Prior authorization is a requirement that a health care provider obtain approval from Medicare to provide a given service. Prior Authorization is about cost-savings, not care. Under Prior Authorization, benefits are only paid if the medical care has been pre-approved by Medicare.
Private, for-profit plans often require Prior Authorization. Medicare Advantage (MA) plans also often require prior authorization to see specialists, get out-of-network care, get non-emergency hospital care, and more. Each MA plan has different requirements, so MA enrollees should contact their plan to ask when/if prior authorization is needed. Medicare Prescription Drug (Part D) Plans very often require prior authorization to obtain coverage for certain drugs. Again, to find out plan-specific rules, contact the plan.
Traditional Medicare, historically, has rarely required prior authorization. Originally, the Social Security Act did not authorize any form of "prior authorization" for Medicare services, but the law has subsequently been changed to allow prior authorization for limited items of Durable Medical Equipment and physicians’ services. Despite this change, there are still very few services requiring Prior Authorization in traditional Medicare.* Enrollees in traditional Medicare Parts A and B can generally see specialists, visit hospitals, get care out of state, and so on, without having to ask Medicare's permission.
Unfortunately, in February of 2016, the Centers for Medicare & Medicaid Services (CMS) published a notice in the Federal Register announcing its effort to seek approval from the Office of Management and Budget (OMB) to “collect information” pursuant to a demonstration project to identify, investigate and prosecute fraud among Medicare home health agencies by requiring prior authorization before processing claims for home health services in several states. CMS is now referring to this proposed process as "Pre-Claim Review."
Such a requirement would harm Medicare beneficiaries in several ways:
- A blanket prior authorization program applied to all home health services would lead to both unnecessary delays and denials of medically necessary care for Medicare beneficiaries who need home health services. Such barriers will affect both those who need home health care on a short-term basis as well as those who have ongoing, chronic care needs.
- Beneficiaries already face almost insurmountable odds when appealing claims denials. Instituting a prior authorization process as an additional barrier before the administrative appeals process even begins will make obtaining coverage even more difficult.
- Such a requirement places tremendous additional pressure on an already over-burdened health care delivery system, creating more bottlenecks from providers’ offices to hospitals to skilled nursing facilities to homes, further slowing urgently needed care to beneficiaries, and allowing beneficiaries’ conditions to worsen in the process.
Ironically, it is unlikely that this proposal would even serve to advance CMS' stated goal to “assist in developing improved procedures for the identification, investigation, and prosecution of Medicare fraud occurring among HHAs providing services to Medicare beneficiaries.” The types of errors leading to improper payment identified by CMS are led by a 90% rate of “insufficient documentation errors” – which is not the type of fraud CMS seeks to combat. Indeed, providers who commit fraud likely do not make documentation errors.
In short, if implemented, this demonstration would undoubtedly negatively impact access to necessary home health care for many Medicare beneficiaries. Requiring prior approval for every prospective home health recipient will effectively delay and deny home health coverage for countless Medicare beneficiaries, often when they are most medically vulnerable.
- CMS Final Rule for Prior Authorization Process for Certain Durable Medical Equipment, Prosthetics, Orthotics, and Supplies (DMEPOS)
- Replacing the Broken Medicare Physician Payment Formula: At What Cost for People with Medicare?
* (1) In the states of AZ, CA, FL, GA, IL, IN, KY, LA, MD, MI, MO, NJ, NY, NC, OH, PA, TN, TX and WA that Prior Authorization is required before getting a Medicare-covered power wheelchair or scooter.
(2) in NJ, PA, SC, MD, DE, DC, NC, VA and WV, you may now be affected by a Medicare demonstration program. Under this demonstration, your ambulance company may send a request for prior authorization to Medicare before your fourth round trip in a 30-day period, so you and the company will know earlier in the process if Medicare is likely to cover your services.