In April, we covered the first wave of public payer PA data and Gartner defining intelligent PA as a market category. A lot has happened since then. CMS proposed extending electronic prior authorization to drugs for the first time, roughly 50 health plans committed to standardized electronic PA submissions by January 2027, and we're starting to see major payers rethink their utilization management operating models. Several states also passed new laws restricting how AI can be used in coverage decisions. The comment period for the CMS drug PA rule closes June 15.
"The prior authorization landscape is moving fast right now. CMS-0062-P brings drug PA into the interoperability framework for the first time, and the requirements are substantial. Shorter decision windows, FHIR-based standards, centralized API reporting. For health plans, the window to prepare is narrowing. For us, it reinforces everything we've been building toward."
— Daniel Friedman, CEO, Ethermed
CMS-0062-P: Drug PA Gets a Deadline and a New Standard
This is the most significant PA rulemaking since CMS-0057-F.
When CMS finalized 0057, it only covered non-drug items and services, which left a gap that everyone in the industry expected would be addressed. Drug PA has been the single biggest source of delay and administrative burden in the system. CMS-0062-P brings it under the same interoperability framework by requiring electronic PA for all drugs that need prior authorization and proposing HL7 FHIR as the HIPAA standard for PA transactions, replacing the legacy X12N 278 EDI format. Required implementation guides include Da Vinci CRD 2.2.1, DTR 2.2.0, and PAS 2.2.1, with older IG versions expiring January 1, 2028. For pharmacy benefit drugs, the rule adopts NCPDP SCRIPT, Formulary & Benefit, and Real-Time Prescription Benefit standards with a proposed compliance date of October 1, 2027.
The timeline compression is significant. Standard requests would need to be resolved within 72 hours, down from 14 days. Expedited requests within 24 hours, down from 72. Organizations still running manual PA workflows with handoff delays and rework loops will have a hard time meeting those windows consistently.
CMS is also proposing a centralized API endpoint registry where payers would report their FHIR API endpoints and technical documentation, giving developers and vendors a single place to find and connect with payer systems.
The comment period closes June 15, 2026.
50 Health Plans Commit to Standardized PA by 2027
AHIP announced that roughly 50 health plans will adopt standardized electronic PA submissions for most medical services by January 1, 2027. The initial focus is orthopedic surgeries and advanced imaging across commercial, MA, and Medicaid managed care, with a target of 80% of electronic PA approvals answered in real time by 2027. The participating list includes most of the major national and regional plans.
This builds on earlier voluntary commitments that already reduced PA volume by 11% overall and 15% in Medicare Advantage. It's also happening at the same time CMS-0062-P is making much of this mandatory for government programs. Voluntary industry action and regulatory mandates converging on the same outcome at the same time is unusual, and it gives a pretty clear signal about where the market is heading.
The question for health plans at this point is less about whether to modernize and more about whether they can realistically get there by January 2027.
Payers Are Rethinking UM Operating Models
One of the larger developments this month was a major national payer announcing a strategic review of its utilization management subsidiary, with options including partnerships, a sale, or restructuring. The stated reasoning was notable: the payer pointed to industry progress on standardizing and automating PA services as a contributing factor.
As PA becomes more automated and the infrastructure around it changes, the economics of outsourced utilization management shift as well. When large payers start questioning whether their traditional UM operations fit their long-term plans, it suggests the industry is moving toward a different model for how PA decisions get made and managed. For health plans evaluating their own UM infrastructure, this is a trend worth watching closely.
States Continue Expanding AI Oversight in PA
Washington passed SB 5395, which bars insurers from using AI as the sole basis to deny, delay, or modify care. The law requires licensed clinicians to review AI-influenced denials, mandates transparency about who oversees those determinations, and requires EHR-integrated PA processes by 2027. Virginia, North Dakota, Nebraska, and Alaska also implemented new PA laws this year with varying requirements around timelines, approval durations, and AI constraints.
It's worth noting that these laws don't restrict the use of AI in prior authorization. They restrict AI-only decisions made without clinical oversight. PA automation platforms designed with clinician-in-the-loop review and transparent audit trails already operate within these requirements.
Manatt's policy tracker now counts more than 240 AI-related health care bills across 43 states in 2026. The White House's national AI policy framework proposed federal preemption of state AI laws, but until that gets resolved, the state-by-state patchwork is what organizations actually have to build for. PA automation operating across multiple states needs to accommodate different rules by jurisdiction.
On the federal side, a U.S. Senator called on RFK Jr. to revise the administration's AI prior authorization program, citing concerns about automated denials and patient harm. Combined with the EFF lawsuit we covered last month targeting CMS's WISeR pilot, there's increasing political attention on how AI is being used in coverage decisions from both legislative and advocacy directions.
Interoperability Updates
WEDI launched a CMS-0057-F Testing Directory to help payers, providers, and vendors coordinate FHIR API testing ahead of the January 2027 deadline. The directory is industry-submitted and continuously updated. If you're working on PA API readiness, getting listed is a practical way to connect with testing partners.
The Sequoia Project's Payer Workgroup also published a readiness checklist for the payer-to-payer FHIR API mandate, covering regulatory, operational, and business requirements for compliant member data exchange. Both resources are worth bookmarking if your team is working toward CMS-0057-F compliance.
Closing Thought
Between CMS-0062-P, the AHIP standardization commitment, payers rethinking their UM models, and the continued expansion of state AI laws, May was one of the more consequential months we've covered. The common thread across all of it is that prior authorization infrastructure is being actively rebuilt, and the timelines for compliance are getting shorter.
At Ethermed, we've been building for exactly this kind of environment. If your team is working through what any of these changes mean for your operations, we're always happy to talk.
