As you and your doctor talk about a treatment plan for the medical issue you came to discuss your assumption is that there are only the two of you in the examination room. But alas, that’s not true. Because within every treatment plan that involves some form of diagnostic testing there lies a little thing called prior authorization.
Although your doctor feels these tests are appropriate for your treatment, they must first get prior authorization from your health insurance company before you can go and get them done. That involves filling out countless forms and having someone review your doctors’ findings and either agree or disagree with your treatment plan.
If they agree, then you receive authorization for the treatment or services. If they disagree your treatment plan is back to square one.
The following are all the reasons why CMS says they need a prior authorization program:
— Prior authorization allows health plans to review requests for certain services or medications to determine if they are medically necessary and appropriate for the patient’s condition.
— By requiring prior authorization, plans can potentially avoid paying for unnecessary or expensive procedures and medications, especially when lower-cost alternatives are available.
— Prior authorization can help identify and prevent fraudulent claims or overuse of certain services, such as durable medical equipment and home health care, which have been areas where fraud has been detected.
— Prior authorization can help ensure that medications are used appropriately and in accordance with established clinical guidelines, especially for drugs with serious risks or potential for misuse.
They go on to say, “The Centers for Medicare & Medicaid Services (CMS) is committed to being a responsible steward of public funds and to promoting the sustainability of its programs for future generations.”
But are they really “responsible steward of public funds” as they claim. Let’s take a look.
Original Medicare (Parts A & B) has very limited prior authorization requirements. Medicare Advantage plans and Part D prescription drug plans often use prior authorizations more frequently.
Under Original Medicare if a claim is deemed medically necessary by CMS eighty percent of the bill is automatically paid to your provider and the other twenty percent either comes out of your pocket or from your Medicare supplemental (Medigap) policy. With Medicare Advantage the claim bypasses CMS and if deemed medically necessary by your insurance carrier it is paid by them to your provider.
One Medicare supplemental structure seems to be more susceptible then the other to fraud or abuse. CMS has set up programs to monitor and try to control waste, fraud and abuse of our tax dollars.
CMS calls them “improper” payments and they are payments that do not meet the CMS program requirements. They can be overpayments, underpayments, or payments where insufficient information was provided to determine whether a payment was proper. Most improper payments involve a state, contractor, or provider missing an administrative step.
On the CMS fact sheet for fiscal year 2024 the breakdown was as follows:
— The Medicare Fee-for-Service (FFS) estimated improper payment rate was 7.66%, or $31.70 billion.
— The Medicare Part C estimated improper payment rate was 5.61%, or $19.07 billion.
— The Medicare Part D estimated improper payment rate was 3.70%, or $3.58 billion
For those who don’t have a calculator, I did the math. In fiscal year 2024 CMS made improper payments of $54.35 billion dollars. Based on the numbers above it’s obvious that when you have someone guarding the hen house you don’t loss so many eggs. Statistics show that Medicare Advantage Plans have better health outcomes and now we see better economic outcomes as well.
No doctor likes getting second guessed. No patient wants a delay in treatment. But when you look at the economics of care prior authorizations are the first line of defense designed to promote healthier outcomes.
Here are the dates for my Medicare 101 classes being held at the Traverse District Library: Wednesday, April 23; Thursday, May 29; Wednesday, June 25; Thursday, July 24; Wednesday, August 27. If you are 64 or going on Medicare for the first time (i.e. retirement) this seminar is for you. Call to sign up for the date that works for you.