CMS Finalizes Rule on Electronic Prior Authorization

CMS finalized a rule on electronic data entry that will streamline the prior authorization process and improve data transparency for providers, payers, and patients.

CMS finalized a new rule today that will allow certain payers, providers, and patients to have electronic access to pending and active prior authorization (PA) decisions.

The agency said the rule will streamline the PA process and allow providers to devote more time and focus to providing better quality care to patients. Promoting secure electronic access to data in new ways will drive interoperability, empower patients, and reduce costs and the burden on the health care system, CMS reiterated.

“Thanks to this rule, millions of patients will no longer have to wrangle with prior providers or locate ancient fax machines to take possession of their own data. Many providers, too, will be freed from the burden of piecing together patients’ health histories based on incomplete, half-forgotten snippets of information supplied by the patients themselves, as well as the most onerous elements of prior authorization,” said CMS Administrator Seema Verma in a statement.

Payers require PAs for oversight and control over provider prescribing patterns. In March 2020, the American College of Rheumatology called on CMS to improve the PA process and gave recommendations on how to do so, including adopting a national electronic standard for PAs and improving transparency on formulary decisions.

The CMS Interoperability and Prior Authorization rule will require Medicaid, Children’s Health Insurance Program managed care plans, fee-for-service programs, and issuers of individual market Qualified Health Plans on the federally facilitated exchanges to implement application programming interfaces (APIs). Doing so will enable providers to access data through integration with their electronic health records.

“By exchanging relevant health information between patients, providers, and payers, APIs support a better health care experience for patients. Patients have easier access to their own health information, their providers have a more complete picture of their care, and patients can take their information with them as they move from plan to plan, and from provider to provider throughout the healthcare system,” said the agency in the statement. “This ensures more coordinated, quality care, and less repetitive and unnecessary care that is costly.”

Payers regulated under the rule will be required to include claims and encounter data, including laboratory results and information regarding any pending and active PA decisions, into an API. The data should be directly shared with providers, when requested, and other payers in order to aid patients as they move between or among payers.

“In this way, patients, providers, and payers have the data when and where they need it, to help ensure that patients receive the best possible care,” said the agency.

The final rule will also require payers to reduce their decision timelines for PAs. In 2017, the American Medical Association reported that 64% of providers have waited at least 1 business day for a PA from their health plan and 30%, at least 3 business days. Eighty-six percent also said the PA burden has increased over the last 5 years.

Payers will now have a maximum of 72 hours to make a decision on a PA application for urgent requests and 7 calendar days for nonurgent requests. If an application is denied, payers will have to provide a specific reason why, thereby increasing transparency for providers. To promote accountability, the rule will also require payers to make PA metrics public that detail how they operationalize the process.

CMS said that enabling patients to review the status of a PA application will provide them with a better experience, because they can better understand the timeline for the process and in turn be more able to plan next steps with their provider.

As the rule currently stands, Medicare Advantage plans are not included. However, CMS said that it is considering whether to include these plans in future rulemaking.

“This change will reverberate around the healthcare system for years and decades to come,” said Verma.


CMS puts patients over paperwork with new rule that addresses the prior authorization process. News release. CMS. January 15, 2021. Accessed January 15, 2021.

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