H.R. 3173 would require most Medicare Advantage plans to establish an electronic program for prior authorizations and to report new data to the Secretary that would later be made publicly available. The new data would include a list of services subject to prior authorization as well as data on several metrics specified in the legislation. For example, plans would be required to report the number of service requests that they received and the share of those requests that were denied.
In addition, plans would be required to respond to expedited requests for prior authorization of services within 24 hours and to other requests within seven days. Most provisions of H.R. 3173 would go into effect three years after enactment, but the data reporting requirements would go into effect four years after enactment. For this estimate, CBO assumes that H.R. 3173 will be enacted before the end of calendar year 2022.
Under current law, prior authorization is a utilization management tool that limits coverage to cases that meet the plan’s standards of review. By placing additional requirements on plans that use prior authorization, we expect H.R. 3173 would result in a greater use of services. We expect Medicare Advantage plans would increase their bids to include the cost of these additional services, which would result in higher payments to plans.