CMS mandates electronic prior authorizations, providers scramble

A new rule from the Centers for Medicare & Medicaid Services (CMS) will require Medicare Advantage and Medicaid plans to support electronic prior authorization by January 1, 2027. But payers and practice leaders say they lack time to prepare, raising concerns about delays and untested systems.

At the Medical Group Management Association’s (MGMA) 2026 Annual Conference in San Antonio, Madison Hynes, an associate director of government affairs at MGMA, asked attendees in two sessions whether their electronic health record (EHR) vendors had contacted them about the transition. No hands went up.

Hynes and her colleague, James Haynes, also an associate director, delivered MGMA’s Washington update on September 27. Two days later, at a government affairs town hall, practice leaders told MGMA that an approved prior authorization is no guarantee of payment.

The rule is part of a broader push to modernize prior authorization processes, but implementation risks are high. CMS has given payers years to prepare, yet Hynes said testing has barely begun. “For all this to work, there needs to be testing, as with any new implementation of technology or process.”

If payers miss the deadline, CMS could enforce delays or penalties, though enforcement details remain unclear. The regulation includes three key components: EHR integration to flag services requiring prior authorization, standardized templates for requests, and electronic transmission of those requests. Some payers have expressed uncertainty about meeting all three by the deadline.

Medicaid work requirements add new hurdles

Meanwhile, Medicaid work requirements also take effect on January 1, adding another layer of complexity for practices. These requirements apply only to the Medicaid expansion population in participating states, but confusion over eligibility could lead to fewer beneficiaries enrolling or staying enrolled. Hynes warned that practices may see a rise in uncompensated care as patients drop coverage or avoid seeking treatment.

For now, the focus remains on electronic prior authorization. The WISeR model, which tests AI-driven prior authorization in six states, has already drawn criticism. Some vendors have missed implementation deadlines, and practices report claims being denied without clear reasoning. MGMA fears the model could expand to more states and services, raising concerns about automated denials and reduced access to care.

MGMA is forming work groups to gather member feedback on Medicare Advantage, health IT, and other priorities. Practices can join by contacting [email protected].

Fee schedule cuts loom for providers

The 2027 Medicare physician fee schedule now stands as the most urgent federal issue for practice leaders, according to Madison Hynes. The final conversion factor—set to determine reimbursement rates—will be released in the coming weeks, with cuts already confirmed for both advanced alternative payment model (APM) participants and non-qualifying providers. Hynes warned that changes to modifiers like the 25 modifier and the addition of G2211 (a new prolonged service code) will have immediate financial consequences. Practices billing these codes should review the updates closely, as adjustments could reduce revenue before year’s end.

Beyond the fee schedule, MGMA is pushing for extensions of key policies, including the APM incentive payment and the geographic practice cost index floor, both of which face expiration risks. Hynes emphasized that without congressional action, these protections, already under pressure from inflation, could vanish by year’s end. The Patients First Act, a bipartisan proposal to tie Medicare payments to inflation, remains a critical focus. Unlike the current fee schedule, which is untethered from economic adjustments, the act would provide annual updates based on market basket inflation. While challenges remain, Hynes called it a “first step” toward closing the gap between Medicare reimbursements and the cost of care, which has eroded over decades of static or declining payments.