How CMS is digitizing prior authorizations to save $15B

CMS is aiming to solve one of healthcare's most perplexing — and time-consuming — issues: the dreaded prior authorization.

The agency plans to expedite prior authorizations, through digitization and better data exchange, saving the healthcare industry $15 billion over a decade — in the hopes of one day having the decisions made instantaneously, right in the EHR.

Becker's caught up with Alexandra Mugge, chief health informatics officer at CMS, to learn more about how the agency intends to meet such an ambitious goal.

Question: What is CMS doing to speed up prior authorizations?

Alexandra Mugge: We recently finalized the CMS Advancing Interoperability and Improving Prior Authorization Processes final rule, which both streamlines the existing prior authorization process and moves the industry towards an electronic, interoperable one.

Starting in 2026, providers will get prior authorization decisions on medical items and services faster than is currently required under our programs. Additionally, the payers affected by this rule will be required to give clear reasons any time they deny a prior authorization request for an item or service, making appeals easier and faster for the provider.

We're also increasing transparency and efficiency by having these payers publicly report metrics about their prior authorizations. Starting in 2027, those payers are required to implement a new Prior Authorization API [application programming interface] to help digitize the entire process, saving everyone time and effort.

To support this move to electronic prior authorization processes, we recently announced new flexibility for implementing electronic prior authorization. HHS will exercise enforcement discretion for use of the HIPAA prior authorization transaction standard to further promote efficiency in the prior authorization process.

Q: How will the new prior authorization interoperability rule save money? We reported that it is estimated to save $15 billion over 10 years.

AM: That's correct. The savings will come from the collective time and effort providers will save after these new policies go into effect. While prior authorization has its necessary place in healthcare, it's clear that it can sometimes be an obstacle to necessary patient care when providers must navigate complex and widely varying payer requirements or face long waits for prior authorization decisions. Our policies are going to go a long way in removing some of these obstacles, which will return both time and money to providers.

Q: What has been the biggest challenge in improving data exchange to streamline prior authorization?

AM: The biggest challenge we've heard about from stakeholders is the sheer volume of diverse prior authorization policies across all the payers. Providers spend far too much time tracking down payer requirements and filling in the required documentation.

Under our policies, each payer will be required to identify all of their policies and guidelines and then structure them to be incorporated into an API for use by the providers, through an EHR, using automated processes that save providers time and burden.

There are thousands of these requirements, which must be identified and analyzed, and then the rules have to be computable. Every payer has to execute the same process on those different policies. Once that work is done, the process will be streamlined, but it will be a significant effort.

Q: Where do you see this work going next? What would be the "holy grail" for data exchange and prior authorization?

AM: There are several opportunities, but a significant one will be further reducing the payer decision timeframes so that we get to decisions within a day, or even less. We would love to get to the point where providers can not only request prior authorizations electronically through their EHR in an interoperable manner, but can also receive decisions quickly, or in real-time, during the patient encounter.

The Da Vinci Project is working on enabling this now through FHIR [the Fast Healthcare Interoperability Resources standard], and we think providers being able to tell their patients that their request was approved right then and there will make for a better care experience for all.

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