The Centers for Medicare & Medicaid Services (CMS) finalized important updates impacting prior authorization of care processes within the Medicare Advantage (MA) program. These changes, detailed in the CMS 2026 Medicare Advantage Final Rule (“Rule”), aim to enhance beneficiary protections and clarify plan responsibilities, particularly concerning inpatient care.
KEY CHANGES TO PRIOR AUTHORIZATION APPROVALS
The Rule was issued on April 4, 2025, and published in the Federal Register on April 15, 2025. A significant change strengthens the binding nature of prior care approvals: If a Medicare Advantage Organization (“MA organization”), such as a health plan, approves a service or item via prior authorization, pre-service determination, or a concurrent determination during care, “it may not deny coverage later on the basis of lack of medical necessity.” This language can be found in the revised section 422.138 paragraph (c) of the Rule, which further clarifies that the MA organization “may not reopen such a decision for any reason except for good cause … or if there is reliable evidence of fraud or similar fault.” This key provision limits the health plan’s ability to retroactively reverse coverage decisions after initially granting approval, offering greater certainty for both patients and providers, especially in inpatient settings.
ADDRESSING MISAPPLICATION AND PROTECTING ENROLLEES
CMS stated in the Rule that it implemented these changes partly because the agency had “identified that some MA organizations misapply … appeal limitation provisions … to certain coverage decisions, specifically those related to an enrollee’s inpatient admission or level of care.” By improperly labeling coverage denials (like level-of-care decisions made during a stay) as non-appealable payment issues, some plans effectively denied beneficiaries their right to appeal critical decisions impacting their care and cost-sharing. The finalized changes aim to correct these misapplications, safeguard appeal rights, and enhance overall enrollee protections.
LIMITING THE REOPENING OF APPROVALS, ESPECIALLY FOR INPATIENT STAYS
The Rule specifies how MA plans are restricted from reversing prior approvals. As stated above, generally, once an MA organization approves coverage, “it may not deny coverage later on the basis of lack of medical necessity and may not reopen such a decision for any reason except for good cause … or if there is reliable evidence of fraud or similar fault per the reopening provisions at §422.616.”
Crucially, however, the final rule adds a specific and significant limitation for inpatient hospital admission approvals via a new paragraph at §422.616(e). This new provision prevents MA plans from using additional clinical information obtained after the initial approval of the admission as “new and material evidence” to establish good cause for reopening.
While the regulation technically retains the “good cause” standard, this carve-out effectively means that for inpatient admissions, reopening based on clinical information is largely restricted to situations involving “obvious error or fraud,” rather than disagreements over medical necessity arising from the patient’s evolving condition during the stay. This addresses a pattern where initial approvals were later overturned, thereby strengthening the finality of inpatient prior authorizations considerably.
IMPLEMENTATION DATE
The provisions related to prior authorization and organization determinations finalized in this rule, including the restrictions on reopening inpatient approvals, are applicable for coverage beginning January 1, 2026.
Disclaimer: This article provides a summary based on the specified CMS rule It is not intended as legal advice. Consult the official rule text and relevant legal counsel for specific interpretations and guidance.
Categories: DATA ACCESS & INTEROPERABILITY, Uncategorized
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