CMS Releases Final Rule on Prior Authorization in Medicare Advantage & New Medicaid Payment Model

A year-long wait is over for a prior authorization rule from the Centers for Medicare and Medicaid (CMS).

On January 17, 2024, CMS released the long awaited rule, and while there are some important components coming into effect, this rule only applies to Medicare Advantage (MA) plans, state Medicaid and Children’s Health Insurance Program (CHIP) fee-for-service (FFS) and managed care programs, and qualified health plan (QHP) issuers on the federally facilitated exchanges (FFEs). The finalized rule does not apply to FFS Medicare, employer-sponsored plans, or self-insured plans, for example. 

To refresh memories, CMS originally proposed a rule to improve the electronic exchange of health care data and streamline processes related to prior authorization (PA). Among other things, the initial proposed rule sought to require impacted payers (those to who the rule applies) to: 

• Implement a process to that would allow them to share information about a patient’s PA decisions; 

• Institute an interface for clinicians to share patient data (patient claims and encounter data, as well as PA requests/decisions) with other in-network clinicians with whom the patient has a treatment relationship; 

• Exchange patient data (patient claims and encounter data, as well as prior authorization requests/decisions) when a patient changes health plans with the patient’s permission; 

• Build and maintain an interface that will automate the process for providers to determine whether a PA is required, identify prior authorization information and documentation requirements, as well as facilitate the exchange of PA requests and decisions from their electronic health records (EHRs) or practice management system; 

• Include a specific reason when they deny a PA request; 

• Provide a PA decision within 72 hours for urgent requests and 7 days for non-urgent requests; and (note: QHP issuers on the FFEs are exempted from this requirement) 

• Publicly report on certain PA metrics. 

CMS originally proposed to make these elements required by January 1, 2026. However, CMS notes in the final rule that the requirements regarding the communication of PA decisions will come into effect in January 2026, while the requirements regarding the sharing of PA information between clinicians and payers will be required beginning in January 2027.

Importantly, none of these new policies govern PA decisions about prescription drugs, as well as those that are typically administered in the office by a clinician. While the American Medical Association (AMA) has documented extensive issues with PA, these reforms instituted under this rule may have limited utility for prescribers of addiction medications, who continue to face utilization management hurdles. 

After the release of this rule, keep an eye on Congress. In September 2022, the House passed H.R.3173 (Improving Seniors’ Timely Access to Care Act of 2021), which included PA reform. However, the bill was stalled in the United States Senate, due to a Congressional Budget Office (CBO) estimate of over $16 billion, mostly due to new insurer mandates.  

As the Biden Administration’s rule may lower the price tag, there is a renewed sense of momentum on the Hill to finally pass PA reform, and give CMS stronger authority over “real-time” PAC decisions. 

New Payment Model to Support Care Integration 

On January 18th, CMS unveiled a new payment model designed to improve the quality of care and health outcomes for people with moderate to severe behavioral health (BH) conditions, including mental health conditions and/or substance use disorders (SUDs). Unlike previous payment models centered around behavioral health, this model would center behavioral health providers who would then work with primary care providers to ensure Medicare/Medicaid beneficiaries are having their physical health needs addressed. 

Under the new model, there are two components: 

• Community-based behavioral health organizations and providers (Community Mental Health Centers, public or private practices, opioid treatment programs, and safety net providers where individuals can receive outpatient mental health and SUD service) will provide care integration and care management services. This includes: 

• Screening and assessment 

• Person-centered planning and treatment 

• Condition monitoring 

• Interprofessional team-based care 

• Ongoing care management 

• Addressing health-related social needs (HRSNs) 

• CMS will provide infrastructure investments to support electronic health records integration, telehealth tools, and practice transformation activities 

CMS intends to issue a notice of funding opportunity to states in the spring of 2024. CMS will select 8 states to participate for a period of 8 years. Information about payments, risk, etc. are not yet available. 

More information about the announcement can be found here.