How the CMS Interoperability and Prior Authorization Final Rule Affect Healthcare Providers

After five years of revisions and debate, the Centers for Medicare & Medicaid Services (CMS) issued a final rule on January 17, 2024. This interoperability rule has profound implications for patients, providers, and software developers in the industry – but its full impact on existing policies can appear unclear or confusing. 

We have been following this rule since it was first proposed in 2019 – and can now offer a complete overview of its impact on providers. This article makes it quick and easy to identify how the Final Rule will impact your organization and understand the benefits (and changes) it will produce. 

What Are the Key Takeaways from the Final Rule? 

The CMS Interoperability and Prior Authorization Final Rule (CMS-0057-F) is a significant step toward improving how healthcare organizations share data and process prior authorizations. It was initially intended to “support seamless and secure access, exchange, and use of electronic health information (EHI)”, according to HealthIt.  

The Final Rule is part of a broader movement to increase healthcare interoperability and ensure organizations adopt standardized application programming interfaces (APIs), which will help allow individuals to securely and easily access structured EHI using smartphone applications. 

Here is how that has translated into the full published rule: 

1. Mandatory APIs for Faster Data Exchange

The CMS now requires payers—including Medicare Advantage (MA), Medicaid, CHIP, and Federally Facilitated Exchange (FFE) insurers—to implement FHIR-based APIs for seamless electronic data exchange. These APIs standardize how data is shared between patients, providers, and payers, reducing reliance on phone calls, faxes, and manual paperwork. 

Why it matters: Previously, a lack of standardization led to slow approvals, duplicate tests, and treatment delays. This change ensures that critical health information moves faster across the system. 

2. Faster & More Transparent Prior Authorization

• New API for electronic prior authorization (ePA)
  • Providers can submit, track, and receive decisions electronically. 
  • Reduces back-and-forth paperwork between payers and providers.
• Shorter Decision Timelines
  • Standard requests: 7-day response time (previously 14 days). 
  • Expedited requests: 72-hour response time.
• Denial Transparency: Payers must provide specific reasons for denials, allowing providers to challenge or adjust requests more effectively. 

What this means: Patients waiting for surgeries, specialty drugs, or diagnostic tests will see faster approvals and fewer care disruptions. 

3. Increased Care Coordination with Provider & Payer Data Sharing

Provider and payer data sharing will be impacted in two key ways: 

• Provider Access API: Gives in-network providers real-time access to patient data (including prior authorizations, claims, and encounter history). 
• Payer-to-Payer API: Ensures that when a patient switches insurers, their prior authorization history follows them, preventing delays in ongoing treatments. 

This will have a profound effect on patient care: For example: if a patient on chemotherapy changes insurance plans, their treatment will not be delayed because their new insurer will have immediate access to prior approvals. 

4. Implementation Timeline & Compliance

The Final Rule will be rolled out in two key phases: 

• By January 1, 2026: Shortened prior authorization response times take effect. 
• By January 1, 2027: APIs for Patient Access, Provider Access, and Payer-to-Payer Data Exchange must be fully implemented. 

Industry challenge: While the rule mandates compliance, many payers lack the IT infrastructure for seamless data exchange, creating potential delays in adoption.

How Does the Final Rule Impact You?

This rule is a major moment for providers, patients, and payers – but each is impacted in distinct ways. Here is a brief breakdown of the Final Rule’s effect on each group:  

For Providers: Less Paperwork, Faster Approvals 

• Easier Prior Authorization Requests: 
  • No more faxing forms or waiting on hold for approvals. 
  • Can submit, track, and receive electronic responses via EHR systems.
• More Complete Patient Data: Providers gain real-time access to a patient’s prior authorization history, reducing duplicate tests and unnecessary administrative work. 

Potential Challenge: Smaller practices may need IT investments to integrate with new payer APIs. 

For Patients: Faster Care, More Control 

• No More Lost Medical History When Switching Plans: The Payer-to-Payer API ensures that prior authorizations transfer seamlessly.
• More Transparency: Patients will receive clear explanations for denied authorizations, empowering them to challenge unfair decisions. 

Example: A patient needing an MRI for a chronic condition can now get faster approvals and see their provider’s submitted request status online. 

Patient Consideration: While data access improves, patients may need guidance on how to retrieve their records using insurer-provided API tools. 

For Payers: Compliance & Competitive Advantage 

• Regulatory Compliance: Insurers must build FHIR-compliant APIs by 2027 or risk penalties.
• Operational Efficiencies: 
  • Electronic prior authorization reduces administrative costs. 
  • Automation speeds up claim approvals and provider relationships. 

Industry Concern: Some insurers worry about high upfront technology costs for API development. However, those who invest early will gain an advantage in provider network partnerships. 

Save Time and Effort with Our API 

The Final Rule requires payers to implement APIs within a few years – or risk significant penalties. But that could create a lot of complexity, not to mention the time investment and development costs involved.  

That is why our healthcare API is so useful, enabling payers and third-party vendors to access risk adjustment data and improve interoperability without the need for complicated EHR integrations.  

Want to explore how it could help you stay compliant? 

Book a Demo