CMS Makes Improvements to Prior Authorization Process

Jan 23, 2024 | Industry Insights

The Centers for Medicare & Medicaid Services (CMS) has released the CMS Interoperability and Prior Authorization Final Rule (CMS-0057-F) on January 17, 2024. The rule aims to advance interoperability and enhance prior authorization processes in healthcare. It mandates Medicare Advantage organizations, state Medicaid and CHIP Fee-for-Service programs, Medicaid managed care plans, CHIP managed care entities, and Qualified Health Plan issuers on Federally Facilitated Exchanges to implement and maintain specific Health Level 7 (HL7) Fast Healthcare Interoperability Resources (FHIR) application programming interfaces (APIs). These APIs are designed to improve the electronic exchange of health care data and streamline prior authorization processes.

To incentivize providers to adopt electronic prior authorization processes, the final rule introduces a new measure for Merit-based Incentive Payment System (MIPS) eligible clinicians and eligible hospitals and critical access hospitals under the Medicare Promoting Interoperability Program.

Building on the foundation of the May 2020 CMS Interoperability and Patient Access final rule, these API policies aim to improve access to interoperable patient data and reduce the burden of prior authorization processes for patients, providers, and payers. Impacted payers are required to implement operational provisions, starting generally from January 1, 2026. However, compliance with API development and enhancement requirements has a deadline generally beginning January 1, 2027, with specific dates varying by the type of payer. The final rule includes various provisions to achieve these goals.


Prior Authorization API and Processes

The CMS Interoperability and Prior Authorization Final Rule introduces requirements for impacted payers to implement and maintain a Prior Authorization API by January 1, 2027. This API should include information on covered items and services, documentation requirements, and support prior authorization requests and responses. The rule allows enforcement discretion for the Health Insurance Portability and Accountability Act of 1996 (HIPAA) X12 278 prior authorization transaction standard for covered entities implementing an all-FHIR-based API.

To enhance prior authorization processes, impacted payers must send decisions within 72 hours for expedited requests and seven calendar days for standard requests. Beginning in 2026, payers must provide specific reasons for denied prior authorization decisions, improving communication and transparency. Providers can receive denial notices via various methods. The rule also mandates impacted payers to publicly report certain prior authorization metrics annually on their websites, with the compliance date starting January 1, 2026, and the initial metrics to be reported by March 31, 2026.

For more information, read the official CMS Fact Sheet on Interoperability and Prior Authorization Final Rule CMS-0057-F here:


Prior Authorization in the Laboratory Billing Cycle

Prior authorizations in the laboratory billing cycle refer to the approval process required by insurance companies before certain medical tests or procedures can be performed. This process ensures that the requested services are medically necessary and appropriate before the insurance provider agrees to cover the costs. In the context of lab billing, labs must try to obtain prior authorization from the insurance company before conducting specific laboratory tests otherwise they will not receive reimbursement for the tests conducted.

The prior authorization process typically involves submitting detailed information about the patient’s medical condition, the necessity of the lab test, and other relevant details to the insurance company. The insurance company then reviews this information and determines whether to approve or deny the request. If the authorization is denied, the lab may need to explore alternative options or appeal the decision.

The process is time-consuming and may pose challenges for laboratories receiving partial or full payment for their tests in a timely manner. Common lab tests that often require prior authorization include:

  1. Genetic Testing:

    • CPT Codes: 81211-81408, 81479, 81518-81599
  2. Advanced Imaging Tests:

    • MRI (Magnetic Resonance Imaging)
      • CPT Codes: 70551-70553
    • CT (Computed Tomography) Scans
      • CPT Codes: 70450-70498
  3. Drug Testing:

    • Urine Drug Testing
      • CPT Codes: 80305-80377
    • Blood Drug Testing
      • CPT Codes: 80301-80304
  4. Molecular Pathology Tests:

    • CPT Codes: 81200-81499
  5. Allergy Testing:

    • Skin Tests
      • CPT Codes: 95004-95078
  6. Specialized Chemistry Panels:

    • Cardiovascular Panel
      • CPT Codes: 80061, 82465-83722
    • Hepatic Function Panel
      • CPT Codes: 80076-80078, 82172-82299
  7. Therapeutic Drug Monitoring:

    • CPT Codes: 80150-80299

It’s important to note that this list is not exhaustive, and the requirement for prior authorization can vary between insurance plans and providers. Laboratories should always check with the specific insurance company and verify the latest policies and guidelines regarding prior authorization for lab tests. Additionally, the CPT codes listed are for reference, and the codes associated with specific tests may change over time. These contantly changing rules, requirements, codes, and plans pose a great challenge for labs to handle their billing alone, which is where knowledgable lab billing partners like Phytest can assist labs in the prior authorization process and help them get paid more, faster.



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