Cross-posted with permission from Health Affairs Forefront.

[Original Post: Michael Anne Kyle, Rachel Sachs. “Understanding CMS’s Proposed Rule Regarding Prior Authorization For Drugs,” Health Affairs Forefront, May 8, 2026. http://doi.org/10.1377/forefront.20260505.411452, Copyright © 2026 Health Affairs by Project HOPE – The People-to-People Health Foundation, Inc.]

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The Centers for Medicare & Medicaid Services (CMS) recently issued a proposed rule overhauling prior authorization requirements for prescription drugs across a range of federally run and facilitated healthcare programs. This proposed rule builds on a 2024 CMS final rule, which focused on prior authorization for non-drug items and services. The new proposed rule extends many of the 2024 rule’s requirements to the prescription drug context.

In this article, we begin with a brief summary of CMS’s 2024 final rule on prior authorization. We then describe the ways in which the recent proposed rule extends the 2024 final rule’s requirements to the prescription drug context within medical benefits but also adopts new requirements specific to pharmacy benefits. We consider four broader implications of the proposed rule, situating it within ongoing policy discussions regarding health care costs, quality, and access.

Building On CMS’s Previous Prior Authorization Reforms

In February 2024, CMS finalized a rule focusing on “Advancing Interoperability and Improving Prior Authorization Processes” in Medicare Advantage plans; state Medicaid plans, both fee-for-service and managed care; Children’s Health Insurance programs (CHIP), both fee-for-service and managed care; and Qualified Health Plan (QHP) issuers, both individual and small group, on federally facilitated exchanges. In an effort to “reduce burden on patients, providers, and payers,” the final rule requires these payers to implement an electronic Prior Authorization Application Programming Interface (API) with compliance dates beginning on or shortly after January 1, 2027. The Prior Authorization API defines Health Level Seven (HL7) and Fast Healthcare Interoperability Resources (FHIR) standards for interoperability and exchange of the following information: (1) whether prior authorization is required; (2) electronic forms for populating and submitting a prior authorization; (3) prior authorization requests and decisions between provider and payer.

This particular 2024 final rule focused primarily on prior authorization procedures, not substance. (Other rules have included substantive reforms within specific government programs, for example.) In addition to electronic information exchange, timeliness is a key tenet of CMS’s prior authorization process improvements. The 2024 final rule establishes that prior authorization decisions must be made within seven calendar days for standard requests and 72 hours for expedited requests. If a prior authorization request is denied, the rule requires payers to furnish a specific reason for the denial along with information about how to initiate an appeal. The rule also requires impacted payers to publicly report a range of metrics about their prior authorization process to “enhance transparency.”

Importantly, the 2024 final rule applied only to non-drug items and services under a plan’s medical benefit. Drugs (whether provided under a medical benefit or a pharmacy benefit) were specifically excluded for reasons including that “the standards and processes for issuing prior authorizations for drugs differ from those that apply to medical items and services.” In response to comments on the final rule, CMS specifically noted that it would “consider options for future rulemaking” relating to prior authorization for drugs.

Key Provisions of the Proposed Rule

The April 2026 Interoperability Standards and Prior Authorization for Drugs proposed rule responds to extensive public comment during the 2024 rulemaking process indicating broad support for the inclusion of prescription drugs in policy efforts to improve prior authorization processes. Consistent with the 2024 final rule, the 2026 proposed rule applies to Medicare Advantage plans, state Medicaid plans (both fee-for-service and managed care), CHIP programs (both fee-for-service and managed care), and Qualified Health Plan (QHP) issuers (both individual and small group) on federally facilitated exchanges.

The 2026 proposed rule is built around the same key provisions as the 2024 final rule governing prior authorization for non-drug items and services: interoperability standards for APIs to facilitate electronic prior authorization, timelines for rendering prior authorization decisions, and annual reporting requirements for certain prior authorization metrics to enhance transparency. The proposed rule also suggests several updates to the 2024 rule, for example harmonizing prior authorization decision timelines and aligning annual reporting to existing milestones (e.g., QHP certifications or state reporting deadlines for Medicaid/CHIP managed care contracts).

In outlining a path toward electronic prior authorization for prescription drugs, the proposed rule hews closely to existing regulations and standards. For drugs covered under the payer’s medical benefit, the proposed rule would direct plans to use the same electronic Prior Authorization API established for non-drug items and services in the 2024 final rule. For drugs covered under the payer’s pharmacy benefit, the proposed rule outlines an approach that follows the same principles but is based on the existing National Council for Prescription Drug Programs (NCPDP) standards for electronic prior authorization already used by Medicare Part D plans, prescribers, and dispensers, specific to retail prescription drugs. The proposed rule envisions requiring electronic prior authorization being implemented under both standards beginning on October 1, 2027, with some opportunities for extensions.

CMS first supported the NCPDP SCRIPT standard in a 2008 final rule establishing initial standards for e-prescribing in Part D. Since 2022, CMS has required Part D plans to use the NCPDP SCRIPT standard for electronic prior authorization. In addition to the foundational NCPDP SCRIPT standard, the NCPDP has issued more recent standards including the NCPDP F&B (formulary and benefit) and the NCPDP RTPB (real-time prescription benefit) standards. In conjunction with the Office of the National Coordinator for Health Information Technology, CMS finalized a 2024 rule transitioning Part D prescribing to NCPDP F&B and RTPB standards beginning January 1, 2027, and phasing out the NCPDP SCRIPT standard by January 1, 2028. The proposed rule requests detailed comments from non-Medicare issuers on implementing NCPDP standards generally, as well as on the pros and cons of implementation of each specific standard or some combination thereof. 

Reducing administrative burden associated with prior authorization decision timeframes is a key feature of the proposed rule. There are a number of existing policies specifying prior authorization decision deadlines for prescription drugs. State Medicaid, Medicaid managed care, and CHIP managed care plans are currently required to render prior authorization decisions for prescription drugs within 24 hours of receiving a request. Medicare Advantage plans are currently required to make decisions about Part B-covered drugs “as expeditiously as the enrollee’s health requires” but no later than 72 hours after a standard request or 24 hours after an expedited request. These same deadlines currently apply to Part D plans, although plans may request extensions.

For QHPs, the proposed rule would establish decision timeframes for prescription drugs based on the Medicare deadlines. The proposed rule further suggests updating QHP decision deadlines for non-drug items and services to the standard of seven calendar days (routine) or 72 hours (expedited) established in the 2024 final rule. (The 2024 rule currently allows QHPs to follow their existing ERISA-based guidance requiring decisions within 15 days; public comments suggested aligning to the shorter timeline would be feasible.) Finally, the proposed rule requests comment on aligning prior authorization timeframes for instances where drugs and non-drug services are delivered as a bundle.

In the proposed rule, CMS invites comments on a number of granular questions around technical implementation and timelines. Collectively, these questions solicit information about the most pragmatic, least burdensome approach to implementing prompt, standardized electronic prior authorization for prescription drugs. The proposed rule envisions that the medical or pharmacy benefit will be mutually exclusive and requests comment on any instances where drugs are not clearly captured in either category.

The proposed rule also makes several requests for information (RFI), three of which are closely related to the substance of the proposed rule. One RFI concerns oversight of Payer APIs, acknowledging enduring challenges in achieving complete and current coverage details—an issue that resurfaced in public comments on the 2024 final rule. The Payer API RFI requests input on supporting best practices for Payer API implementation and strategies by which CMS could strengthen its oversight. The second RFI focuses on step therapy, a variant of prior authorization wherein patients must attempt first-step treatments as a prerequisite for advancing to treatments on the next step. The step therapy RFI is especially interested in coverage transitions, seeking input on how payer-to-payer information exchange could facilitate information transfer and alleviate patient and clinician administrative burden associated with collecting historical records. The third related RFI requests public comment on current issues and opportunities for improvement around prior authorization for lab tests and durable medical equipment.

Two other RFIs focus on expanding electronic notifications to support care coordination, and opportunities for CMS to increase its engagement in addressing the growing issue of cyberattacks.

Broader Implications

The issue of prior authorization for prescription drugs sits at the intersection of a number of ongoing policy issues. Here, we briefly consider just four of the broader implications of this proposed rule.

First, some members of Congress have been interested in pursuing reforms to prior authorization. The Improving Seniors’ Timely Access to Care Act, introduced on several occasions both predating and postdating the 2024 rule, focuses on reforming prior authorization within Medicare Advantage for “any item or service for which benefits are available under such plan, other than a covered part D drug.” Some of the bill’s provisions, such as those relating to the use of electronic prior authorization and many of its efforts to increase transparency, overlap closely with both the 2024 rule and current proposed rule. Finalizing CMS’s proposed rule may reduce congressional efforts to push this bill forward. But other elements of the bill, such as its efforts to define and create a process for real-time decisions for “routinely approved items and services,” go beyond these regulatory efforts and are likely to continue to be a focus of legislative interest.

Second, the proposed rule represents an important intervention in existing policy debates regarding the need to protect patients’ access to necessary medications while also constraining health care spending. As the proposed rule notes, existing prior authorization requirements—particularly their procedural fragmentation across payers and their opacity—can have the effect of delaying or preventing patient access to necessary care. At the same time, prior authorization has a role to play in ensuring that payers pay only for care that is medically necessary. But particularly in the absence of large-scale efforts to control the costs of prescription drugs (the Inflation Reduction Act’s Medicare Drug Price Negotiation Program representing a significant but relatively narrow exception), insurers’ use—and often overuse—of utilization management tools is one of the main ways our system attempts to constrain spending. If it works as intended, this rule should have the effect of making it easier for patients to access the medications prescribed for them, increasing utilization and overall spending in the process. This is not to say that this increased spending would not be justified or high-value. But it runs counter to many current administration officials’ stated goal to lower health care spending rather than increase it. 

Third and relatedly, the proposed rule aims to provide relief from administrative burden by “reduc[ing] the number and complexity of forms (including paper and electronic forms) and data entry required by patients and providers.” Administrative process improvements are much-needed and long overdue. The proposed rule is pragmatic in its emphasis on leveraging existing infrastructure and workflows related to electronic prior authorization, decision timeframes, and plan reporting obligations. A potentially consequential limitation of the proposed rule (as with the 2024 final rule) is that it ends at the initial coverage decision and largely neglects the appeals process. CMS may expect to receive comments within the framework of the proposed rule aimed at improving the appeals process, including by extending elements of the initial prior authorization request to 1) include the appeals process and 2) differentiate substantive versus procedural denials. 

Fourth and finally, one effect of these proposals would be to increase the technical ability of governmental (and governmentally regulated) payers to determine when drugs are being prescribed for particular indications. That is, although the rule does not require particular payers or plans to implement prior authorization for any specific products, it requires the building of a system that could be used to do so. A payer that sought to limit coverage of a drug for a particular indication, for example, could more easily implement that policy with the API in place.

Conclusion

The 2026 CMS Interoperability Standards and Prior Authorization for Drugs proposed rule aims to improve prior authorization for prescription drugs through process improvements that would establish and require electronic prior authorization, set coverage decision deadlines, and promote transparency through annual reporting metrics. Alleviating administrative burden is an important policy goal in its own right; however, administrative burden associated with prior authorization is in part driven by efforts to contain rising prescription drug costs.

Authors’ Note

Rachel Sachs served as a Senior Advisor in the Department of Health and Human Services Office of the General Counsel from April 2023 to April 2024, at the time one of the rules discussed in the piece was finalized. She had no involvement in that rule.

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