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GAO: Medicare DME Prior Authorization Programs are Effective

A new analysis from GAO found that CMS’s prior authorization programs for durable medical equipment (DME) created an estimated $1.9 billion in Medicare savings.

Prior authorization programs helped lower Medicare spending.

Source: Thinkstock

By Thomas Beaton

- CMS’s prior authorization programs for durable medical equipment (DME) and mobility devices created between $1.1 and $1.9 billion in Medicare savings from 2012 to 2017 by controlling unnecessary spending, according to a new Government Accountability Office (GAO) report.

The findings indicate that prior authorization initiatives can be beneficial for payers that need to limit healthcare spending or combat healthcare fraud.

Providers also responded positively to CMS programs due to the fact that prior authorizations ensured providers received complete reimbursement for DME services, illustrating that these strategies can be beneficial for multiple stakeholders.

By 2016, CMS had fully implemented proposed prior authorization programs for DME, non-emergency ambulance services, non-emergency oxygen therapy, and home health services. CMS also implemented a permanent Durable Medical Equipment, Prosthetics/Orthotics & Supplies (DMEPOS) prior authorization program.

After the programs began, GAO found that some states experienced a decrease in DME expenditures that totalled between 17 and 74 percent. Total DME and related healthcare spending would have increased by $2.1 billion without prior authorization programs.

Provider and enrollment screening programs also contributed to savings, creating an estimated $2.1 billion savings opportunity by removing unqualified or inappropriate providers from Medicare participation. CMS also conducted provider education and outreach programs about the DMEPOS competitive bidding program, and attributed savings to these educational efforts.  

Medicare providers experienced a mix of benefits and challenges related to prior authorization programs and accurate financial reimbursements, GAO said.

Providers said that prior authorization programs help them understand which devices and services require additional documentation requirements. In addition, provider groups told GAO that prior authorization deters healthcare fraud and abuse within Medicare programs. Providers generally agreed that CMS should expand prior authorization programs.

However, GAO found that providers sometimes experienced regulatory and administrative burdens with prior authorization programs.

Many providers were unsure if certain beneficiaries with life-threatening conditions required a prior authorization request. This led CMS to eliminate many of its prior authorization requirements over a five-year period.

Providers also experienced long wait times and cumbersome documentation process with prior authorization programs.

“For example, some of these officials told us that providers and suppliers may spend 3 to 7 weeks obtaining necessary documentation from referring physicians and other relevant parties before submitting a prior authorization request,” GAO said.

“While CMS’s documentation requirements did not change under prior authorization, officials from a provider and supplier group we spoke with said that prior authorization exacerbates existing documentation challenges because they must obtain all required documentation before providing items and services to beneficiaries.”

GAO proposed that CMS should continue prior authorization programs throughout 2018 and that the agency should not terminate prior authorization protocols.

Provider concerns with prior authorization challenges lead CMS to end many programs at the beginning or end of 2018, even though prior authorization created financial protections for providers.

The non-emergency oxygen tank prior authorization program ended in February 2018. The power mobility device program will end in August 2018 and the non-emergency ambulance services demonstration ends in November 2018.

The home health services program is in limbo since CMS put the program on hold during April 2017 without a plan to resume it. Only the DMEPOS prior authorization program will expand into next year, according to CMS.

GAO believes that CMS will be unable to manage excessive Medicare spending, reduce healthcare fraud, and help compliant providers secure Medicare reimbursement.

The agency recommended that CMS should reimplement previous prior authorization programs and extend current demonstrations for longer durations. GAO also encouraged CMS to identify new opportunities to incorporate prior authorization for healthcare services at risk for unnecessary utilization and improper payments.


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