3 Dec 20212 Comments
No doubt about it, baby boomers (65 and older) and seniors are shifting from Traditional (original) Medicare to Medicare Advantage Plans, which is coverage offered through private health insurance companies that manage costs, protocols, and services in accordance with Medicare regulations.
In Traditional Medicare, providers are paid a set rate for each service they provide to their Medicare patients. With Advantage plans (MAPs), Medicare sends insurance companies a per capita amount for each of their enrollees. Companies by law can only spend 15%–20% of their budgets on admin costs (overhead, salaries and profit), and they’re known to use prior authorizations as a way to manage their expenditures.
Services that require prior authorizations are hospitalizations, therapy, and complicated diagnostic tests. Prior authorization is used most frequently, though, for durable medical equipment, skilled nursing facility stays and Part B drugs. The standard approval time is two weeks, but some services, like those you get in emergency situations, don’t require any prior authorization and others can go through “expedited” approvals.
To be sure, prior authorizations are used to evaluate medical necessity and deter inappropriate procedures and medications. The literature says it’s a management technique to make sure patients receive optimal care based on efficacy and safety (for example, to protect them from medications and services interfering with other medications and services) or that a clinician has the appropriate training to give them the care they need. Prior authorizations also ensure that counseling and similar support services are being offered when they’re called for, or that care coordination gets triggered at the right time.
In addition to federal and state laws, local practices also govern the criteria for determining medical necessity and whether a MAP will authorize a requested service. In theory, approvals can only be given to prevent, evaluate, diagnose, or treat an illness, injury, or disease. They are supposed to be consistent with generally accepted standards of medical practice (peer-reviewed scientific evidence, for example) and clinically appropriate as to type, frequency, duration, and the like.
Traditional Medicare also reviews cases for medical necessity, but the evaluation is made after the service has been provided. When payment is denied at this later stage, the patient can be responsible for the entire cost. In the case of MAPs, however, patients will always know beforehand whether a service they’re asking for will be covered.
Clearly, Medicare enrollees need to be aware of how prior authorizations work, especially in the context of Medicare Advantage plans, where the attraction of zero- or low-cost premiums has to be weighed against, among many other considerations, the uncertainty of whether a procedure their doctor thinks they need will be covered by the plan.