Biden’s prior authorization reforms divide providers, insurers

By Bridget Early / November 20, 2024

The Biden administration sought to tackle one of the most contentious policies in healthcare: prior authorization. Providers and insurers say there’s still room for improvement.

Provider groups have complained misuse of prior authorizations is responsible for care delays, increased hospitalizations and a reduced likelihood that patients follow their care plans, along with the administrative burden providers face in trying to secure coverage for patients.

In response, the Centers for Medicare and Medicaid Services issued two main prior authorization regulations: an April 2023 Medicare Advantage pay rule and a January rule on electronic prior authorization.

“CMS is committed to breaking down barriers in the health care system to make it easier for doctors and nurses to provide the care that people need to stay healthy,” CMS Administrator Chiquita Brooks-LaSure said in a news release on the January rule.

While there is support for CMS’ efforts, the industry is not convinced the regulations have done much more than lay groundwork — and providers and insurers each want the agency to take their side.

Policy changes

CMS’ Medicare Advantage final rule for 2024 laid out an array of transparency requirements. Medicare Advantage must cover the same products and services covered by traditional Medicare, explain denials, extend approvals through the entirety of a patient’s treatments, and make decisions based on national and local coverage criteria, or if those don’t exist provide insight into the peer-reviewed evidence used to make a coverage decision.

The January electronic prior authorization rule, which takes effect in 2026, sets parameters for how long Medicare Advantage, Medicaid, Children’s Health Insurance Program and exchange plans have to complete prior authorizations. Standard prior authorizations will need to be finalized within seven days, while urgent requests need to be finished within 72 hours.

On Capitol Hill, there’s been traction on a bill that mirrors the electronic prior authorization regulation, called the Improving Seniors’ Timely Access to Care Act. It would create electronic prior authorization procedures for Medicare Advantage plans while strengthening oversight of the process.

Dan Jones, senior vice president of federal affairs for Alliance of Community Health Plans, a trade group, said the Biden administration successfully crafted prior authorization regulations that benefit insurers, providers and patients.

“There is a balance in making sure that [prior authorization] is used appropriately while making sure that patients are able to get the care that is needed, when and where they need it,” Jones said. “So long as the motivation is that, and not simply a mechanism where edits can be made and other things to maximize the margin, then we're headed in the right direction. And I think a lot of the reforms that have been put in place on the regulatory side are sending us in that direction.”

But the conflict between providers and insurers continues. Both groups think the Biden administration's regulations were only steps in the right direction, and each side wants CMS to crack down on the other in future regulation.

Hospitals

Hospitals report that some insurers are still skirting requirements, even though the Biden administration laid good groundwork with its regulations, said Terry Cunningham, director of administrative simplification policy for the American Hospital Association.

That’s prompting providers to push for stronger oversight, Cunningham said.

AHA sent a Nov. 11 letter to CMS urging it to step up its enforcement, including by increasing its audits of Medicare Advantage plan denials, with a focus on plans that "are outliers in reported plan performance data or have a history of suspected or actual CMS rule violations on their record," Ashley Thompson, AHA’s senior vice president of public policy analysis and development, wrote in the letter.

“More robust enforcement and transparency is needed to ensure compliance with these important coverage protections. Hospitals and health systems across the country continue to report noncompliance with the new rules,” Thompson wrote.

Physicians

The American Medical Association reiterated its stance on prior authorization at its semiannual national conference last week.

The physician trade group's priorities include shortening prior authorization timelines, improving transparency about when prior authorization is required and reducing how many procedures require preapproval.

The group also is calling for the government to hold insurers accountable for reimbursing providers for care they’ve already approved. 

Meanwhile, the American Academy of Family Physicians is pressing particularly hard for legislative action because it is looking for something more permanent than a regulation.

“There is some question about what various government organizations can say now, and then, whether policies can be brought into question if they're not directly from the legislation,” said Dr. Sarah Nosal, the group's president-elect.

Providers are focused on their “ability to make sure that we can hold all of the insurance companies accountable, even once those regulations have been put in place,” but worry they’re “likely to see more challenging of that going forward,” Nosal said.

Insurers

Insurers like the electronic prior authorization processes CMS put in place, but dislike that the oversight policies target payers. Insurers believe CMS hasn’t done enough to beef up accountability for providers who administer unnecessary care. 

“There are very clearly instances where prior auth is about safety, is about appropriateness, and can be about spotting fraud, and so we need to recognize that, especially if a patient is not in a good integrated system,” said Ceci Connolly, president and CEO of the Alliance of Community Health Plans.

A report last week from the Lown Institute, a nonpartisan think tank, found hospitals and physicians performed over 200,000 unnecessary back surgeries on Medicare beneficiaries over three years, based on three years’ worth of Medicare and Medicare Advantage claims data. Those procedures cost Medicare about $2 billion between 2019 and 2022, the report said. 

“There is no requirement in the system today on providers, and we need to get the information from them in a timely, accurate fashion, or it's very difficult to know and understand what's going on with a patient,” Connolly said.

AHIP, the insurers' trade group, wants physicians to play their part in getting up to speed on interoperability, too, noting on their website that physicians “are lagging in their adoption of electronic health data exchange,” including electronic prior authorization.

Insurers have said they’re trying to fix problems themselves by pulling back prior authorization requirements for certain services, increasing automated approvals and instituting new gold-carding programs, where payers forego prior authorization for physicians with a track record of accurate approvals.

But AHA’s Cunningham said those changes don't address deeper concerns.

“A lot of what we've heard from our providers is it's often not the services that they're frequently experiencing issues with, or it's not the services that they're seeing their patients actually experience delays,” Cunningham said. “On paper, it seems like there's been a huge shift, but in terms of the practical, ‘Where is there an issue right now that plans are not expeditiously approving care,' those services don't seem to have been addressed.”

Mutual agreement

One thing the industry agrees CMS did right: The agency listened to warnings about a set of conflicting policies and took action.

CMS proposed a rule that would have required providers and insurers to use a specific set of electronic data-sharing standards for prior authorizations, claims reviews and electronic attachments.

But AHIP, the American Hospital Association, American Medical Association, and the Blue Cross Blue Shield Association jointly called on CMS to rethink its proposals, which they said would create a mismatch between two regulations and worsen interoperability problems rather than fixing them.

Even without conflicting standards, there are still unaddressed interoperability problems that make it complicated, expensive and time-consuming for providers to handle prior authorization, Nosal said. 

“As a physician, I need to not have to — in a small, tiny practice — hire multiple people just to do logging into portals and making calls and sending faxes and getting specific documents,” Nosal said. “That is this process right now, and that's really what's untenable.”