New electronic prior authorization rule takes effect

Two female healthcare workers in a clinical office, reviewing diagnostic results on a computer screen. Photo: Gustavo Fring/Pexels

A new rule from the Centers for Medicare & Medicaid Services (CMS) will require health plans to use standardized electronic connections for prior authorization requests starting January 1, 2027. The rule, known as CMS-0057-F, aims to streamline the prior authorization process by allowing electronic health records (EHRs) to communicate directly with health plans.

The operational burden of implementing this new system falls on practice administrators, who must ensure that their EHR systems are compatible with the new electronic connections. The rule requires health plans to use four electronic connections, known as application programming interfaces (APIs), to transmit prior authorization requests, documentation, and decisions.

Understanding the New Rule

The Prior Authorization API is the key component of the new system, as it allows EHRs to determine whether a service requires authorization and what documentation is needed. The API also carries the request to the health plan and returns the decision or a request for more information.

Instead, plans may still route requests for clinical review within the required timeframe. The electronic channel simply changes how the request is transmitted, not whether a nurse reviewer reads it.

The new rule applies to certain types of health plans, including Medicare Advantage plans, state Medicaid and Children’s Health Insurance Program fee-for-service programs, and marketplace plans sold on the federal exchange. However, it does not cover employer-sponsored commercial plans or traditional Medicare.

American Medical Association (AMA) Chief Executive Officer John Whyte, M.D., M.P.H., has urged CMS to keep the January 1 deadline and not give health plans broad leeway on enforcement in 2027. Whyte noted that the last mile of implementation falls to vendors, who are not subject to CMS oversight and enforcement.

CMS finalized the rule in January 2024, after years of physician complaints about fax and portal prior authorization. Since January 1, 2026, covered plans have been required to decide standard prior authorization requests within seven calendar days and urgent requests within 72 hours.

As of April 10, 2026, CMS issued a separate proposal, CMS-0062-P, which would bring medical-benefit drugs into the Prior Authorization API starting October 1, 2027. The comment period for this proposal closed on June 15, 2026, and a final rule has not yet been issued.

Preparing for the New Rule

Practice administrators should ask their EHR vendors several questions to ensure readiness for the new rule. These questions include which payers will be live inside the ordering workflow on January 1, whether the electronic connection is included in the current version and license, and whether the vendor can demonstrate a real order going through the electronic path with an actual payer.

Practices that report under the Merit-based Incentive Payment System (MIPS) will be affected by the new rule, as it adds an Electronic Prior Authorization measure to the Promoting Interoperability category. Clinicians will be required to attest that they sent at least one request through the Prior Authorization API or qualify for an exclusion.

Physicians complete an average of 40 prior authorizations a week, which consumes about 13 hours of physician and staff time weekly, according to a survey by the American Medical Association.

To measure the effectiveness of the new rule, practices should record their current prior authorization numbers, including requests per week, staff hours, days to decision, denial rate, and resubmissions. They can then compare these numbers with their baseline and with the turnaround times each plan has posted in the first quarter of 2027.

One thing a vendor can provide today is a payer-by-payer list with dates, which practices can use to prepare for the new rule. Practices should ask their vendors for this list this month to ensure a smooth transition to the new electronic connections.

CMS’ own guidance to physicians is to confirm EHR vendor readiness, take part in testing with plans, and begin electronic submission by January 1, 2027. By following these steps and asking the right questions, practice administrators can ensure that their practices are ready for the new rule and can take advantage of the streamlined prior authorization process.

The rule does not require practices to make any significant changes, but it does require health plans to add the electronic channel. Plans do not have to close the old channels, so some prior authorizations may still be done by fax or phone. However, the new electronic connections should reduce the burden of prior authorizations on practices and improve the overall efficiency of the process.

As the January 1 deadline approaches, practices should be prepared to adapt to the new rule and take advantage of the benefits it offers. By understanding the requirements of the rule and preparing their EHR systems, practices can ensure a smooth transition and improve the quality of care for their patients.