CMS Introduces Prior Authorization Regulations for Medicare Advantage

Prior authorization regulations for Medicare Advantage are being scaled back.

In what is surely a welcome development to clinicians everywhere, the final rule is reigning in the use of prior authorization to avoid unnecessary disruptions to care. Under the new guidelines, Medicare Advantage (MA) plans can only use prior authorization to confirm the presence of a diagnosis that serves as the basis for coverage determinations or to ensure that physical therapy services (or any other types of treatment) are medically necessary. 

The 2024 final rule also introduces a requirement that approval of a prior authorization request for a course of treatment is required to be valid as long as is medically necessary, taking into account coverage criteria, a patient’s medical history, and the recommendation of the patient’s clinician. With this change, CMS is looking to get rid of the requirements for clinicians to obtain prior authorization again after three visits. MA plans are also forbidden from modifying their decision after the fact for lack of medical necessity, with minimal exceptions, and can’t adopt blanket policies with a course of treatment. 

In keeping with this goal for better continuity of care, the final rule institutes a policy that MA plan enrollees that switch plans have a 90-day period during which further prior authorization isn’t required for an active course of treatment. This will ensure that patients don’t have their care dropped simply because they’re moving to a different insurance.  

Coverage criteria for Medicare Advantage plans will be more in line with Medicare policies.  

The first big bit of news is that CMS is setting forth policies for medical necessity determinations that are closer to established Medicare guidelines. We should note at the outset that these changes strictly apply to coverage and that the rules set forth are not affecting any PT or OT rules under Medicare Part B. 

So what are the changes? Under the 2024 final rule, MA plan providers cannot have coverage criteria that are more restrictive than those set forth under Medicare, or at least where Medicare has published guidelines. That means situations where:

• there are additional criteria needed to interpret provisions;
• local coverage determinations (LCD) or national coverage determinations (NCD) permit flexibility; or
• there is no applicable Medicare coverage policy.

In those instances where there is no fully established Medicare policy, any internal criteria created by payers must be based on widely-used treatment guidelines or clinical literature.

Payers will have utilization management committees.

In order to ensure compliance with new prior authorization regulations and existing MA policies, payers will be required to have a utilization management committee that monitors account management activities and tracks and reports complaints and audits their plans (in addition to audits conducted by CMS). The utilization management committee will be headed by the plan’s medical director and the majority of members will be practicing physicians. These committees are also mandated to have representation across the breadth of clinical specialties, including one elderly/disabled specialist as well as one independent member without any conflicting interests. 

These new committees will be required to review and approve utilization management policies annually, and document in writing the reasoning behind any decisions made in the development of utilization management policies. Starting on January 1, 2024, MA plans won’t be able to implement any policies that haven’t been reviewed or approved by the utilization management committee. 

Any potential coverage denial requires a review first. 

Another big shift is the change to the coverage denial process for MA plans. Under the new rules, any potential prior authorization denial has to first be reviewed by a clinician in that specialty. In the case of PTs and OTs, this means that any prior authorization denial for a patient would first need to be signed off on by another physical therapist or occupational therapist, rather than a nurse or other provider in an unrelated discipline. At present, that review process was only in place for appeals to prior authorization denials.  

Insurance companies are getting ahead of the prior authorization curve. 

We know that private payers tend to take their cues from CMS when it comes to policy changes, and the new prior authorization regulations are no exception. United Healthcare has already announced that it’s planning to eliminate 20% of prior authorizations beginning in Q3 2023. Similarly, Cigna announced that it would be removing prior authorizations for about 500 services and devices, while Aetna has stated that it will focus on electronic prior authorization to reduce the volume and burden of prior authorization requests.

It’s not all good news on that front, though; while Cigna might be reducing prior authorizations for some services, they’re also doubling down on outsourcing benefit management to their third-party contractor. As APTA lays out in this article, American Specialty Health will be expanding into an additional 15 states this fall. The APTA notes that affected providers should be receiving notices of change, but you can check out the article for a full list of states and organizations that will be impacted and the time frame for rollouts.   

State legislatures are looking to reform prior authorization practices. 

Lest you think that insurance companies have somehow seen the error of their ways on their own, we should note that private payers don’t seem to have much choice in shaping up their prior authorization regulations. In addition to the new rules for MA plans and Part D, the AMA reported in early May that over 90 prior authorization bills in 30 states are set to be considered in legislative sessions. Whereas the changes implemented by CMS are limited to MA plans, many of the bills working their way through state legislatures are looking to make substantive changes to prior authorization processes across the board. 

Some of the proposed regulations outlined in the AMA article are in line with the coming changes to MA, like adverse determinations from clinicians within the same specialty and a 90-day transition period for existing prior authorizations for patients switching plans. Others are more ambitious in their aims, like proposals to shrink the timeline for prior authorization approvals to 48 hours for non-urgent care and 24 hours for urgent treatment, or making prior authorizations valid for one year, regardless of changes to dosing. While it remains to be seen how many will actually make it into law, it does seem that prior authorizations are one of the few things that Americans (and politicians) can agree on these days.

With these changes to prior authorization regulations coming into effect, clinicians should see a dramatic reduction in their administrative burden—at least with their Medicare Advantage patients. The only hope is that this is only the start of bringing prior authorization requirements down to manageable levels across the board.