NAMD’s Recommendations on CMS’ Prescription Drugs Prior Authorization Interoperability Proposed Rule

This snapshot provides a high-level summary of NAMD’s comments on CMS’ 2026 Interoperability Standards and Prior Authorization for Drugs Proposed Rule. The proposed rule would extend existing federal interoperability requirements to prior authorization for drugs, with the goal of making it easier for providers, pharmacies, plans, and Medicaid agencies to exchange information electronically.

NAMD supports CMS’ goals of improving interoperability, reducing administrative burden, and helping Medicaid members access care more efficiently. Medicaid agencies have already made significant investments to modernize technology systems and improve data exchanges. However, as NAMD’s comments explain: 1) Medicaid agencies need sufficient time to implement the proposed requirements; 2) the policies should allow states and territories to build on existing systems, vendor arrangements, and delivery system structures; and 3) Medicaid programs need technical assistance, operational guidance, and open-source code that they can leverage and reuse. For a more detailed analysis, read NAMD’s full comments here.

Background: Why This Matters

Prior authorization is the process by which providers must receive approval from a payor before certain services or drugs are covered. When prior authorization processes are manual or difficult to navigate, they can create administrative burden for providers and delay care for members. CMS’ proposed rule aims to make prior authorization for drugs more automated and standardized through the adoption of specific technical frameworks. This would require Medicaid agencies and their partners to exchange certain information through standardized data-sharing tools and application programming interfaces (APIs).

For Medicaid agencies, these changes are not just technical updates. Implementation may require changes to Medicaid claims systems, pharmacy benefit systems, managed care contracts, vendor agreements, reporting processes, and staff workflows. States and territories are also implementing earlier federal interoperability requirements while simultaneously managing other major federal and state policy changes that also require IT systems work.

Another challenge for Medicaid agencies is the low uptake and use of prior interoperability efforts. Previous interoperability work and associated API buildout have seen limited use among Medicaid members, providers, and other payors, despite federal requirements and significant Medicaid resource investments. As CMS considers additional requirements, states and territories are eager to understand how existing tools are being used and ensure that new requirements are realistic, phased, and supported by clear federal guidance.

NAMD’s Policy Perspective

NAMD supports CMS’ broader goal of improving how health information moves across the Medicaid program, which can reduce administrative burden, improve care coordination, and support more timely access to services and medications. At the same time, implementing the proposed rule will require significant operational work, including updates to vendor contracts, coordination with managed care organizations (MCOs) and pharmacy benefit managers (PBMs), system modifications, and testing of new data exchange processes. NAMD encourages CMS to take a practical implementation approach that prioritizes core functionality first, gives states time to build on lessons learned from existing interoperability requirements, and provides shared and open-source tools and technical assistance to reduce duplicative state-by-state work.

Key Concerns and Recommendations

Medicaid Agencies Need Sufficient Time for Implementation

CMS suggests that states may not need as much time to implement this rule because agencies have already begun building similar data-sharing tools under existing interoperability requirements. However, Medicaid agencies report that this new proposed rule would still require substantial work across multiple vendors and IT systems.

States and territories may need to update contracts with MCOs, PBMs, fiscal agents, and other vendors. They may also need to complete procurement processes, modify systems, test new data standards, and train staff. Taken together, these steps can lengthen overall implementation timelines, particularly for agencies that are already managing other major federal and state system changes, like implementing community engagement requirements. Medicaid agencies are also working to implement existing interoperability requirements and would benefit from additional time to evaluate lessons learned from those efforts before applying similar requirements to drug prior authorization.

NAMD recommends that CMS take a phased implementation approach that gives Medicaid agencies sufficient time to implement the proposed requirements. Specifically, CMS should extend the implementation timeline by at least three years, prioritize core functionality before requiring more advanced reporting, and provide enhanced federal systems funding to support implementation. This additional time would allow agencies to build on existing work, make adjustments before layering on new requirements, and evaluate lessons learned from prior interoperability efforts before applying similar requirements to drug prior authorization.

CMS Should Allow States to Build on Existing Systems and Vendor Arrangements

Medicaid programs vary significantly in how they administer pharmacy benefits, contract with MCOs, and use vendors to support prior authorization. Because of this variation, a single technical pathway may not work for every state or territory.

NAMD recommends that CMS allow states and territories to meet the rule’s goals through flexible implementation approaches. For example, CMS could allow existing health information networks or vendor-supported data exchange tools to satisfy federal requirements. This would help Medicaid agencies understand whether they can build on existing connections and vendor infrastructure rather than creating duplicative systems. CMS should also clarify whether MCOs must build their own prior authorization data-sharing tools or whether states can use a consolidated reporting approach through the state Medicaid system. Without clear guidance, Medicaid agencies may face uncertainty in how to structure contracts and reporting responsibilities across state systems, managed care plans, pharmacy benefit managers, and other vendors.

Medicaid agencies also raised concerns about vendor capacity, particularly in the PBM market. Smaller states and territories may face challenges securing vendor support to implement the changes within required federal timelines. NAMD recommends that CMS consider an exemption or extension process that accounts for both vendor availability and state readiness.

Federal Requirements for Business Timeframes Should Account for Medicaid Operations

The proposed rule includes short timeframes for exchanging certain prior authorization information. Medicaid agencies support timely data exchange, but some proposed timeframes may not reflect how current Medicaid systems and vendor processes operate.

For example, many state systems and pharmacy vendors rely on overnight or batch data processing. Requests received late in the day, on weekends, or near holidays may be difficult to process within a strict 24-hour or one-business-day timeframe. Medicaid agencies also raised concerns about prior authorization decision-making timeframes for drugs that require additional clinical information. Some drug prior authorization decisions, particularly for complex therapies administered in clinics or outpatient hospital settings, may require more clinical review than a standard prescription drug authorization. If timelines are too compressed, this could unintentionally increase denials or create additional administrative burden when more information is needed to make an accurate coverage determination.

NAMD recommends that CMS adopt more flexible business-day standards where appropriate and ensure that timeframes support both timely access to care and accurate clinical decision-making.

CMS Should Provide Practical Technical Assistance and Shared Open-Source Tools

Medicaid agencies emphasized the need for clear, practical implementation support from CMS. This includes guidance on technical standards, vendor readiness, workforce training, managed care reporting, and compliance expectations.

NAMD recommends that CMS work directly with vendors, support training on interoperability standards, facilitate cross-state learning, and issue implementation guidance well in advance of compliance deadlines. Medicaid agencies also recommend that CMS analyze the uptake of existing interoperability tools before adding new requirements. Understanding whether current APIs are being used as intended would help CMS and states make more informed decisions about future technology investments. In addition, CMS should consider developing shared, open-source tools or reference models that states and territories can adapt. This would reduce the need for each Medicaid agency to build similar technology independently, support more consistent implementation across states and territories, and use taxpayer resources more efficiently.

Moving Forward

NAMD appreciates CMS’ continued focus on improving interoperability and streamlining prior authorization. Medicaid agencies share CMS’ goal of reducing administrative burden and improving timely access to care for Medicaid members. As the rule is finalized, NAMD encourages CMS to adopt a phased and flexible approach that reflects the operational realities of Medicaid programs. With sufficient time, clear guidance, technical flexibility, and open-source resources, Medicaid agencies will be best positioned to advance CMS’ interoperability goals while maintaining stable program operations and access to care.