CMS Finalizes Rule to Expand Access to Health Information and Improve the Prior Authorization Process

By The Policy Center’s Policy Team

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The Centers for Medicare and Medicaid Services (CMS) announced on January 17, as part of the Biden-Harris Administration’s ongoing commitment to increasing health data exchange and strengthening access to care, finalization of the Interoperability and Prior Authorization Final Rule (CMS-0057-F). The rule sets requirements for Medicaid and the Children’s Health Insurance Program (CHIP) fee-for-service (FFS) programs and Medicaid managed care plans, among other CMS-regulated plans.

The final rule aims to modernize the health care system and reduces patient and provider burden by streamlining the prior authorization process

The rules were developed to improve the electronic exchange of health information (HEI) and prior authorization (PA) processes for medical items and services. These changes are expected to streamline processes for patients, providers, and payers, resulting in approximately $15 billion of estimated savings over ten years.

The announcement quotes the head of the Health and Human Services Administration (HHS), Dr Becerra:

“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. Today the Biden-Harris Administration is announcing strong action that will shorten these wait times by streamlining and better digitizing the approval process.”

Further, the announcement notes that while “prior authorization can help ensure medical care is necessary and appropriate, 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.”

Beginning primarily in 2026, Medicaid plans will be required to:

  • Send prior authorization decisions within 72 hours for expedited (i.e., urgent) requests and seven calendar days for standard (i.e., non-urgent) requests for medical items and services.
  • Include a specific reason for denying a prior authorization request, which will help facilitate resubmission of the request or an appeal when needed.
  • Implement a Health Level 7 (HL7®) Fast Healthcare Interoperability Resources (FHIR®) Prior Authorization application programming interface (API), to facilitate efficient electronic prior authorization between providers and payers. (Implementation of all-FHIR-based Prior Authorization API who do not use the X12 278 standard as part of their API implementation will not be enforced against under HIPAA Administrative Simplification.)
  • Publicly report prior authorization metrics, similar to the metrics Medicare FFS already makes available.

CMS is also finalizing API requirements to increase health data exchange and foster a more efficient health care system and is delaying the dates for compliance with the API policies from January 1, 2026, to January 1, 2027.

Finally, the rule also adds a new Electronic Prior Authorization measure for eligible clinicians under the Merit-based Incentive Payment System (MIPS) Promoting Interoperability performance category and eligible hospitals and critical access hospitals (CAHs) to report their use of payers’ Prior Authorization APIs to submit an electronic prior authorization request.

The final rule is available to review here.

The fact sheet for this final rule is available here.