed automation and efficiency to the current time-consuming, manual workflow.”

Moreover, the administration’s action “will significantly enhance transparency around prior authorization by requiring specific denial reasons and public reporting of program metrics as well as requiring that prior authorization information be available to patients to help them become more informed decision-makers,” Dr. Ehrenfeld said.

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In addition, CMS is mandating shortened processing time frames and also requiring that payers give physicians and patients more prior authorization-related information. Notably, the $15 billion savings estimate does not account for lower patient costs attributable to timelier delivery of physician-ordered care.

Enforcement of these policies, particularly around Medicare Advantage payers, can include CMS sanctions and civil monetary penalties. Starting in 2026, affected payers will have to send prior authorization decisions within 72 hours for urgent requests and within a week for nonurgent requests. For some payers, CMS noted, that would represent a 50% improvement. The AMA strongly advocated faster time frames (PDF) of 24 hours for urgent requests and 48 hours for standard requests. CMS said it will consider updating its policies in future rulemaking.

Why it’s important: While payers claim that prior authorization requirements are used for cost and quality control, a vast majority of physicians report that the protocols lead to unnecessary waste and avoidable patient harm. One-third of the 1,001 physicians surveyed (PDF) by the AMA reported that prior authorization has led to a serious adverse event for a patient in their care.

More specifically, the AMA survey found that these shares of the physician respondents reported that prior authorization led to:

  • A patient’s hospitalization—25%.
  • A life-threatening event or one that required intervention to prevent permanent impairment or damage—19%.
  • A patient’s disability or permanent bodily damage, congenital anomaly or birth defect, or death—9%.

The Improving Seniors’ Timely Access to Care Act would help fix prior authorization within Medicare Advantage, and the legislation was strongly supported by the AMA, which played a major role in securing enough co-sponsors to ensure the bill passed the House of Representatives (PDF) in 2022. The legislation, however, stalled in the Senate due to a flawed $16 billion cost estimate from the Congressional Budget Office. The Biden administration’s final rule could mean a big drop in the agency’s $16 billion cost estimate for the legislation, thus upping the odds of congressional passage.

Learn more: Fixing prior authorization is a critical component of the AMA Recovery Plan for America’s Physicians.

Prior authorization is overused, and existing processes present significant administrative and clinical concerns. Find out how the AMA is tackling prior authorization with research, practice resources and reform resources.

Patients, physicians and employers can learn more about reform efforts and share personal experiences with prior authorization at FixPriorAuth.org.

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