Prior Authorization Compliance 2026: Are You Ready?

For years, healthcare providers and patients have criticized the Prior Authorization process for causing unnecessary delays in care. However, upcoming regulatory changes are poised to address some of these concerns, benefitting patients but facing Medicare, ACA, and insurers of any government-backed programs into a pressured situation.

With new rules introduced by the Centers for Medicare & Medicaid Services (CMS) taking effect in 2026, insurers will face more stringent requirements, including shorter decision timelines and increased transparency. This will fundamentally reshape how healthcare insurers, claims adjusters, and TPAs operate, demanding a new approach to handling prior authorizations. While the goal of many physicians

Here’s a closer look at how these changes will impact the industry.

Shortened Timelines for Prior Authorization

One of the most anticipated changes from CMS is the shortened timeframe for prior authorization decisions. By 2026, payers will be required to approve or deny urgent prior authorization requests within 72 hours and standard requests within seven calendar days. This will help reduce delays in care, something that physicians and patients have been demanding for years.

For insurers, claims adjusters, and TPAs, this shortened window represents a significant operational shift. Current PA processes often involve multiple layers of review, communication between providers and payers, and back-and-forth negotiations. Compressing these steps into a shorter timeframe will require a more streamlined, efficient system.

However, this comes with both benefits and risks:

Efficiency Gains: Insurers who invest in technology to automate parts of the prior authorization process will benefit from increased operational efficiency. AI and machine learning can help by flagging routine requests for quick approvals and routing more complex cases to human reviewers.

Increased Errors: On the flip side, rushing decisions could lead to more errors in denials or approvals. Adjusters and TPAs may find themselves navigating an uptick in appeals or disputes if decisions are not thoroughly vetted.

Ultimately, insurers and TPAs will need to invest in both technological upgrades and staff training to meet the new deadlines without sacrificing quality.

PA Transparency and Public Reporting

Another critical aspect of the CMS changes is the public reporting requirement. Insurers will now have to disclose specific metrics, such as:

1. How long does it take to approve or deny requests?
2. The percentage of requests that are approved versus denied.
3. The average time to resolve requests.

This information will be made available to patients, which will greatly impact insurers’ reputations and patient choice. Patients will have access to transparency on the insurers’ performance and may choose their healthcare plans based on these metrics.

This introduces an entirely new level of accountability. No longer will inefficient or slow-moving prior authorization processes be hidden from view; they will be under a microscope for patients, physicians, and even regulators to scrutinize.

Reputational Risk: A pattern of excessive delays or denials could hurt an insurer’s public image and, ultimately, lead to a loss of clients. This could affect insurers’ bottom lines, as customers seek out companies with faster, more efficient PA systems.

Incentive to Improve: On the flip side, this transparency offers insurers a chance to differentiate themselves from competitors. Those who excel at meeting the new standards will likely see an uptick in clients who value fast, reliable service.

TPAs, often tasked with processing PAs for multiple insurers, will need to ensure they meet each client’s specific needs while also adhering to these new standards of transparency.

Financial Penalties for Not Meeting Prior Authorization Rules

Perhaps the most impactful element of the CMS rule is the possibility of monetary penalties and sanctions for non-compliance. This is a clear indication that CMS is serious about enforcing these changes, and insurers can no longer afford to ignore the inefficiencies in their PA processes.

Historically, prior authorizations have been criticized for causing delays that sometimes result in adverse health outcomes—even disability or death—due to lack of timely care. With financial penalties on the line, insurers will now face direct consequences for delays or improper denials that lead to such outcomes.

Increased Scrutiny on Denials: Claims adjusters, who play a crucial role in determining approvals or denials, will need to adopt more rigorous processes to ensure that denials are both justified and thoroughly documented. This will require updated training and possibly new internal review protocols.

Risk of Lawsuits: Insurers who fail to comply with the new rules may also find themselves at greater risk for legal action from patients who feel they were unfairly denied care.

The public reporting of metrics will make it easier for patients to build cases against insurers that show patterns of improper denials.

The stakes are higher now, and insurers must ensure their PA processes are airtight to avoid costly sanctions and legal repercussions.

Voluntary Efforts by Private Insurers

While these CMS changes primarily affect Medicare, Medicaid, and federally regulated health plans, private insurers are beginning to respond to the pressure. Companies like Cigna and UnitedHealthcare are already outlining their own voluntary efforts to streamline prior authorizations, reduce delays, and ease the burden on physicians.

By taking proactive measures, these insurers are signaling that they understand the importance of improving their PA processes, even without the direct regulatory push. For TPAs and claims adjusters, this means that change is not just coming from the government—it’s also being driven by the market.

Competitive Advantage: Insurers that lead the way in PA reform will likely gain a competitive edge over those who lag behind. Claims adjusters and TPAs working with progressive insurers will need to adapt quickly to new processes and technologies that facilitate faster decisions.

Less Administrative Burden: As private insurers streamline their PA processes, TPAs may experience reduced workloads, especially if more requests can be approved automatically or with minimal review.

The voluntary actions of major insurers show that the industry is moving toward reform, and those who adapt early will benefit most.

Prior Authorization Reforms and State-Level Changes

Beyond the CMS regulations, there is growing momentum for further reforms. Efforts are underway to extend these changes to drug prior authorizations, and legislation at the national level continues to push for improved access to care for seniors.

At the state level, over 17 states have already adopted comprehensive PA reforms, often serving as models for federal changes.

For insurers, this means that the regulatory environment will continue to evolve. Staying agile and adaptable will be essential for success. TPAs and claims adjusters must keep a close eye on legislative developments to ensure they remain compliant with both federal and state regulations.

How Is This a Positive Change for Insurers?

Many private insurers are starting to implement faster prior authorization (PA) times. By providing timely care, they can help prevent emergency room visits caused by untreated pain and lengthy authorization processes for urgent matters. This approach will ultimately help insurers avoid the mistake of being “penny wise, pound foolish.”

Due to the new accountability, the hope is that lawsuits from patients who were left incapacitated or even died due to the PA process will decrease because of these new improvements.

The pressure is on—but for those who embrace change, there’s a significant opportunity to lead the way in a more efficient, patient-centered healthcare system.

Check out some of our sources:

https://fixpriorauth.org/

Feds Move to Rein In Prior Authorization, a System That Harms and Frustrates Patients