Prior authorization – the requirement that a provider justify the clinical need for a particular service before a plan will cover it – has long been a contentious topic. Plans argue the practice is needed to prevent inappropriate use of services and to save the health system money, while providers and patients argue that prior authorization is an onerous and often arbitrary barrier to necessary care and treatment. Over the past several years, advocates have been pushing both state and federal regulators to better regulate the prior authorization process for public and private payers, including by limiting the types of services prior authorization can be applied to, requiring more transparency regarding prior authorization decisions, and requiring decisions to be made within certain timelines.
On January 17, 2024, in an earlier than forecasted move, the Biden Administration issued a sweeping final rule that, among a slew of other data interoperability provisions, added new requirements for impacted payers to follow when it comes to prior authorization for items and services other than prescription drugs. The rule applies to Medicare Advantage plans, state Medicaid and Children’s Health Insurance Program (CHIP) programs, Medicaid and CHIP managed care plans, and individual and small group plans available on the Federally Facilitated Exchanges (FFEs). The rule is a big step for increased federal scrutiny over payer practices surrounding prior authorization.
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