CMS Unveils Digital Prior Authorization Plan in Nursing Homes, Targeting $15B in Savings

The Centers for Medicare and Medicaid Services (CMS) is adding electronic prior authorization to the Health Tech Ecosystem, bringing electronic health record (EHR) vendors, health systems, hospitals, physician practices and digital health developers to the table with payers.

The idea is to make a unified coalition aligned around making electronic prior authorization work end-to-end on time and for every patient, CMS Administrator Dr. Mehmet Oz shared in a blog post late Tuesday.

And while nursing homes weren’t mentioned specifically, the agency’s end-to-end commitment would imply inclusion of the sector.

“A common practice imposed by health insurers on patients and providers is their intrepid need to second-guess clinician treatment decisions by requiring prior authorizations before paying a claim,” Oz said. “The current prior authorization process creates unnecessary delays for patients, burdens health care providers with excessive paperwork, and erodes trust between payers and health care providers, even though all share the same goal: delivering high-quality patient care.”

Electronic prior authorization interfaces from select payers will go live on Jan. 1, 2027, Oz said, and their use will eventually be added into the Merit-based Incentive Payment System (MIPS) Medicare Promoting Interoperability Program for hospitals.

Nursing home stakeholders, including LeadingAge, are supportive of the initiative, but remain cautious of its real-world impact considering a lack of funding to upgrade EHR tools. It’s also unclear whether post-acute care providers are required to adopt the digital prior authorization tools, nursing home industry advocates note.

However, EHR companies lauded CMS’ move.

Tim Ashe, chief clinical officer for EHR company WellSky, said the agency’s decision to bring electronic prior authorization into its broader Health Tech Ecosystem vision is an important step forward for providers and patients. It sends a powerful signal about where health care innovation is headed.

“Today, prior authorization remains highly manual across much of post-acute care, leading to delays, administrative burden, and unnecessary friction for providers seeking to initiate care quickly,” Ashe said in an email to Skilled Nursing News. “These breakdowns are also a leading driver of costly claim denials.”

The nursing home sector has an opportunity here to streamline workflows and ultimately accelerate access to care for patients, Ashe said.

CMS expects this move to save about $15 billion for patients, providers and payers over the course of 10 years, and eventually expand such reforms to drug prescriptions too, beginning October 2027.

Good goal, but not a clear home run

LeadingAge sees the electronic exchange of information between plans and providers as a good goal, but it’s not a clear home run.

“Providers are not required to use these tools, and it is not clear from CMS communications – including this blog from Administrator Oz – whether post-acute care providers, including skilled nursing, will be able to take advantage of these electronic submissions and in doing so reap the desired result of reduced administrative burden,” said Nicole Fallon, VP of managed care and integrated services for LeadingAge.

And post-acute care providers received no meaningful use dollars to upgrade their technology for health information exchanges. They may not have the tools or platforms needed to engage with the electronic prior authorization tools being developed, Fallon said.

“We have met with CMS leaders to discuss these concerns and provided examples for how to standardize [prior authorization] requests to reduce providers’ burden but have yet to receive a response,” said Fallon. “We do note that Dr. Oz made no mention of post-acute care providers being stakeholders included in this work.”

Fallon has also heard that third parties developing the digital prior authorization tools for MA plans may charge EHR vendors for use, a move that would add costs to the system.

The agency’s announcement comes on the heels of the Medicare Advantage Improvement Act of 2026, which includes provisions to prevent delays and denials of care and increase transparency in prior authorization, among other requirements. Lawmakers introduced the bill with the blessing of the American Health Care Association (AHCA) and LeadingAge.

Stopping workforce gaps through digitization

Working groups across listed stakeholders will address workflow gaps and technical handoffs that no single sector can fix in a vacuum – everyone will work to align on the CMS Interoperability and Prior Authorization Final Rule, he said.

“Prior authorization touches every part of the health care system; now, every part has a seat at the table,” Oz said. The CMS Administrator went on to update the nursing home sector on the agency’s pledge to streamline and improve prior authorizations in order to create a more responsive, patient-centered experience.

CMS has been working with EHR vendors in particular to streamline and digitize the prior authorization process for medical items and services.

“We see this as a pivotal moment,” Ashe said of the initiative. “We have been actively investing in interoperability, automation and AI-driven capabilities to help our clients navigate this transition – not because of a deadline, but because it’s the right thing to do for providers and patients.”

An ecosystem-wide coordination separates this effort from previous attempts at prior authorization reform, Oz noted.

“As hospitals are more directly brought into the prior authorization process, there is a meaningful opportunity to help relieve some of the administrative burden historically placed on post-acute care providers and better align care transitions,” said Ashe.

Automated eligibility and authorization workflows, as well as real-time visibility and intelligent documentation are already part of WellSky’s platform – the EHR company will continue to expand these capabilities to better align with CMS, Ashe said.

“When data flows seamlessly — between a provider’s EHR, the payer’s electronic prior authorization interfaces, and a patient’s health record — the entire system becomes more responsive, more accountable, and more focused on what matters most,” said Oz.

The timeline for prior auth reform

CMS laid out a timeline of prior authorization reform starting in 2022, with Part D sponsors required to support prior authorization using CMS-designated standards, followed by a finalized rule requiring health plans process requests faster starting in 2026.

In June 2025, major insurers pledged to fix the broken prior authorization system. More than 40 providers announced the joint initiative to overhaul and streamline the process, and insurers represented by advocacy group AHIP and the Blue Cross Blue Shield Association signed off on commitments to ease prior authorization processes as well.

The pledge has made a difference. As of April, health plans reduced prior authorizations by 11% across a range of medical services, resulting in 6.5 million fewer requests.

Other insurance plans are in the process of scaling standardized processes, Oz said, and reducing requirements.

“Meaningful change is not only possible—it’s happening. For example, one large national plan is eliminating authorization requirements for 30% of health care services and has committed to removing an additional 30% of remaining requirements by the end of 2026,” Oz said in his blog.

As of Jan. 1, payers across Medicare Advantage, along with Medicaid & Children’s Health Insurance Program (CHIP) and Marketplace, are required to send prior authorization decisions for medical items and services within 72 hours for expedited requests and seven calendar days for standard requests.