Physician groups have welcomed a new federal rule announced on January 17, which requires health insurers to streamline and disclose more information about their prior authorization processes. This rule, applicable to insurers in federal programs like Medicare Advantage and Medicaid, mandates a response to expedited prior authorization requests within 72 hours and other requests within 7 days. Insurers must also explain their reasons for denying a prior authorization request and publicly release data on denial and approval rates for medical treatments. Additionally, they are required to provide patients with more information about decisions to deny care. Compliance with some provisions of the rule is required by January 2026, and others by January 2027.
The rule is seen as a significant step towards reducing the volume of prior authorization requests, which are often viewed as burdensome and detrimental to patient care. Health insurers have traditionally opposed increased regulation of prior authorization, arguing it’s necessary to control healthcare costs and prevent unnecessary treatments. However, the rule has been criticized for not addressing the need for electronic prior authorization capabilities in electronic health records systems, which would make the process more efficient.
The new rule is a response to increasing criticism of health insurers for their complex and time-consuming prior authorization procedures, which are believed to delay or deny necessary medical treatments. With federal legislation on this issue at a standstill, 30 states have introduced bills to tackle the problem, and regulators and lawsuits have highlighted the growing use of AI and algorithms by insurers to deny claims without human review.
Physicians, particularly family physicians, have expressed that prior authorizations take time away from patient care and contribute to physician shortages. The American Medical Association views the final rule as a major victory for patients and physicians, hoping it will integrate prior authorization procedures into physicians’ electronic health records systems, thereby streamlining the current manual workflow.
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