Medicare Patients Alert! Biden Administration Finalizes Rule to Streamline Health Insurance Prior Authorization

On Wednesday, U.S. President Joe Biden’s administration finalized a rule requiring government backed-insurance plans such as Medicare Advantage organizations, Medicaid, Children’s Health Insurance Program (CHIP) fee-for-service programs, Medicaid managed care plans, CHIP managed care entities, and issuers of Qualified Health Plans offered on the Federally-Facilitated Exchanges, to improve the electronic exchange of health information and prior authorization processes for medical items and services.

The Centers for Medicare & Medicaid Services (CMS) said the rule will begin primarily in 2026.

CMS notes that these policies will improve prior authorization processes and reduce the burden on patients, providers, and payers, resulting in approximately $15 billion of estimated savings over ten years.

“When a doctor says a patient needs a procedure, it is essential that it happens in a timely manner,” said HHS Secretary Xavier Becerra. 

“Too many Americans are left in limbo, waiting for approval from their insurance company. Today the Biden-Harris Administration is announcing strong action that will shorten these wait times by streamlining and better digitizing the approval process.” 

Related: Pharmaceutical Giants Brace for Showdown as Medicare Drug Price Negotiations Are Poised For 2024.

Under the new rule, prior authorization decisions must be sent within 72 hours for urgent requests and seven calendar days for standard non-urgent requests.

 For some payers, this new timeframe for standard requests cuts current decision timeframes in half. 

The rule also requires all impacted payers to include a specific reason for denying a prior authorization request, which will help facilitate resubmission of the request or an appeal when needed.

Medicare Part D beneficiaries facing rising drug costs received welcome news as changes brought about by the 2022 Inflation Reduction Act cap their out-of-pocket expenses in 2024. 

The legislation dictates that individuals on Part D plans will now pay a maximum of around $3,300 annually for their prescription drugs, with variations depending on whether the medication is brand or generic. In 2025, this cap will be further reduced to a flat $2,000.

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