AHLA's Speaking of Health Law
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AHLA's Speaking of Health Law
Prior Authorization: Payer and Provider Perspectives As 2025 Closes
Kathy Roe, Managing Attorney, Health Law Consultancy, speaks with Dorothy DeAngelis, Senior Managing Director, Ankura Consulting, and Richelle Marting, Attorney, Marting Law, about the latest trends and developments related to prior authorization, from both the payer and provider angles. They discuss what prior authorization is and why it engenders scrutiny, approaches to easing prior authorization’s administrative burden, the responsible use of artificial intelligence, the impact of the new WISeR Model, and what to expect in 2026. From AHLA’s Payers, Plans, and Managed Care Practice Group.
Watch this episode: https://www.youtube.com/watch?v=k2Oi2HnXZOE
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Learn more about AHLA’s January 8, 2026 webinar on prior authorization: https://educate.americanhealthlaw.org/local/catalog/view/product.php?productid=1705
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SPEAKER_02:Greetings, everybody. Thank you for joining us today for AHLA's Speaking of Health Law podcast. Today's episode is entitled Prior Authorization, Payer and Provider Perspectives as 2025 comes to a close. I am Kathy Rowe. I am the managing attorney at the health law consultancy in Chicago. It's a boutique health law firm focused on regulatory contracting and counseling in the health care space. And I am also the chair of the Payers of Lands and Managed Care Practice Group. And that's the practice group that is bringing you today's podcast. I'm joined by two guests, and I'd like them to have them introduce themselves to you. Dorothy?
SPEAKER_01:Yes, hi everyone. I'm Dorothy DeAngelis, Senior Managing Director with Anchara Consulting. I head our healthcare and life sciences industry group here at Anchara, and my focus is compliance, disputes, investigations, and spending a lot of time in prior authorization in particular.
SPEAKER_03:Hi, thank you for having me. My name is Rochelle Martin. I'm an attorney in the Kansas City area. I work with providers, both professionals and facilities around the country on managed care contracting. My background is in health information management. I'm an RHIA and a certified coder. So a lot of the lens through which I approach prior authorizations are from a contracting compliance, a regulatory compliance, and then sort of a revenue perspective, a revenue cycle lens.
SPEAKER_02:All right. It sounds like we've got our payer and our provider voices for today. So let me start off from a definitional perspective to make sure we're all on the same page. And when we're talking about prior authorization, we're talking about a utilization management process carried out by a payer to assess the medical necessity and the medical appropriateness of a health care service, item or drug prior to the delivery of the health care service item or drug. So that's our definition. And sometimes there's different takes on the definition. But one point that I would like to raise to kick us off is in talking about what prior auth is about. And I may say prior authors or we may say PA. In all instances, what we're talking about is prior authorization. But sometimes folks say that prior authorization is not a guarantee of payment. So Dorothy, is a prior auth approval? Is it a guarantee of payment or something else?
SPEAKER_01:Yeah, it's a good question, Kathy. Basically, you know, from my perspective, prior auth really, as you said, I mean, it makes sure that the recommended service item or supply is medically necessary and appropriate for the patient or the member. And there may be, however, there may be other issues that you know arise with the uh claim, you know, after the fact or even as the prior office being reviewed, things like eligibility, networks, um, coding errors, and the like. So that's why it really doesn't guarantee payment. There's sort of two different things. I view PA, however, as a gating issue to obtaining that payment often if one is to be applied, uh, but it certainly, in my view, is not necessarily a guarantee.
SPEAKER_02:Would you agree with that, Rochelle?
SPEAKER_03:Yeah, I love this question. And I like the foundational um concept of starting with the definition because talking to AHLA and folks interested in health law, we know it depends. It can depend on the definition in your contract under state law, under federal law, under the individual benefit plan. And so we have this kind of overarching concept of the nuances can be so specific to each individual plan and each individual claim or service, even. But I always say, I also say it depends on whether it's a guarantee of payment. Um, for example, there's there's language in a Medicare Advantage manual from CMS that prior authorizations are advanced approval that payment will be made, and that payment can't later be denied once prior authorization is obtained, based on medical necessity. So I agree with Dorothy. It is a it's a gateway to payment in overcoming one of the initial hurdles to approval and to payment, which is whether we're providing a covered service. It's reasonable, it's necessary, it's appropriate for the patient, and prior authorization sort of accomplishes or greenlights that perspective. Of course, then you have to properly code and bill and present the claim, and the patient has to be an eligible member for that data service, and you overcome those challenges, but it it achieves a significant hurdle towards the payment of that service.
SPEAKER_02:Okay, I think we now have a good grounding as to what prioroth is about and how it's common across different benefit programs, but may vary definitionally in terms of the nuances. But I think it's fair to say whether you sit on the provider side, the payer side, the patient side, hire off is something that in the last several years has been an object of critique. Do either of you want to speak to that critique again? How the industry may be responding?
SPEAKER_01:Yeah, I I will be happy to start that um discussion, but uh, you know, it has been heavily scrutinized, Kathy. You're absolutely right. Um, in terms of why that is the case, um, you know, in my view, it's because uh a request for prior authorization is in Medicare Advantage a coverage or organization determination, really. Um, and that has an impact on potential for member harm. You know, if something is being delayed from a clinical perspective, um that can cause treatment issues, uh especially if if the prior auth is not done appropriately. It can also cause later down the line a financial impact or financial harm if that was, as I said, a gating issue to obtaining payment down the line and it doesn't occur, and the service is an expensive one, you know, some sort of inpatient or even hospital outpatient procedure, uh, that has significant financial impact as well. And you know, lastly, I would say it's it's scrutinized because I think it's deeply personal because so many of us, whether it's you know, those of us on this call or people, you know, clients that we deal with, or even frankly members of Congress, I think we all um deal with prior authorization in one way or another and have perhaps you know had one take longer than we would like, or you know, it just can cause a lot of frustration. So it definitely is a bit of a lightning rod issue in my mind.
SPEAKER_03:I think from the patient perspective and provider, healthcare providers that want to advocate for their patients, there's a perception of prior authorization being a roadblock or a delay in care or a denial of care. Even though prior authorizations and utilization management is not intended to override the physician or the professional's judgment making recommendations and treatment decisions for their patients, the reality is that when a prior authorization is denied, that is a tremendous deterrent for proceeding with that care because of the potential financial implications to the patient. So hearing about patient access and delayed access seems to be one of the biggest reasons prior authorization processes seem to be scrutinized. The provider community, and I use provider broadly for healthcare professionals as well as facilities that work with third-party payers and utilization management and review entities, they they struggle with the guidelines or the parameters and whether they agree or disagree that those reflect current industry standards, the qualifications of the reviewers that they talk with through the prior authorization process, and how long it can take from start to finish to get what hopefully will be a green light at the end of the day that the patient can receive the care they need. And then on the back end, I think there is a perception that if prior authorization was denied, while approval is not a guarantee of payment, perception that a denial is merely a guarantee that the service will not be paid and create some challenges on the back end for providers delivering care to those members.
SPEAKER_02:So in your remarks, Rochelle, you are really starting to get at some of the areas of administrative burden. And do either of you want to speak to some of the legislative or regulatory or even the voluntary commitments that payers have made this summer and what they're going after and the prospect of those commitments or laws making a change for the better and prior off in its perception.
SPEAKER_01:Yeah, sure. Um I can certainly start that. I I think one of the latest or largest developments, um, there are a number of them, but one from a legislative perspective was uh CMS final rule on interoperability and the one that requires the implementation of FIRE-based APIs so that providers can submit requests uh from their uh EHR, uh EMR systems. And that particular legislation did a number of things in terms of increasing access that way. It also reduced turnaround times, which is one of the pain points that was mentioned, I think, by both of us, and um taking those two 72 hours for uh an urgent request and seven days for standard. And then there are data reporting uh requirements for transparency purposes, and the um turnaround times and reporting requirements go into effect on 101, 26, while the APIs go into effect in 2027. Um I think in addition to that, yes, you are right, Kathy. You know, there was the uh announcement later or earlier this year in the summer, uh, whereby you know the president and several large payers announced that they would be um you know trying to reduce or committing to take a pledge to reduce this burden. Um we have seen some of the large payers um taking off the plate the number of services that even require PA. Um, and that that has been uh one of the focal areas. And then the third piece that I think uh it's being utilized to try to admit, you know, at least take away some of the administrative burden off of what used to be a very manual process is probably artificial intelligence or AI. And yeah, that's being used by both payers and providers, um whether it's to automatically submit an appeal if the request was denied by providers or by payers to automate certain aspects of prior auth. Of course, not the portion that requires uh, you know, a medical director review and sign-off, but at least the portion that would cut down on some of the really um tedious manual searches that that occur.
SPEAKER_02:How about you, Rochelle? Do you want to add to that? Because one of the things I don't think I mentioned, or I'll just emphasize again, is that we've had legislative activity or I shouldn't say legislative, we've had legislative activity at the states and several states, hitting the commercial and in some cases the Medicaid market. We've had regulatory action at the federal level. So, what's your your view from the provider standpoint?
SPEAKER_03:Yeah, I look at announcements uh with third-party payers reducing prior authorization volume uh with a little bit of skepticism. It solves a tremendous um roadblock for access, and it's helping patients get the care that they need for services faster. And then the provider perspective is a concern that absent that prior authorization that shows the plan at least gave their stamp of approval that this was medically reasonable and necessary for that patient for that circumstance at that time, that the providers will deliver the care and still nonetheless receive a denial on the back end now that they've they've given the care, the expenses have gone out. So there's a maybe healthy level of skepticism to be determined as those processes play out. Are they achieving the goals of improved access and still not putting the healthcare provider community at a financial disadvantage? Um, because they they do like to point to that prior authorization as a some sort of protection on the back end that they have a decent chance of getting paid assuming the claim is presented properly. But Dorothy mentions um AI as a hot topic to potentially reduce administrative burden. And I think there's so many, there's opportunities and so many considerations in the world of AI with prior authorization. We've seen headlines and and even litigation scrutinizing plans that maybe began using AI as a tool to automate and expedite approvals, which is a fantastic use of AI to get those prior authorizations through as quickly as possible, but scrutiny that it was used to expedite denials as well. And you can see headlines of a physician who affixed a signature, you know, thousands and thousands of times over the course of the month. So there's that balance of using it for the right purposes to expedite, well, as Georgie said, um, reserving the clinical decision if there could be potentially an adverse decision. And we've seen that balance in some rulemaking in 2024, 25, I believe, that didn't get finalized for Medicare Advantage plans. Um, because I think there is still uncertainty on how to effectively and appropriately balance those pros and cons in the use of AI. And on the provider side, um, AI is maybe more in an infancy stage in terms of appealing prior authorization denials than I think it is on the payer side, where there seems to be more sophisticated and systematic um ways to leverage those tools. And it feels a little bit piecemeal on the provider side still, on how we can quickly and efficiently and effectively provide the information to plans to get to that approval um uh more expediently.
SPEAKER_02:I think there is definitely a literacy issue, for lack of a better word, in terms of understanding exactly how and where in the prior authorization process A AI is being used. People oftentimes speak about it so generally that it raises a prospective concern. But I think its usage is something to watch, not only in the real world, but also with the administration, because if anybody took a look at the request for information that the Office of Science and Technology policy put out about six weeks ago, it was in asking for proposed reforms to regulation of artificial intelligence. This was one of the proposed action items in the AI action plan issued by the White House in July. The beginning of that RFI, before it gets to the questions to prompt the public, it lays out various what are characterizes faulty assumptions that there oftentimes is an inclination to go towards regulating artificial intelligence akin to how we would regulate humans. And they actually talk about human oversight and human decision making, and then they go on and talk about how healthcare is a sector that is ripe for AI. So I think you will hear at least some proponents who who would say, but geez, if you can adequately train in AI, mightn't it be a more effective tool in terms of making both approvals and denials? I think we're we're a ways away from a cultural acceptance uh of that, but I certainly think there is some corner of our country that is thinking in that regard, maybe beyond just corners within payers or vendors that serve payers.
SPEAKER_03:But like it or love it, it could solve some of the concerns that providers have about inconsistencies in decisions and and maybe help alleviate or bridge some of that gap.
SPEAKER_01:Yeah, that's a really good point, uh, Rochelle and Kathy, all good points made by you as well. I I think what we're talking about here are a couple of things. One is the responsible use of AI in this space, um, and that is to be determined in terms of what the guardrails are going to be. Um, as Rochelle said, there were some really important, I think, points that would have been in that regulation that did not get. Finalized by CMS. Hopefully, you know, that will. And then the other thing is the point of adoption and the literacy of it, as you point out, Kathy. I mean, you know, I think it's important to meet providers or payers where they are with regard to that adoption and then kind of take them along that journey in terms in terms of what is possible in the responsible use of AI. And that's something that I deal with a lot in my practice because, you know, you both said it very well. Not everyone is up to speed on this, not everyone trusts it. But there are uses that would help in many regards, whether it's consistency or speed, reduction of manual processes and the like. But it's just finding where those guardrails really should should exist.
SPEAKER_03:Well, Kathy, you started this discussion with the definition of prior authorization. What's the definition of artificial intelligence where you can even begin to regulate or decide how it's going to be used responsibly in the space of something so important as prior authorization and access to care?
SPEAKER_02:That's such a wonderful point about the definitional inconsistency of artificial intelligence. You have some narrow definitions and broad definitions. And even when they're close, there's always like a word or two different between states or different organizations. And I don't know when we're going to get sort of that driving influence here in the United States that kind of has us heading all towards a single definition. It's kind of like the definition of specially drug or specially product in the pharmacy benefits space. But talking about AI makes me want to ask you both. Have one of you talk about the wiser model that is set to launch at the beginning of next year? And that's CAP W, Cap I, Cap S, lowercase E, Cap R model. It's out of CMMI, that's an acronym. But what it is, and there's been a lot of talk about it, certainly at the administration as well as in Congress.
SPEAKER_01:Yeah, this was uh quite an interesting uh what I would almost call curveball uh you know that was that was thrown. Um so what it is, uh well just to level set again, prior auth is a utilization management tool, and just the concept of utilization management generally speaking is more common in the managed care context. Um the Wiser program is set up to pilot uh for original Medicare, which is more of a fee for service, obviously a fee for service program. And so traditionally, prior auth was used in original Medicare in a very limited set of situations. Examples of which would be certain uh hospital outpatient department services, some DME, uh, some non-emergency transport requests, and regardless, these were handled by the MACs, the Medicare Administrative contractors. What Wiser is seeking to do is work with private contractors, technology contractors, uh that would use, they'll use AI tools and review PAs for services where it's thought that there's a high potential for fraud, things such as skin substitutes, knee arthroscopy for arthritis, osteoarthritis, or those are good examples. This causes some concern and has caused some scrutiny because, again, now we're talking about blurring the lines between a fee-for-service program and a managed care program. We're also talking about introducing more prior auth in original Medicare, which could introduce delays again for physicians and patients. And then really, I think the largest area of scrutiny is the model itself, whereby these contractors would operate on a recovery basis, meaning that they would receive a percentage of savings. And that is something that we haven't seen, or you know, would certainly frown upon, at least from the managed care perspective. Um, and then the last piece is AI again, right? So we've just talked about how there's no set definition, we don't have a mandated framework for oversight, but we have a lot of information for how CMS wanted Medicare Advantage organizations to view AI and use it in prior auth. And one of the couple of those considerations were you know such that you would still take into account individual facts and circumstances of the case, not make big sweeping decisions, and that also there would be no discrimination or that bias and things of that nature that can creep into these models would be carefully reviewed and certainly not take place. So those are some of the things that that I would point out uh with regard to Wiser.
SPEAKER_03:Yeah, thank you, Kathy. I I am not in one of the states where Wiser will be rolled out initially, but we are watching carefully for how that how that program is impacted. And Dorothy, you use the word curveball, and that was my reaction when the Wiser model was announced because it came on the heels of proposed rules that would really tighten the way AI is used in prior authorization for Medicare Advantaged Plan. And those those rules or those proposals were sort of tabled. We had a change in administration while that proposed rule was was with the agency. And then this model almost seemed to conflict or just take a hard right um uh in the sense that it just hived it from the approach or the tone of the proposed rule for Medicare advantage and now what traditional wood medicare would be doing. So a little bit of of kind of riplash on on the policy perspective or the approach. And I think that's the question patients and providers want to see with this wiser model, especially given Dorothy that your comment that the contractors have a financial incentive to deny. And that's different from the RAC model, where a contingency fee was was such an uproar a decade and a half ago when that program began. But that was payment on the back end where this could be access on the front end. And so it really will be interesting to see how the the industry and patients respond to that. But you also um mentioned, Dorothy, areas where there's a high likelihood of a fraud or overpayment or a lot of money at stake, and you use skin substitutes as an example. And I've been watching that really closely because I defend a lot of providers in my practice against traditional Medicare audits and Mac audits and UPIC audits and rack audits and skin substitutes are a topic that's been um highly contested over the last few years. And what I like about the wiser model in that particular area is it gives me provide growth providers peace of mind up front. Before I purchase this product and spend a lot of money that I will not get feedback, it's not just my professional time I would lose if I have to pay back for this actual expense. Having the prior authorization on the front end, I think in certain areas could could really be beneficial to both providers and patients.
SPEAKER_01:Yeah, I I think that's a fair, fair point, uh Rochelle. And um some of the things here, I mean, with with regard to utilization management, I mean, I think that's always been the case that um anything, and I use the drug example. I do a lot of work, as says Kathy, in the Part D arena and um in the drug claim arena. And you know, whether or not the drug carries a high risk with it is always a component of whether you're going to apply prior authorization. Um, so from that perspective, you know, I definitely understand where this policy is coming from, and I understand it from the perspective of wanting to cut down fraud, waste, and abuse. I think again, the component that is most concerning or raises some eyebrows is that recovery uh element and doing that on the front end where you could really be incentivized to um you know cut off someone's access. So I think all eyes are going to be watching how that really plays out.
SPEAKER_02:It'll be interesting to see what reporting comes out on this model and at what pace, sort of akin to the transparency that's being mandated by other CMS regulated uh plans and whether Medicare fee for service I'll say measures up to that level of transparency for this program.
SPEAKER_01:Exactly. And you know, one other thing that's kind of interesting is that the uh physician fee schedule final regulation rental rule came out and it contained some interesting um uh arrangements with regard to financials around skin substitutes. So there again, you you've got this weird policy juxtaposition of coming up with a potential solution to reduce those prices uh that way. And then my I guess my question would be: do you really still need that prior auth on the front end? Uh I guess that all remains to be seen and we'll have to work through once these things get implemented.
SPEAKER_02:Do either of you think the wiser model will have anything to say about the application of AI, harking back to earlier earlier in our conversation relative to its application in MA or in other lines of business? Rochelle says she's watching the model closely. Should others be watching it closely as well and with an eye on what?
SPEAKER_03:Yeah, I I I again I kind of go back to the RAC program when that was a new and revolutionary concept and um hotly debated because of the contingency fees in that program. I think we'll see an evolution come out, and that's why it's being piloted in a few areas, and there will be an evolution of policy on whether and how and to what extent AI is used in the guardrails and the protections. And we will probably see reporting on prior authorization requests and approvals and denials. Uh, and I think that's what we should be watching to see how that program may evolve and whether it's likely to extend to other geographic areas.
SPEAKER_01:Yeah, another is true, and another interesting place that we can keep our eyes peeled is in the uh information that gets released each year for MAOs, Medicare Advantage organizations to put their uh submit their bids for payment. So theoretically, uh these these if the Wiser model moves forward and it does bring down, let's say, uh the rising medical cost trend, which is very significant and a significant issue right now. If it does that in the states in which it's being implemented, uh we should see that in the US PCCs, the US per capita costs that are derived from fee for service Medicare utilization, and then that's given to the Medicare Advantage organizations for them to proxy their bids. Theoretically, what should start to happen is those costs come down, and then the plans would be in those states, you know, have a lower bid target or lower cost target to go against with regard to their bid. So we could, I suppose, compare whether you know it's in place in those states versus others and see what plays out in the US PCCs. It would be a nice way to analyze how this is actually working once we actually start to see results.
SPEAKER_02:So I think it's about time for us to wrap up. So we've talked about where we are with PA as 2025 comes to a close. I would love to hear from each of you where should folks be focusing their eyes for PA as 2026 launches.
SPEAKER_03:The wiser model is first and foremost what everybody has their eyes on in traditional Medicare and how that how that program plays out in the 2026. We haven't talked a lot about state law policy, and that is something in our area that we are seeing an increase in state laws taking initiative to implement various prior authorization policies. Often those are even more stringent than some of the federal proposed rules, which can be great for patient protections and consumers and constituents in the state, but also create complexities for plans that or payers, I should say, that have plans governed by different bodies of law on how to effectively administer different rules, as it is challenging on the provider side to figure out those processes and those rules in this patchwork of state law and federal law. And that's just in the prior authorization space. We also, as we've kind of been talking about over the last um over the last hour here, the the developing framework and patchwork of AI rules as it applies in the healthcare space. Those I think are going to be trends into 2026 to see how federal policy is developing and evolving, and then how state law is either following suit or maybe straying from what federal policy is doing.
SPEAKER_01:Yeah, I think those are all good things to watch. I agree, I all eyes on Wiser, and um certainly I think the Democrats in Congress are already taking aim at it. There's certainly a lot of pushback on it already before it even starts. Uh, I agree, you know, the AI framework and whether you know there's more to come on that from a legislative or even policy perspective. Uh, and then um the other thing I would say is just staying vigilant generally, and then certainly whether you're a payer or a provider, it's knowing your data, knowing what's happening to you, and getting control over it, understanding you know what your denial rates really are and you know what types of services and what the rules are so that you can start to demystify it a little bit, regardless of what happens, you know, on the legislative or policy landscape. I think there's still a lot of just our operational and data analysis work there that can be done. So it's kind of giving a sense of what you can do while all this is spinning and changing.
SPEAKER_03:You sparked a good thought there too, Dorothy, um, that I don't know that we've talked about yet, which is kind of the evolution and rollout of different gold card, platinum card type programs that are becoming more popular and um whether those are effective to balance burden and access and payment as well.
SPEAKER_02:Well, on that note, I'm gonna thank everybody for tuning in because that gives me the opportunity to say that Dorothy and Rochelle at least, maybe we'll have another panelist join them. We'll be back in early 2026 in webinar form to talk about looking ahead in 2026 for prior authorization. And I think talking about gold carding and platinum carding, given I've heard mixes mixes and feedback on them, we will have time to dive into that. So let me thank everybody for joining us today. And thank the Payers Plans and Managed Care Practice Group, which is bringing you today's podcast episode. Bye all.
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