By: HUB’s EB Compliance Team

U.S. Health and Human Services (“HHS”) Secretary Robert F. Kennedy, Jr. and Centers for Medicare & Medicaid Services (“CMS”) Administrator Dr. Mehmet Oz recently secured a pledge from select health insurance carriers to change the way they handle prior authorizations (“PAs”). These commitments are designed “to streamline and improve the PA processes for Medicare Advantage, Medicaid Managed Care, Health Insurance Marketplace and commercial plans.”

Prior Authorization

PA (sometimes referred to as pre-authorization) is the process whereby a specific item, service or medication requires specific approval from the health plan before coverage is provided under the health plan. PA is typically employed as a medical management technique in order to ensure an item, service or medication meets the health plan’s definition of medical necessity. Health plans determine which specific items, services or medications require PA, as well as the criteria for determining the circumstances under which the PA will be approved.

As an example, imagine Harper has coverage under her employer’s group health plan, and she requires a certain medication. Harper’s plan covers the medication she needs, but only after she (in conjunction with her medical provider) can demonstrate she meets the PA requirements under the plan. Harper and her provider often submit extra paperwork or proof to the health plan administrator to do so. If the PA is satisfied, Harper can obtain the prescribed medication under her health plan. If the PA is not satisfied, Harper will not have coverage for the prescribed medication.

Notably, the items, services, and medications subject to PA, as well as the PA process, will vary by health plan. This can contribute to the PA process being complex and time consuming for both individuals and medical providers.

The Pledge

The following six commitments are included in the pledge:

  • Standardizing Electronic Prior Authorization. Participating health plans will work toward implementing common, transparent submissions for electronic prior authorization. This commitment includes the development of standardized data and submission requirements (using FHIR® APIs) that will support seamless, streamlined processes and faster turn-around times. The goal is for the new framework to be operational and available to plans and providers by January 1, 2027.
  • Reducing the Scope of Claims Subject to Prior Authorization. Individual plans will commit to specific reductions to the scope of medical prior authorization as appropriate for the local market each plan serves, with demonstrated reductions by January 1, 2026.
  • Ensuring Continuity of Care When Patients Change Plans. Beginning January 1, 2026, when a patient changes insurance companies during a course of treatment, the new plan will honor existing prior authorizations for benefit-equivalent in-network services as part of a 90-day transition period. This action is designed to help patients avoid delays and maintain continuity of care during insurance transitions.
  • Enhancing Communication and Transparency on Determinations. Health plans will provide clear, easy-to-understand explanations of prior authorization determinations, including support for appeals and guidance on next These changes will be operational for fully-insured and commercial coverage by January 1, 2026, with a focus on supporting regulatory changes for expansion to additional coverage types.
  • Expanding Real-Time Responses. In 2027, at least 80 percent of electronic prior authorization approvals (with all needed clinical documentation) will be answered in real-time. This commitment includes adoption of FHIR® APIs across all markets to further accelerate real-time responses.
  • Ensuring Medical Review of Non-Approved Requests. Participating health plans affirm that all non-approved requests based on clinical reasons will continue to be reviewed by medical professionals – a standard already in place. This commitment is in effect now.

Potential Limitations

While the pledge has gathered much attention, it is important to understand what the pledge is, and what it isn’t.

  • The pledge is a voluntary commitment by select insurance carriers to make the changes included in the pledge. Voluntary is emphasized to indicate these changes are not being made to comply with any specific legal requirement, or in response to an executive order.
  • The pledge includes specific performance metrics and dates by which stated requirements will be met; however, it does not include any type of reporting on whether these items have been satisfied.
  • Not all insurance carriers have committed to the pledge so far. While many of the larger insurance carriers made the stated commitments, this should not be viewed as something all insurance carriers have committed to.
  • The pledge specifically focused on insurance carriers, which implicates fully-insured health plans. Many of the insurance carriers also act as third-party administrators (TPAs) for self-insured health plans. Carriers will need to address whether the changes included in the pledge will also apply to self-insured plans administered by their TPA services.

Conclusion

The complexity of the PA process has been challenging for many to work through. This has led to the pledge being viewed as a general positive for healthcare. That being said, sponsors of group health plans should understand the potential limitations of the pledge, as well as how their insurance carriers and possibly TPAs plan to meet the commitments, and what this may mean for their plans.

If you have any questions, please contact your HUB Advisor. View more compliance articles in our Compliance Directory.

NOTICE OF DISCLAIMER
Neither Hub International Limited nor any of its affiliated companies is a law or accounting firm, and therefore they cannot provide legal or tax advice. The information herein is provided for general information only and is not intended to constitute legal or tax advice as to an organization’s or individual's specific circumstances. It is based on Hub International's understanding of the law as it exists on the date of this publication. Subsequent developments may result in this information becoming outdated or incorrect and Hub International does not have an obligation to update this information. You should consult an attorney, accountant, or other legal or tax professional regarding the application of the general information provided here to your organization’s specific situation in light of your or your organization’s particular needs.