The Biden administration finalized a new rule on how insurers can use prior authorization (PA), a practice aimed at reducing unnecessary treatment, but a headache for doctors and patients.
The new rule, announced on January 17, will apply to plans under the authority of the Centers for Medicare & Medicaid Services (CMS) and attempts to remove a barrier to health care, says Kaye L Pestaina, director of the Program on Patient and Consumer Protection at KFF.
“This could include delays in getting access to care due to prior authorization red tape, or wrongful denials,” said Pestaina. “The most significant changes in the final regulation are to automate the exchange of information needed in the prior authorization process. This could speed up review across the board, with new expedited time frames for making a PA decision for certain plans.”
Transparency Is the Goal
Insurers will be required to disclose on their website certain aggregate statistics—claims approved, claims denied, and the services that require PA. By disclosing more information, patients and providers can plan for possible coverage delays.
The rules do not apply to authorization of prescription drugs, says Pestaina.
“CMS said that drug electronic claim processing is operationally distinct from the process for medical claims,” said Pestaina. “As a result, the agency would need to evaluate this separately.”
The rule applies to insurers in programs that CMS has direct oversight over: Medicare Advantage, Medicaid, the Children’s Health Insurance Program, and the federal health insurance marketplace. The Department of Labor regulates most private employer-sponsored health plans, so any regulatory changes that apply to them would need to come from that agency.
More Paperwork, Less Care
Prior authorization causes more problems than it solves, says Marilyn Singleton, M.D., J.D., a board-certified anesthesiologist and visiting fellow at Do No Harm.
“In theory, prior authorization of medical services by the patient’s insurer was supposed to save money by reducing unnecessary utilization of such services,” said Singleton. “Instead, prior authorization’s busywork increased physicians’ administrative costs and contributed to burnout. Worse, not only did the process cut into physicians’ time with patients, the delays in approval of medical services have cost patients timely diagnosis and treatment and, in some cases, their lives.”
In response to physician and patient demand, Congress began giving more scrutiny to bureaucratic roadblocks to patients’ access to medical care, according to Singleton. Prior authorization was high on the list. Beginning in 2026, the new rules require insurers in government programs to process urgent prior authorization requests within 72 hours.
“Since when is three days an appropriate response to urgency?” asked Singleton.
‘Eliminate It Entirely’
Under the new rule, non-urgent requests must be completed in seven calendar days—about half of the current wait. The reviewers must give clear, specific reasons for denials, and report the number of denials they issue to providers, patients, and other health plans. The system requires providers to install an ‘application programming interface’ to enable this shortened time frame, says Singleton.
“On the other side of the process, the government insurance programs likely will have to hire more personnel, increasing government costs,” said Singleton.
“Prior authorization reform is a step forward to improving access to medical care; it didn’t save money and it didn’t save lives,” said Singleton. “Prior authorization proved to be another way for the government and insurers to stick their noses between the doctor and the patient.”
Singleton’s recommendation? “Eliminate it entirely,” said Singleton.
‘Let the Market Work’
The reason insurers use prior authorization is because so much that happens in medicine is not necessary, says John C. Goodman, president of the Goodman Institute and co-publisher of Health Care News.
“Doctors get paid for doing things,” said Goodman. “They get paid nothing if they do nothing. Some experts think that 30 percent of everything we do in health care is unnecessary.”
The Biden administration’s approach is bureaucratic—trying to tell health plans what to do, says Goodman. A better approach is to let the market work.
“Medicare Advantage plans should be able to do something they are now not allowed to do: advertise how many prior authorizations get resolved, how quickly they are resolved, and estimate how much lower premiums are because some unnecessary care is avoided,” said Goodman.
Better Information Empowers Patients
There is an upside to prior authorization, says Devon Herrick, a health economist who writes for the Health Bog of the Goodman Institute, which co-publishes Health Care News.
“On the one hand, patients need access to appropriate care recommended by their doctors,” said Herrick. “The issue is not simple, however. Patients also need information about costs and any options they may have, something that prior authorization can provide.
“For instance, my wife was referred to a hospital outpatient clinic, where the hospital had to get prior authorization for a diagnostic procedure,” said Herrick. “The request was approved, but in the process, she learned her share of the cost was going to be $2,700. She proceeded to find the service elsewhere for $403. Prior authorization is all that saved her from spending $2,300 unnecessarily. I worry about providers using Biden’s new regulation to ambush patients with care that costs more than necessary.”
Kenneth Artz (KApublishing@gmx.com) writes from Tyler, Texas.