CMS Finalizes Final Rule Increasing Regulations on Medicare Advantage Plans’ Use of Prior Authorization

A new final rule from the Centers for Medicare and Medicaid Services adopts many proposals to reform how Medicare Advantage plans use prior authorization. The federal government has been increasing its scrutiny of how health plans overuse of prior authorization creates administrative burdens and impacts patient care. A 2022 HHS Office of Inspector General (OIG) report on Medicare Advantage plans’ use of prior authorization found that 13% of prior authorization requests and 18% of payment denial requests were not properly executed by Medicare Advantage plans, mainly due to human error. These concerns are further supported by a 2021 survey by MGMA which found that 88% of providers find prior authorization requirements “very or extremely burdensome,” an increase from 82% in 2018.

The final rule requires a medical professional used by a MA plan for prior authorization to have expertise relevant to the field of service related to the prior authorization request. CMS will also require all Medicare Advantage plans to establish a Utilization Management Committee to review prior authorization policies on a yearly basis and ensure that policies are consistent with traditional Medicare’s national and local coverage decisions and guidelines.

Outside of prior authorization, the finalized provisions require MA plans to be more transparent about coverage decisions for scenarios with no existing Medicare coverage requirement. Starting in 2024, MA plans will be required to provide “current evidence of widely used treatment guidelines or clinical literature” to CMS and providers when developing internal coverage criteria in circumstances where no applicable Medicare statute, National Coverage Determinations, or Local Coverage Determinations determine whether an item should be covered.

MA plans will also be required to provide a 90-day continuity of care transition period when an enrollee receiving treatment for a medical issue switches to a new Medicare Advantage plan. If a primary care or behavioral health provider is dropped from a Medicare Advantage plan’s network, the plan must notify its beneficiaries.

CMS is also trying to improve how it regulates MA marketing practices. Medicare Advantage plans will be prohibited from using the Medicare name and logo in their advertising and will be required to specify the name of the plan in those ads.

Finally, CMS is finalizing a new health equity measure that will begin in 2027. This measure is intended to encourage Medicare Advantage plans to improve their services for patients who are dual-eligible, receive low-income subsidies, and receive disability benefits, in addition to expanding the population list that plans must provide culturally competent care.

Last year, Congress attempted to pass legislation to streamline prior authorization, but that legislation ultimately did not pass. While CMS proposed to adopt most of the provisions from that legislation in a different regulation, it is not yet clear if Congress will attempt to pass that bill again due to its estimated cost. A revised version of that cost estimate shows a lower budgetary impact, but the score will likely still be too high for Congress to stomach.