Proposed prior authorization rule leverages FHIR to trim administrative burden

A standardized approach across the industry could reduce clinician burden, aid timeliness of treatment and cut administrative expenses.

This article is part of the January 2023 COVERstory.

A proposed federal interoperability and prior authorization rule is a significant development in the ongoing effort to reduce administrative burdens – and costs – by applying standards. 

The draft regulation, unveiled by the Centers for Medicare and Medicaid Services on December 6, would require certain payers to work with providers to automate the now costly and cumbersome process of requesting and receiving prior authorizations for treatment by implementing HL7’s Fast Healthcare Interoperability Resources (FHIR) standard application programming interface (API).  

The regulation also would require these payers – including Medicare Advantage plans, Medicaid managed care plans and Qualified Health Plans offered in federally facilitated exchanges, among others – to build and maintain a provider access FHIR API to help enable patient data exchange from payers to in-network providers. Plus, it would require the payers to exchange patient data using a payer-to-payer FHIR API when a patient moves between payers or has concurrent payers. 

The regulation, if successfully implemented across the industry, could reduce expense and hassle, and it exemplifies how federal agencies – including the technical expertise and guidance from the Office of the National Coordinator for Health Information Technology – hope to influence the healthcare industry through using its influence to bring about widely wanted change. 

Common problem, big expense 

“We anticipate that this proposed rule … could save the industry more than $15 billion over a 10-year period based on the reduction in time spent on prior authorizations,” says Alexandra Mugge, deputy chief health informatics officer at CMS. 

Charles Jaffe, MD, HL7’s CEO, points out: "This proposed rule has the potential to dramatically reduce clinician burden, shorten the timeframe during which patients await approval, and both lower costs and enhance the quality of care.” 

CMS is a founding member of HL7’s Da Vinci Project, a collaboration of providers, payers and vendors that funded and are developing the FHIR APIs. The agency provided technical resources to help get the standard and implementation guides built, rather than attempting to start from scratch on its own, says Jocelyn Keegan, Da Vinci’s program manager. 

“As one of the largest payers, CMS can lead the way in moving toward standards implementation," Keegan says. “The regulation provides alignment to get everyone going in the same direction. The inclusion of eligible hospitals and critical access hospitals to the proposed rule engages the provider voices necessary for successful adoption and implementation of the improved workflows.” 

Mugge says CMS strongly recommends that providers and payers use relevant Da Vinci implementation guides as they prepare for compliance.  

And she urges payer organizations to apply electronic prior authorization to all their lines of health insurance business, not just those that will be required to abide by the new rule. 

Viet Nguyen, MD, chief standards implementation officer at HL7 and Da Vinci Project technical director, suggests providers and payers preparing to comply with the regulation participate in upcoming Da Vinci “connectathons” designed to facilitate testing of FHIR-based solutions. The organization conducts connectathons several times during the year, and it is open to industry participation. 

Eliminating a cumbersome process 

FHIR APIs are expected to provide an interoperable method for providers to submit pre-authorization requests directly from electronic health records at the point of care. Without such APIs, the process for requesting and receiving pre-authorizations has been slow and labor-intensive. Requests are often submitted by fax or through a health plan portal, on which clinical information must be re-keyed manually, which can lead to errors. 

The proposed regulation is designed to relieve the burden of this process by improving transparency into when prior authorization is needed and what the requested documentation is, and then applying automation to extract data at rest and exchange it between trusted entities. 

Implementing FHIR could have a huge impact on reducing administrative burdens for providers and payers alike, says Kirk Anderson, Da Vinci steering committee chair and CTO at Regence, a health plan that’s been testing the use of the FHIR API for prior authorization transactions. 

“Putting the right data in the right hands at the right time improves healthcare efficiency, quality, outcomes and affordability for everyone,” Anderson says. “By reducing the administrative burden of pre-authorization, we can help providers get high-value care to patients faster. We’ve demonstrated that using secure, real-time FHIR APIs dramatically reduces the pre-authorization burden for providers and payers. And because it is built on open standards, it can help eliminate the need for expensive proprietary solutions.” 

The timeline 

The deadline for submitting comments on the proposed regulation is March 13. “HL7 and Da Vinci will submit comments as early as possible so others can elaborate on their responses,” Keegan says.  

The final version of the regulation, which is slated to go into effect Jan. 1, 2026, is likely to be released by the end of 2023, she adds. 

Mugge of CMS says the agency set the effective date for 2026 “to make sure that this is implemented right the first time.” Compliance will require the involvement of electronic health record vendors and will involve bidirectional data exchange, which will take time to roll out, she points out. 

The proposed rule, “Medicare and Medicaid Programs: Advancing Interoperability and Improving Prior Authorization Processes for Medicare Advantage Organizations, Medicaid Managed Care Plans, State Medicaid Agencies, etc.,” can be viewed here.

Many benefits 

Automating prior authorization will yield numerous benefits, says HL7’s Nguyen.  

For example, it will enable patients to get their care authorized more quickly, improving their treatment. In addition, it will enable providers to reduce their burdens because they can submit the same data to all payers by using the FHIR APIs, he points out. And payers will be able to greatly improve their treatment decision documentation quality. 

Mugge says the prior authorization rule is just the latest step toward achieving interoperability. “This path to interoperability is a journey that we are all on together. Our policies will have to evolve as technology evolves.” 

This article is part of the January 2023 COVERstory.

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