Legal Alert

CMS Encourages Flexibility in Utilization Management and Prior Authorization Within Limits

by the Employee Benefits and Executive Compensation Group
April 23, 2020

The Centers for Medicare & Medicaid Services (CMS) issued FAQ guidance encouraging health insurers to relax their utilization management and prior authorization requirements in view of the COVID-19 pandemic while at the same time cautioning them to act in accordance with existing guidance.

The FFCRA and CARES Act prohibit insurers and group health plans from requiring prior approval for COVID-19 testing and various related services. The new FAQs encourage health insurers to exercise flexibility beyond that to relieve medical staff from administrative burdens faced in processes, such as moving a patient from an acute care hospital to a post-acute setting to allow for faster turnover.  Recognizing that the COVID-19 pandemic may strain the capacity of in-network providers, it encourages health insurers to negotiate rates with out-of-network providers to eliminate balance billing to patients.

While encouraging creative practices by insurers to address these issues, CMS warns that any changes made to prior authorization requirements and utilization management practices must be applied in a non-discriminatory manner. For example, a health insurer may not, by plan design or practice, discriminate on the basis of age, life expectancy, degree of medical dependency, disability, quality of life, or other health conditions. Such decisions need to be clinically based.  Health insurers participating in the Exchanges may not engage in marketing practices or implement benefit designs that have an effect of discouraging enrollment of individuals with significant needs in Qualified Health Plans.


The FAQs do not then impose any new requirements or offer any new relief. They simply aim to spur the health insurance industry to adapt certain of its practices to the current situation, but within the rules that apply.


The attorneys within Ballard Spahr LLP’s Employee Benefits and Executive Compensation practice group can advise insurers on the rapidly evolving laws surrounding the COVID-19 pandemic.


Copyright © 2020 by Ballard Spahr LLP.
www.ballardspahr.com
(No claim to original U.S. government material.)

All rights reserved. No part of this publication may be reproduced, stored in a retrieval system, or transmitted in any form or by any means, including electronic, mechanical, photocopying, recording, or otherwise, without prior written permission of the author and publisher.

This alert is a periodic publication of Ballard Spahr LLP and is intended to notify recipients of new developments in the law. It should not be construed as legal advice or legal opinion on any specific facts or circumstances. The contents are intended for general informational purposes only, and you are urged to consult your own attorney concerning your situation and specific legal questions you have.


Subscribe to Ballard Spahr Mailing Lists

Get the latest significant legal alerts, news, webinars, and insights that affect your industry. 
Subscribe