Rev Cycle Leaders Cautiously Optimistic Over AHIP Plan to Limit Prior Authorization

More than 40 payers have voluntarily committed to significant prior authorization reforms, but will this time be any different? 

More than 40 payers have signed onto an agreement to limit and simplify prior authorization (PA), according to an announcement from AHIP.

AHIP maintains that PA safeguards patients from exposure to low-value and inappropriate care that deviates from evidence-based guidelines, but also recognizes the frustration that patients and providers feel when provider-recommended care is delayed or denied during PA review.

Signatories to the pact include Aetna, Cigna, Humana, UnitedHealthcare, and numerous affiliates of the Blue Cross Blue Shield Association. Proposed changes would benefit more than 250 million patients across multiple insurance markets, including the commercial, Medicare Advantage, and Medicaid managed care markets, according to the announcement.

The 6 Pillars of the Pact

Signatories to the pact have voluntarily committed to a set of six specific reforms.

Standardizing Electronic Prior Authorization

Lack of technological standardization across payers has long frustrated revenue cycle leaders. For instance, Ochsner Health has successfully automated some components of the PA process, but too few payers use digital platforms that cooperate with its core EHR to drive significant efficiency.

“We’re not able to connect this way to all of the payers and see that big volume that we would like,” Savanah Arceneaux, director of pre-service & financial clearance at Ochsner, said during a recent HealthLeaders Revenue Cycle NOW Online Summit.

As part of their pact to improve PA, signatories say they will develop standardized data and submission requirements using Fast Healthcare Interoperability Resources (FHIR) APIs.

Reducing the Scope of Claims Subject to Prior Authorization

Signatory payers offering Affordable Care Act marketplace and Medicare Advantage coverage say they will limit the use of PA to services most prone to variation. They will also share data to allow industry reporting on PA volume.

Ensuring Continuity of Care When Patients Change Health Plans

Currently, patients frequently require new PA approval when they switch health plans. Under the pact, signatories say that they will honor previous health plans’ PA approvals for 90 days when a patient changes health plans.

Enhancing Communication and Transparency on Determinations

Signatory payers are committing to improving member communications on PA denials. This will include notices that clearly explain next available steps for assistance to their affected members and clear instructions on how to appeal decisions.

Expanding Real-Time Responses

Electronic PA has the potential to reduce the administrative burden for providers and reduce turnaround times associated with the PA process. However, interoperability issues have limited widespread adoption.

Only 35% of PA interactions between providers and payers were fully electronic in 2024, according to a recent Council for Affordable Healthcare report.

As part of their commitment to adopt FHIR standards, signatory payers are also committing to submit 80% of electronic PA approvals in real time by 2027.

Ensuring Medical Review of Non-Approved Requests

AI has the potential to streamline and automate components of the PA process, but providers are concerned about using the technology to deny care. Signatory payers have agreed to only use AI to facilitate quicker approvals and require provider review for all PA denials based on medical necessity.

What are Revenue Cycle Leaders Saying?

There is a sense of muted optimism among revenue cycle leaders in response to the announcement from AHIP and signatory payers, particularly around the potential for standardization in electronic PA processes.

“The most noteworthy commitment for me is the push towards real-time authorizations using FHIR APIs,” Seth Katz, vice president of revenue cycle and HIM at University Health Kansas City, said in an email.  “If that’s truly realized, it would cut down on delays and reduce friction for both providers and patients.”

These specific commitments largely align with requirements established by the Interoperability and Prior Authorization Final Rule issued by the the Centers for Medicare and Medicaid Services (CMS) in 2024, which would mandate the adoption of an API for PA by 2027. While those requirements would only apply to plans participating in government programs, healthcare leaders have applauded payers for embracing the proposed changes to commercial plans as well.

“Today’s commitment by health insurers, much of which is a plan to implement the CMS requirements established in the Interoperability and Prior Authorization final rule, presents a meaningful opportunity to reduce the patient and provider burden associated with prior authorization,” Terrance Cunningham, senior director of administrative simplification policy for the American Hospital Association, said in a statement to HealthLeaders.

“We are encouraged to see their commitment to implementing these changes beyond federally regulated insurance offerings and across their commercial lines of business, which will enable these reforms to impact a greater number of patients,” Cunningham added.

Despite the optimism, years of push-and-pull between providers and payers has led to an acrimony that tempers expectations.

“I’ll admit, I’m cautious,” Katz said. “Health plans have been promising improvements for years, yet frontline staff still spend hours chasing faxes or sitting on hold resulting in delays of care impacting patients and frustrating physicians.”

“In short, the intent is right, but until there is accountability and measurable progress, most of us on the provider side are reserving judgment,” he concluded.