The Interoperability and Prior Authorization Final Rule (CMS-0057-F) aims to streamline the prior authorization process, reducing delays in patient care and lowering administrative costs. Finalized by CMS on January 17, 2024, this rule is expected to save approximately $15 billion over the next decade by reducing burdens on patients, providers, and payers.
Key Impacts of the New Prior Authorization Rule
Under the rule, payers must provide clear and timely communication regarding prior authorization requests, ensuring that providers receive prompt and accurate responses. This will enhance patient safety and reduce unnecessary wait times for essential medical services.
Affected Health Plans
The rule applies to the following government-administered health plans:
- Medicare Advantage
- Medicaid fee-for-service and Children’s Health Insurance Program (CHIP) fee-for-service
- Medicaid managed care plans
- CHIP managed care entities
- Qualified Health Plans (QHPs) on federally facilitated exchanges (FFEs)
Improving Access to Timely Care
Prior authorization is essential for verifying coverage, but the process is often complex and time-consuming, delaying critical care for patients. To address these challenges, CMS has introduced new response time requirements, effective 2026, for impacted payers (excluding QHP issuers on FFEs):
- Urgent requests: Decisions within 72 hours
- Standard (non-urgent) requests: Decisions within 7 calendar days
- Denial transparency: Clear reasoning for all denials
- Public reporting: Prior authorization metrics must be published
These changes will reduce administrative delays and provide a smoother appeals process when needed. However, the American Medical Association (AMA) continues to advocate for even faster turnaround times—24 hours for urgent requests and 48 hours for standard requests—to further protect patient health. A 2022 AMA survey found that one-third of physicians reported serious adverse patient events due to prior authorization delays, including hospitalization, life-threatening incidents, disability, and even death.
Advancing Interoperability Through Automation
To enhance efficiency, the rule mandates that impacted payers adopt Health Level 7 (HL7®) Fast Healthcare Interoperability Resources (FHIR®) Prior Authorization APIs. These automated systems will improve data exchange between payers and providers, accelerating electronic prior authorization approvals and increasing transparency for patients regarding their coverage.
Due to industry feedback, CMS has extended the compliance deadline for API implementation from January 1, 2026, to January 1, 2027, allowing payers time to train staff and update their systems. Beginning in 2027, payers must:
- Expand patient access APIs to include prior authorization data, allowing providers to access claims, encounters, clinical data, and prior authorizations.
- Enable Payer-to-Payer FHIR® API exchanges, ensuring seamless data sharing when patients switch insurance plans or have multiple concurrent payers.
Additionally, a new electronic measure will be introduced for participants in the Merit-based Incentive Payment System (MIPS) and eligible hospitals, allowing them to report how they use prior authorization APIs to submit electronic requests.
Conclusion
The CMS Prior Authorization Final Rule is a significant step toward reducing administrative burdens, improving patient outcomes, and fostering a more efficient healthcare ecosystem. By enforcing faster response times, increasing data interoperability, and holding payers accountable, this rule ensures that patients receive timely, high-quality care without unnecessary delays.