5 takeaways from health insurers' new pledge to improve prior authorization
Dozens of insurance companies, including Cigna, Aetna, Humana, and UnitedHealthcare, agreed to several measures, which include making fewer medical procedures subject to prior authorization and speeding up the review process. Insurers also pledged to use clear language when communicating with patients and promised that medical professionals would review coverage denials.
While Trump administration officials applauded the insurance industry for its willingness to change, they acknowledged limitations of the agreement.
'The pledge is not a mandate,' Mehmet Oz, administrator of the Centers for Medicare & Medicaid Services, said during a news conference. 'This is an opportunity for the industry to show itself.'
Oz said he wants insurers to eliminate preapprovals for knee arthroscopy, a common, minimally invasive procedure to diagnose and treat knee problems. Chris Klomp, director of the Center for Medicare at CMS, recommended prior authorization be eliminated for vaginal deliveries, colonoscopies, and cataract surgeries, among other procedures.
Health insurers said the changes would benefit most Americans, including those with commercial or private coverage, Medicare Advantage, and Medicaid managed care.
The insurers have also agreed that patients who switch insurance plans may continue receiving treatment or other health care services for 90 days without facing immediate prior authorization requirements imposed by their new insurer.
But health policy analysts say prior authorization — a system that forces some people to delay care or abandon treatment — may continue to pose serious health consequences for affected patients. That said, many people may not notice a difference, even if insurers follow through on their new commitments.
'So much of the prior authorization process is behind the black box,' said Kaye Pestaina, director of the Program on Patient and Consumer Protections at KFF, a health information nonprofit that includes KFF Health News.
Often, she said, patients aren't even aware that they're subject to prior authorization requirements until they face a denial.
'I'm not sure how this changes that,' Pestaina said.
Oz acknowledged 'violence in the streets' prompted Monday's announcement. Klomp told KFF Health News that insurers were reacting to the shooting because the problem has 'reached a fever pitch.' Health insurance CEOs now move with security details wherever they go, Klomp said.
'There's no question that health insurers have a reputation problem,' said Robert Hartwig, an insurance expert and a clinical associate professor at the University of South Carolina.
The pledge shows that insurers are hoping to stave off 'more draconian' legislation or regulation in the future, Hartwig said.
But government interventions to improve prior authorization will be used 'if we're forced to use them,' Oz said during the news conference.
'The administration has made it clear we're not going to tolerate it anymore,' he said. 'So either you fix it or we're going to fix it.'
Here are the key takeaways for consumers:
1. Prior authorization isn't going anywhere.
Health insurers will still be allowed to deny doctor-recommended care, which is arguably the biggest criticism that patients and providers level against insurance companies. And it isn't clear how the new commitments will protect the sickest patients, such as those diagnosed with cancer, who need the most expensive treatment.
2. Reform efforts aren't new.
Most states have already passed at least one law imposing requirements on insurers, often intended to reduce the time patients spend waiting for answers from their insurance company and to require transparency from insurers about which prescriptions and procedures require preapproval. Some states have also enacted 'gold card' programs for doctors that allow physicians with a robust record of prior authorization approvals to bypass the requirements.
Nationally, rules proposed by the first Trump administration and finalized by the Biden administration are already set to take effect next year. They will require insurers to respond to requests within seven days or 72 hours, depending on their urgency, and to process prior authorization requests electronically, instead of by phone or fax, among other changes. Those rules apply only to certain categories of insurance, including Medicare Advantage and Medicaid.
Beyond that, some insurance companies committed to improvement long before Monday's announcement. Earlier this year, UnitedHealthcare pledged to reduce prior authorization volume by 10%. Cigna announced its own set of improvements in February.
3. Insurance companies are already supposed to be doing some of these things.
For example, the Affordable Care Act already requires insurers to communicate with patients in plain language about health plan benefits and coverage.
But denial letters remain confusing because companies tend to use jargon. For instance, AHIP, the health insurance industry trade group, used the term 'non-approved requests' in Monday's announcement.
Insurers also pledged that medical professionals would continue to review prior authorization denials. AHIP claims this is 'a standard already in place.' But recent lawsuits allege otherwise, accusing companies of denying claims in a matter of seconds.
4. Health insurers will increasingly rely on artificial intelligence.
Health insurers issue millions of denials every year, though most prior authorization requests are quickly, sometimes even instantly, approved.
The use of AI in making prior authorization decisions isn't new — and it will probably continue to ramp up, with insurers pledging Monday to issue 80% of prior authorization decisions 'in real-time' by 2027.
'Artificial intelligence should help this tremendously,' Rep. Gregory Murphy (R-N.C.), a physician, said during the news conference.
'But remember, artificial intelligence is only as good as what you put into it,' he added.
Results from a survey published by the American Medical Association in February indicated 61% of physicians are concerned that the use of AI by insurance companies is already increasing denials.
5. Key details remain up in the air.
Oz said CMS will post a full list of participating insurers this summer, while other details will become public by January.
He said insurers have agreed to post data about their use of prior authorization on a public dashboard, but it isn't clear when that platform will be unveiled. The same holds true for 'performance targets' that Oz spoke of during the news conference. He did not name specific targets, indicate how they will be made public, or specify how the government would enforce them.
While the AMA, which represents doctors, applauded the announcement, 'patients and physicians will need specifics demonstrating that the latest insurer pledge will yield substantive actions,' the association's president, Bobby Mukkamala, said in a statement. He noted that health insurers made 'past promises' to improve prior authorization in 2018.
Meanwhile, it also remains unclear what services insurers will ultimately agree to release from prior authorization requirements.
Patient advocates are in the process of identifying 'low-value codes,' Oz said, that should not require preapproval, but it is unknown when those codes will be made public or when insurers will agree to release them from prior authorization rules.
Sausser and Galewitz write for KFF Health News, a national newsroom focused on in-depth journalism about health issues and a core program of KFF, a non-profit organization specializing in health policy research, polling, and journalism.
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3 hours ago
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Trump administration tiptoes into testing prior authorization in traditional Medicare
Traditional Medicare plan holders have typically not had to wait for prior authorization before receiving medical treatment. Until now. The Centers for Medicare & Medicaid Services (CMS) recently announced a new program to test prior authorization requirements for certain services in six states starting Jan. 1. The states — New Jersey, Ohio, Oklahoma, Texas, Arizona, and Washington — will apply prior authorization evaluations to more than a dozen services. CMS says the pilot program is intended to root out 'fraud, waste, and abuse,' but as Medicare Advantage members know well, prior authorization can lead to frustrating delays in care. How it works CMS will contract with private companies to deploy 'enhanced technologies, including artificial intelligence (AI)' to conduct the authorization reviews. It won't apply to in-patient or emergency services or treatments 'that would pose a substantial risk to patients if significantly delayed,' according to a CMS press release. Specific services that will require prior authorization are skin and tissue substitutes, electrical nerve stimulator implants, and knee arthroscopy. There is genuine concern about the costs of some of these items and services. A recent New York Times article highlighted pricey medical products, including paper-thin bandages made of dried bits of placenta, for Medicare patients. The Biden administration had approved a plan to limit Medicare's coverage of the bandages, known as skin substitutes, which were reportedly being sold for roughly $10,000 per square inch. An updated Medicare policy proposes setting a significantly lower payment rate. The new prior authorization program 'is focused on reducing wasteful spending, which is an important goal for Medicare,' Jeffrey Marr, a health economist at the Brown University School of Public Health, told Yahoo Finance. 'I expect that the use of prior authorization in this model is likely to reduce the overall level of Medicare spending,' he said. 'Selecting potentially low-value services is a critical part of setting up a well-functioning prior authorization system.' The key question for CMS to address is whether prior authorization can work in traditional Medicare in a way that does not deny or discourage high-value care that improves beneficiaries' health, Marr said. One red flag: 'The companies that will make the prior authorization decisions will be paid a percentage of the savings that they generate for Medicare. This creates an incentive for participants to deny a high share of services,' he said. Sign up for the Mind Your Money weekly newsletter By subscribing, you are agreeing to Yahoo's Terms and Privacy Policy Prior authorizations are part of the Medicare landscape How often do prior authorizations pop up for seniors with Medicare and Medicare Advantage plans? In traditional Medicare, services that often require prior authorization include certain outpatient hospital services, non-emergency ambulance transport, and durable medical equipment. For 2023, under 400,000 prior authorization reviews for traditional Medicare beneficiaries were submitted to CMS, according to KFF data. Medicare Advantage plans, which are offered by private insurers, are a different story. Almost all Medicare Advantage enrollees — 99% according to KFF research — must receive prior authorization for some services. These are typically higher-cost services, such as inpatient hospital stays, skilled nursing facility stays, chemotherapy, and other drugs. That common practice, combined with AI used to scan these requests, is a thorny issue. 'Prior authorization processes and requirements, including the use of artificial intelligence to review requests, may result in administrative hassles for providers, delays for patients in receiving necessary care, and in some instances, denials of medically necessary services, such as post-acute care,' according to Jeannie Fuglesten Biniek, co-author of the KFF report. To allay that fear, CMS noted in the announcement: 'While technology will support the review process, final decisions that a request for one of the selected services does not meet Medicare coverage requirements will be made by licensed clinicians, not machines.' The prior authorization program will not alter Medicare coverage or payment rules, for now, but other services may be added later. There has been pushback. More than a dozen members of Congress sent a letter on Aug. 7 to CMS administrator Dr. Memet Oz to urge him to 'put patients and providers first by cancelling' the model and requested more details about how the program will be implemented. 'The use of prior authorization in Medicare Advantage shows us that, in practice, [this proposal] will likely limit beneficiaries' access to care, increase burden on our already overburdened healthcare workforce, and create perverse incentives to put profit over patients,' the lawmakers wrote.A pivot in MA authorization In an odd juxtaposition, a week prior to trumpeting this new Medicare pre-authorization model, the administration announced that it had a non-binding commitment from insurance plans to reduce prior authorization in Medicare Advantage. In late June, the Department of Health and Human Services announced an initiative coordinated with companies including Aetna, Blue Cross Blue Shield, Humana, and UnitedHealthcare, to streamline prior authorization processes for patients covered by Medicare Advantage. Under the initiative, electronic prior authorization requests would become standardized by 2027. 'Pitting patients and their doctors against massive companies was not good for anyone,' US Health and Human Services Secretary Robert F. Kennedy, Jr. said in a statement. 'We are actively working with industry to make it easier to get prior authorization for common services such as diagnostic imaging, physical therapy, and outpatient surgery.' Oz added: 'These commitments represent a step in the right direction toward restoring trust, easing burdens on providers, and helping patients receive timely, evidence-based care.' Kerry Hannon is a Senior Columnist at Yahoo Finance. She is a career and retirement strategist and the author of 14 books, including the forthcoming "Retirement Bites: A Gen X Guide to Securing Your Financial Future," "In Control at 50+: How to Succeed in the New World of Work," and "Never Too Old to Get Rich." Follow her on Bluesky. Sign up for the Mind Your Money newsletter
Yahoo
3 hours ago
- Yahoo
Trump administration tiptoes into testing prior authorization in traditional Medicare
Traditional Medicare plan holders have typically not had to wait for prior authorization before receiving medical treatment. Until now. The Centers for Medicare & Medicaid Services (CMS) recently announced a new program to test prior authorization requirements for certain services in six states starting Jan. 1. The states — New Jersey, Ohio, Oklahoma, Texas, Arizona, and Washington — will apply prior authorization evaluations to more than a dozen services. CMS says the pilot program is intended to root out 'fraud, waste, and abuse,' but as Medicare Advantage members know well, prior authorization can lead to frustrating delays in care. How it works CMS will contract with private companies to deploy 'enhanced technologies, including artificial intelligence (AI)' to conduct the authorization reviews. It won't apply to in-patient or emergency services or treatments 'that would pose a substantial risk to patients if significantly delayed,' according to a CMS press release. Specific services that will require prior authorization are skin and tissue substitutes, electrical nerve stimulator implants, and knee arthroscopy. There is genuine concern about the costs of some of these items and services. A recent New York Times article highlighted pricey medical products, including paper-thin bandages made of dried bits of placenta, for Medicare patients. The Biden administration had approved a plan to limit Medicare's coverage of the bandages, known as skin substitutes, which were reportedly being sold for roughly $10,000 per square inch. An updated Medicare policy proposes setting a significantly lower payment rate. The new prior authorization program 'is focused on reducing wasteful spending, which is an important goal for Medicare,' Jeffrey Marr, a health economist at the Brown University School of Public Health, told Yahoo Finance. 'I expect that the use of prior authorization in this model is likely to reduce the overall level of Medicare spending,' he said. 'Selecting potentially low-value services is a critical part of setting up a well-functioning prior authorization system.' The key question for CMS to address is whether prior authorization can work in traditional Medicare in a way that does not deny or discourage high-value care that improves beneficiaries' health, Marr said. One red flag: 'The companies that will make the prior authorization decisions will be paid a percentage of the savings that they generate for Medicare. This creates an incentive for participants to deny a high share of services,' he said. Sign up for the Mind Your Money weekly newsletter By subscribing, you are agreeing to Yahoo's Terms and Privacy Policy Prior authorizations are part of the Medicare landscape How often do prior authorizations pop up for seniors with Medicare and Medicare Advantage plans? In traditional Medicare, services that often require prior authorization include certain outpatient hospital services, non-emergency ambulance transport, and durable medical equipment. For 2023, under 400,000 prior authorization reviews for traditional Medicare beneficiaries were submitted to CMS, according to KFF data. Medicare Advantage plans, which are offered by private insurers, are a different story. Almost all Medicare Advantage enrollees — 99% according to KFF research — must receive prior authorization for some services. These are typically higher-cost services, such as inpatient hospital stays, skilled nursing facility stays, chemotherapy, and other drugs. That common practice, combined with AI used to scan these requests, is a thorny issue. 'Prior authorization processes and requirements, including the use of artificial intelligence to review requests, may result in administrative hassles for providers, delays for patients in receiving necessary care, and in some instances, denials of medically necessary services, such as post-acute care,' according to Jeannie Fuglesten Biniek, co-author of the KFF report. To allay that fear, CMS noted in the announcement: 'While technology will support the review process, final decisions that a request for one of the selected services does not meet Medicare coverage requirements will be made by licensed clinicians, not machines.' The prior authorization program will not alter Medicare coverage or payment rules, for now, but other services may be added later. There has been pushback. More than a dozen members of Congress sent a letter on Aug. 7 to CMS administrator Dr. Memet Oz to urge him to 'put patients and providers first by cancelling' the model and requested more details about how the program will be implemented. 'The use of prior authorization in Medicare Advantage shows us that, in practice, [this proposal] will likely limit beneficiaries' access to care, increase burden on our already overburdened healthcare workforce, and create perverse incentives to put profit over patients,' the lawmakers wrote.A pivot in MA authorization In an odd juxtaposition, a week prior to trumpeting this new Medicare pre-authorization model, the administration announced that it had a non-binding commitment from insurance plans to reduce prior authorization in Medicare Advantage. In late June, the Department of Health and Human Services announced an initiative coordinated with companies including Aetna, Blue Cross Blue Shield, Humana, and UnitedHealthcare, to streamline prior authorization processes for patients covered by Medicare Advantage. Under the initiative, electronic prior authorization requests would become standardized by 2027. 'Pitting patients and their doctors against massive companies was not good for anyone,' US Health and Human Services Secretary Robert F. Kennedy, Jr. said in a statement. 'We are actively working with industry to make it easier to get prior authorization for common services such as diagnostic imaging, physical therapy, and outpatient surgery.' Oz added: 'These commitments represent a step in the right direction toward restoring trust, easing burdens on providers, and helping patients receive timely, evidence-based care.' Kerry Hannon is a Senior Columnist at Yahoo Finance. She is a career and retirement strategist and the author of 14 books, including the forthcoming "Retirement Bites: A Gen X Guide to Securing Your Financial Future," "In Control at 50+: How to Succeed in the New World of Work," and "Never Too Old to Get Rich." Follow her on Bluesky. Sign up for the Mind Your Money newsletter Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
Yahoo
3 hours ago
- Yahoo
Trump administration tiptoes into testing prior authorization in traditional Medicare
Traditional Medicare plan holders have typically not had to wait for prior authorization before receiving medical treatment. Until now. The Centers for Medicare & Medicaid Services (CMS) recently announced a new program to test prior authorization requirements for certain services in six states starting Jan. 1. The states — New Jersey, Ohio, Oklahoma, Texas, Arizona, and Washington — will apply prior authorization evaluations to more than a dozen services. CMS says the pilot program is intended to root out 'fraud, waste, and abuse,' but as Medicare Advantage members know well, prior authorization can lead to frustrating delays in care. How it works CMS will contract with private companies to deploy 'enhanced technologies, including artificial intelligence (AI)' to conduct the authorization reviews. It won't apply to in-patient or emergency services or treatments 'that would pose a substantial risk to patients if significantly delayed,' according to a CMS press release. Specific services that will require prior authorization are skin and tissue substitutes, electrical nerve stimulator implants, and knee arthroscopy. There is genuine concern about the costs of some of these items and services. A recent New York Times article highlighted pricey medical products, including paper-thin bandages made of dried bits of placenta, for Medicare patients. The Biden administration had approved a plan to limit Medicare's coverage of the bandages, known as skin substitutes, which were reportedly being sold for roughly $10,000 per square inch. An updated Medicare policy proposes setting a significantly lower payment rate. The new prior authorization program 'is focused on reducing wasteful spending, which is an important goal for Medicare,' Jeffrey Marr, a health economist at the Brown University School of Public Health, told Yahoo Finance. 'I expect that the use of prior authorization in this model is likely to reduce the overall level of Medicare spending,' he said. 'Selecting potentially low-value services is a critical part of setting up a well-functioning prior authorization system.' The key question for CMS to address is whether prior authorization can work in traditional Medicare in a way that does not deny or discourage high-value care that improves beneficiaries' health, Marr said. One red flag: 'The companies that will make the prior authorization decisions will be paid a percentage of the savings that they generate for Medicare. This creates an incentive for participants to deny a high share of services,' he said. Sign up for the Mind Your Money weekly newsletter By subscribing, you are agreeing to Yahoo's Terms and Privacy Policy Prior authorizations are part of the Medicare landscape How often do prior authorizations pop up for seniors with Medicare and Medicare Advantage plans? In traditional Medicare, services that often require prior authorization include certain outpatient hospital services, non-emergency ambulance transport, and durable medical equipment. For 2023, under 400,000 prior authorization reviews for traditional Medicare beneficiaries were submitted to CMS, according to KFF data. Medicare Advantage plans, which are offered by private insurers, are a different story. Almost all Medicare Advantage enrollees — 99% according to KFF research — must receive prior authorization for some services. These are typically higher-cost services, such as inpatient hospital stays, skilled nursing facility stays, chemotherapy, and other drugs. That common practice, combined with AI used to scan these requests, is a thorny issue. 'Prior authorization processes and requirements, including the use of artificial intelligence to review requests, may result in administrative hassles for providers, delays for patients in receiving necessary care, and in some instances, denials of medically necessary services, such as post-acute care,' according to Jeannie Fuglesten Biniek, co-author of the KFF report. To allay that fear, CMS noted in the announcement: 'While technology will support the review process, final decisions that a request for one of the selected services does not meet Medicare coverage requirements will be made by licensed clinicians, not machines.' The prior authorization program will not alter Medicare coverage or payment rules, for now, but other services may be added later. There has been pushback. More than a dozen members of Congress sent a letter on Aug. 7 to CMS administrator Dr. Memet Oz to urge him to 'put patients and providers first by cancelling' the model and requested more details about how the program will be implemented. 'The use of prior authorization in Medicare Advantage shows us that, in practice, [this proposal] will likely limit beneficiaries' access to care, increase burden on our already overburdened healthcare workforce, and create perverse incentives to put profit over patients,' the lawmakers wrote.A pivot in MA authorization In an odd juxtaposition, a week prior to trumpeting this new Medicare pre-authorization model, the administration announced that it had a non-binding commitment from insurance plans to reduce prior authorization in Medicare Advantage. In late June, the Department of Health and Human Services announced an initiative coordinated with companies including Aetna, Blue Cross Blue Shield, Humana, and UnitedHealthcare, to streamline prior authorization processes for patients covered by Medicare Advantage. Under the initiative, electronic prior authorization requests would become standardized by 2027. 'Pitting patients and their doctors against massive companies was not good for anyone,' US Health and Human Services Secretary Robert F. Kennedy, Jr. said in a statement. 'We are actively working with industry to make it easier to get prior authorization for common services such as diagnostic imaging, physical therapy, and outpatient surgery.' Oz added: 'These commitments represent a step in the right direction toward restoring trust, easing burdens on providers, and helping patients receive timely, evidence-based care.' Kerry Hannon is a Senior Columnist at Yahoo Finance. She is a career and retirement strategist and the author of 14 books, including the forthcoming "Retirement Bites: A Gen X Guide to Securing Your Financial Future," "In Control at 50+: How to Succeed in the New World of Work," and "Never Too Old to Get Rich." Follow her on Bluesky. Sign up for the Mind Your Money newsletter Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
