There were two major announcements recently regarding prior approval of treatments and services for Medicare beneficiaries.
In most medical insurance, many treatments won’t be covered unless it is approved first by the insurer. It’s been a source of controversy for some time.
Original Medicare hasn’t required prior authorization of treatments and services, with a few exceptions. For most care, providers and the patient agree on a treatment. After the treatment, paperwork for approval and payment is submitted to Medicare.
Medicare recently announced a new model program that will test pre-approval.
The voluntary model program will test pre-approval for some services and treatments, according to a recent announcement from the Center for Innovation of the Centers for Medicare and Medicaid Services.
The model program is seeking medical providers to volunteer for the program from Jan. 1, 2026 through Dec. 31, 2031. The model will be restricted to New Jersey, Ohio, Oklahoma, Texas, Arizona, and Washington.
Providers who volunteer and are accepted will agree to seek prior authorization for 17 items and services, including skin substitutes, deep brain stimulation for Parkinson’s Disease, impotence treatment, and arthroscopy for knee osteoarthritis.
A provider who volunteers for the program can choose not to seek prior approval for a case. There will be a post-treatment review of the case, and the provider will risk not being paid by Medicare for the treatment.
CMS initiated the program and selected the services to be covered because of a series of reports showing waste, fraud or abuse in certain areas. For example, Medicare spent up to $5.8 billion in 2022 on unnecessary or inappropriate services that had no clinical benefit, according to the Medicare Payment Advisory Commission.
Under the model, providers will submit the same information they currently submit for payment approval after a service is provided to a beneficiary. The difference is that under the model, the information will be submitted earlier and the provider will wait for approval before performing the services.
CMS will select companies to receive and review the prior authorizations. It expects that they will use artificial intelligence and other tools in addition to medical professionals to review the submissions.
The companies will be paid based on the extent to which they saved the government money by stopping unnecessary services.
CMS said it will manage the program to avoid adverse impact on beneficiaries and providers.
There was other news about pre-approval, this time involving Medicare Advantage plans. Pre-approval in Medicare Advantage plans has been controversial recently.
There have been a number of recent reports and studies that found the authorization process was delaying treatment or causing patients to abandon treatment plans. Other reports indicated that a high percentage of treatments that initially were denied coverage eventually were approved if the patients or their providers appealed the decisions.
More than 50 major insurers who sponsor many types of insurance plans announced that they will voluntarily streamline prior authorization of treatments and services in all insurance markets, including Medicare Advantage plans.
The insurers say they plan to have the new process in place by Jan. 1, 2027.
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