Prior Authorization Reform

Prior authorization reform refers to a wave of state and federal legislative changes aimed at reducing the administrative burden and care delays caused by prior authorization (PA) requirements. After years of documented evidence that PA processes delay necessary care, result in treatment abandonment, and create significant administrative costs for both providers and payers, regulators began mandating faster PA timelines, electronic PA processing, and limits on the scope of PA requirements.

On the federal side, CMS finalized a rule in 2024 requiring Medicare Advantage plans, Medicaid managed care plans, and Qualified Health Plans on the marketplace to implement electronic PA processing via HL7 FHIR APIs, respond to urgent requests within 72 hours and standard requests within seven calendar days, provide specific denial reasons, and report PA metrics publicly. Commercial group health plans (including self-funded ERISA plans) are not covered by CMS's rule directly, but many states have enacted similar requirements for fully-insured plans. Gold-carding laws — which exempt high-performing physicians from PA requirements for services they have a strong track record of getting approved — have passed in Texas, Georgia, and other states, also primarily for fully-insured products. For self-funded employers, the practical impact is indirect: TPA and carrier partners are building electronic PA infrastructure to comply with the CMS rule, and that infrastructure typically improves commercial plan PA processing as a byproduct. Employers evaluating TPAs should ask specifically about their PA turnaround times, denial rates by clinical category, and whether they've implemented electronic PA APIs.

The takeaway: prior auth reform is moving faster than most employers realize. If your TPA is still processing PA requests manually with multi-week turnaround times, ask what their timeline is for electronic PA implementation. Members stuck waiting for authorizations are one of the top drivers of benefit dissatisfaction — and those delays are increasingly both avoidable and regulatorily non-compliant.