Wednesday, July 29, 2026

The CMS electronic prior authorization standard finalized under the Interoperability and Prior Authorization final rule becomes mandatory for all impacted payers starting January 1, 2027. This requires Medicare Advantage, Medicaid, CHIP, and Qualified Health Plan issuers on the federally-facilitated exchanges to implement a new standardized transaction for prior authorization requests, decisions, and patient data exchange. The rule aims to reduce provider burden and speed determinations, but implementation will require workflow and software updates. Practices must verify their practice management or clearinghouse vendors are ready for the transaction switch before the deadline. Test with your major payers in Q4 2026.

A new bipartisan bill introduced in Congress aims to establish "sensible guardrails" on the use of artificial intelligence to make coverage denials in Medicare Advantage plans. The legislation responds to watchdog reports and Senate investigations finding MA plans using algorithms to deny post-acute and rehabilitation care at high rates. The bill would require transparency on the AI tools used, mandate human clinical review of algorithm-based denials, and prohibit automatic denials based solely on an AI prediction. While not yet law, the proposal signals growing federal scrutiny of automated MA denials. Monitor the bill's progress as the Senate Finance Committee continues its MA denial probe.

Idaho's Medicaid work requirement program will launch in January 2027, requiring 80 hours per month of work, job training, or community service for an estimated 80,000 adult enrollees. The state claims most beneficiaries already comply and projects only a 5-8% coverage loss. However, the "medically frail" exemption process remains ambiguous, creating risk for practices with vulnerable patient panels. Monitor state guidance on exemption documentation as 2027 approaches. The program is part of a broader Trump administration push; a separate federal Medicaid work rule takes effect July 29, 2026, while a federal judge considers a pause.

A new Trump administration rule allowing states to impose work requirements on Medicaid recipients takes legal effect on July 29, 2026. The rule faces immediate legal challenges, with a federal judge currently considering a nationwide injunction to pause enforcement. This rule creates a framework for states like Idaho to implement programs, potentially leading to coverage churn and increased patient eligibility checks. Practices in states that have signaled interest should track their governor's and Medicaid agency's statements for adoption timelines. The legal battle will determine whether this policy stays on the books.

CMS's proposed CY 2027 Hospital Outpatient Prospective Payment System rule includes significant payment reductions for drugs purchased under the 340B program. The agency seeks to further lower reimbursement for 340B-acquired drugs from average sales price plus 6% to ASP minus 22.5%, expanding cuts previously applied only to excepted hospitals. This follows ongoing litigation over prior 340B payment reductions. If finalized, the cuts would reduce revenue for many hospitals and affiliated outpatient clinics that rely on 340B savings to fund charity care. The proposal is likely to face legal challenge from hospital groups. The comment period will be critical for hospitals to oppose the cuts.