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Myndshft Blog

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May 2, 2023

The Future of Prior Authorization in Medicare Advantage Plans: New (and Pending) CMS Rules Promise Progress on Prior Authorization Automation

by Susan Lawson-Dawson | Healthcare Technology, Prior Authorization

A decade ago, just over a quarter of eligible Medicare beneficiaries enrolled in Medicare Advantage (MA) plans. As of this year, reports the Centers for Medicare & Medicaid Services (CMS), more than half of enrollees chose MA plans over traditional Medicare. Despite the obvious popularity of MA plans, a problem lurks: overuse of prior authorizations. Because of this, the CMS has begun introducing rules to address the issue, including standards to enable prior authorization automation

MA delays and denials fail to follow Medicare standards

A year ago, the Department of Health and Human Services (HHS) Office of Inspector General (OIG) released a report regarding prior authorization delays and denials among MA organizations (MAOs).  

Under the capitated payment model for MA, the government pays a fixed amount per enrollee to an MA plan, regardless of how much care the enrollee uses. This can create incentives for plans to leverage service or payment denials in order to save money and increase profits. And it seems to have come to fruition. 

According to the report, annual CMS audits uncovered “widespread and persistent problems related to inappropriate denials of services and payment.” The investigation validated those concerns. A review of the data found that 13% of prior authorization denials by MAs met traditional Medicare approval standards. That adds up to over 2 million preventable denials. Moreover, 18% of denied payment requests also met traditional Medicare criteria. 

While providers and beneficiaries can appeal denials, only 11% of denials get resubmitted. However, 82% of those denials were fully or partially reversed on appeal, suggesting that there is, indeed, value in reworking  a claim—if time allows. But it comes at a cost, contributing to burnout among  providers’ clinicians and staff AND needlessly delaying care for seniors and other Medicare-qualified beneficiaries.  

New rule tackles prior authorization, transparency

The OIG identified some key issues that the CMS is now working to address through current and upcoming rules to ensure MA beneficiaries receive “timely access to all necessary health care services, and that providers are paid appropriately.” 

In April 2023, the CMS finalized the 2024 Medicare Advantage (MA) and Part D Rule, which goes into effect on January 1, 2024. The rule includes significant changes to the use of prior authorization by MA plans.  

  • Requires MA plans to comply with national and local coverage determinations
  • Clarifies when internal coverage criteria may be used
  • Streamlines prior authorization requirements 

It also requires coordinated care plans to provide a minimum 90-day transition period when an enrollee undergoing treatment switches to a new MA plan. Additionally, all MA plans must establish a Utilization Management Committee to review policies annually and ensure consistency with Traditional Medicare’s coverage decisions and guidelines. 

These changes will promote transparent and evidence-based clinical decisions by MA plans that align with Traditional Medicare while reducing disruptions for beneficiaries.

Upcoming rule to focus on interoperability to enable seamless data exchange

The CMS isn’t stopping there. Earlier this year, the CMS called for comments on the proposed rule called “Advancing Interoperability and Improving Prior Authorization Processes.” If finalized, it will go into effect on January 1, 2026. (Here’s what we had to say.)

The goal of this proposed rule is to improve the exchange of health information between healthcare providers and payers, as well as streamline the prior authorization process.

The proposed rule would require healthcare providers to use standardized application programming interfaces (APIs) when sharing patient health information with payers like Medicare Advantage plans. This would make it easier for providers to share information and for payers to access it, potentially leading to more coordinated and efficient care.

Additionally, the proposed rule would require payers to implement real-time benefit tools to provide patients with more information about their coverage and the cost of their medications. Such tools allow patients and providers to quickly determine coverage based on a patient’s insurance plan, the copay or coinsurance amount, and any lower-cost alternatives available.

The proposed rule would also require payers to standardize their prior authorization processes, which can be confusing and burdensome for healthcare providers and patients alike. The standardization of prior authorization would help to reduce the administrative burden on providers and increase the speed of the prior authorization process.

No need to wait with automated prior authorization

An end-to-end automated prior authorization solution like Myndshft meets the future standards today. Available as an integration in any EHR or other system of record, Myndshft requires minimal data entry.  From there, best-in-class HL7Ⓡ FHIRⓇ APIs, our extensive payer policy library and rules engine, and automation make short work of prior authorization. Plus, with payer-side advantages like clinical decision support and data-informed auto-adjudication, everyone benefits. 

Want to learn more?  Connect with Myndshft to arrange a demo.