The Future of Prior Auth: What Healthcare Leaders Need to Prepare For in 2026

A conversation with Sandeep (Sandy) Gupta, Co-Founder and COO, Innovaccer

By January 1, 2026, US healthcare will face its most significant operational shift in decades. The CMS Interoperability and Prior Authorization Final Rule cuts decision timeframes in half and sets the stage for full API-based automation by 2027, affecting more than 275 million Americans across Medicare Advantage, Medicaid, and marketplace plans. 

For health systems already spending 35 billion dollars each year on prior authorization, the pressure to modernize has never been higher.

We sat down with Sandy Gupta, Co-Founder and COO of Innovaccer, to discuss what these changes mean for health system leaders, why the 2026 deadline is both a challenge and an opportunity, and how organizations can prepare strategically with technology like Flow Prior Auth, Innovaccer’s AI-powered prior authorization solution.

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Q: Sandy, why is 2026 such a pivotal year for prior authorization and for healthcare operations in general?

Sandy:

If you look at what’s coming in 2026, it’s not just another policy change. It’s a real shift in how the system operates day to day. For the first time, payers will have to respond to standard prior authorization requests in seven days instead of fourteen, and those metrics will be made public by March 2026. That’s a big deal because it puts transparency front and center.

For years, prior authorization has lived in the background: painful, slow, but tolerated. Now, it’s becoming something patients, providers, and even boards will see and measure. That visibility changes behavior.

What makes this even more significant is what follows. By 2027, every payer has to support FHIR-based APIs so data can actually move between systems in real time. That’s when interoperability stops being an idea and starts being an operational requirement.

So, yes, it’s a compliance deadline. But it’s also a forcing function. It’s going to push every health system to rethink how information moves, how decisions get made, and how fast care gets delivered.

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Q: The scale of administrative cost and burden is staggering. What are you hearing from CFOs and operations leaders about the real pain points?

Sandy:

They are exhausted by the friction. Most of the systems we talk to manage 30 to 300 locations, and every site has its own mix of payers and processes. It’s a constant drain.

A lot of CFOs tell me the same thing: “We’re spending so much time on work that doesn’t move the needle.” The average physician is handling close to 40 prior auth requests a week. That’s roughly 13 hours of staff time just pushing paperwork.

But what really worries them isn’t the money. It’s what that time replaces. Every minute spent chasing approvals is a minute not spent seeing patients, optimizing capacity, or improving care quality. That is where operational leaders and CFOs are aligned. They know the manual model just won’t scale into the new regulatory era.

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Q: There’s a lot of talk about automation solving this problem, but adoption has been slow. Why do you think that is?

Sandy:

Because healthcare moves at the speed of trust. A lot of organizations have been burned by promises of “plug-and-play” technology that didn’t integrate well or ended up disrupting workflows.

Integration anxiety is the number one reason health systems hesitate. They ask, “Will this actually work with our EHR, or will it create more work for my team?” And that’s a fair question.

The technology has finally caught up. Automation can now fit into existing systems instead of replacing them. We’re now at a point where automation doesn’t have to mean replacing systems. It means connecting them intelligently.

That’s exactly what we’ve built with Flow by Innovaccer. It works with leading EHRs like Epic, Cerner, and Athenahealth, and connects with more than 30 payers through APIs.

It bridges the old and the new, because the truth is, full electronic adoption won’t happen overnight. But while that transition happens, the things that matter most like patients, quality, and growth cannot be allowed to slip through the cracks.

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Q: What are the biggest mistakes organizations make when approaching prior authorization modernization?

Sandy:

The first is treating it like a compliance task. Meeting the seven-day rule is the starting point, not the finish line. The real goal is to simplify operations, reduce denials, and free up staff time.

The second is underestimating change management. This isn’t just a tech rollout. It touches every part of the organization, so IT, clinical ops, and revenue cycle all need to move together.

And finally, many start too late. 2026 sounds far off, but building readiness takes time. The smart ones are already piloting in a few high-volume areas, proving ROI, and then scaling across sites.

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Q: Speaking of ROI, what kind of financial and operational outcomes are early adopters seeing?

Sandy:

The results are impressive. Across the board, AI-powered prior authorization is cutting administrative costs by nearly half and reducing clinician time by 50 percent. Some systems are seeing five times ROI in the first year. That’s a remarkable shift.

With Flow Auth, our partners have seen denials drop by nearly a third, staff productivity double, and near real-time approvals for common procedures. 

Every faster authorization means a patient seen sooner and a smoother path to financial stability. These examples show how quickly automation can start paying back when it’s done right.

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Q: Beyond compliance and cost, what is the larger opportunity you see for health systems post-2026?

Sandy:

The bigger story here is about restoring balance. It’s about taking the administrative drag off clinicians so they can focus on care again. When nearly every physician says prior authorization delays care, and a third have seen it lead to serious complications, you know the system needs fixing.

I think we need to start viewing automation as the friction remover. Once healthcare organizations unify data and implement intelligent workflows, information will start to move seamlessly across the system. That is what sets the stage for a more unified and responsive healthcare ecosystem.

If we do this right, prior authorization will move faster and bring us closer to the kind of healthcare everyone wants to build: efficient, collaborative, and human at its core.

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Q: If you had one piece of advice for healthcare leaders right now, what would it be?

Sandy:

Don’t wait for clarity. Start with readiness. Build your roadmap now. Align your teams, evaluate your EHR and API readiness, define your baseline metrics for reporting, and find a technology partner who can help you move fast without creating disruption.

The 2026 deadline will arrive either way. The difference will be what you do with it. For those who start now, this is a rare chance to transform, not just comply.

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Closing Thoughts

The transformation ahead is about reimagining how data, people, and processes connect to create faster, fairer, and more transparent care.

Flow Prior Authorization helps health systems make that shift today: building readiness and resilience for what’s next.

See how Flow Auth can help your organization prepare for January 2026 → Request a demo