Five major companies, including Amazon, Google, and Meta, have joined a government-led initiative to reform prior authorization for their self-funded health plans. These plans provide coverage for millions of Americans. The companies pledged to implement electronic prior authorizations to speed up the process and enable better data sharing.
The announcement from the Centers for Medicare & Medicaid Services (CMS) and the Department of Labor noted that the employers will build on a voluntary pledge made last year by nearly 60 health plans. Those plans agreed to eliminate authorizations for some services, provide clearer decision explanations, and respond to requests in real time.
Self-Funded Plans Lag in Reform
Prior authorization is a cost-controlling method used by insurers. It requires providers to get preapproval for certain services and prescriptions. Insurers call it necessary, while providers say it delays patient care. Reforms have focused on Medicare, Medicaid, and commercial plans, but self-funded plans were largely excluded.
Self-funded health plans are governed by the Employee Retirement Income Security Act (ERISA), not federal health mandates. This left them out of many past efforts. Over half of Americans get coverage through employer-sponsored self-funded plans. Amazon’s plan alone covers 2.8 million people, making it the largest single-employer plan in the country.
Commitment to Digital Change
The companies agreed to use electronic prior authorizations by the start of the year. They called on insurance carriers and third-party administrators to make digital processes available immediately. This effort aligns with a CMS requirement for FHIR-based application programming interfaces (APIs) in Medicare Advantage, Medicaid, and other plans by Jan. 1. Health plans have set their own Jan. 1 deadline to switch to a prior authorization process that relies on HL7’s Fast Healthcare Interoperability Resources, or FHIR, a data exchange standard for healthcare information.
Health plans also pledged to have at least 80% of electronic prior authorization requests answered in real time next year, primarily through FHIR APIs. Health plans report they have reduced prior authorizations by 11% so far. However, some providers say they have not yet felt any improvement from these pledges.
