DME Prior Authorization Programs – GAO

According to the analysis of GAO, CMS’s prior authorization programs for durable medical equipment (DME) created an estimated $1.9 billion in Medicare savings.

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

Prior authorization is a payment approach used by private insurers that generally requires health care providers and suppliers to first demonstrate compliance with coverage and payment rules before certain items or services are provided to patients, rather than after the items or services have been provided. This approach may be used to reduce expenditures, unnecessary utilization, and improper payments.

The Centers for Medicare & Medicaid Services (CMS) has begun using prior authorization in Medicare through a series of fixed-length demonstrations designed to measure their effectiveness and one permanent program. According to GAO’s analyses, expenditures decreased for items and services subject to a demonstration.

GAO’s analyses of actual expenditures and estimated expenditures in the absence of the demonstrations found that estimated savings from all demonstrations through March 2017 could be as high as about $1.1 to $1.9 billion. While CMS officials said that prior authorization likely played a large role in reducing expenditures, it is difficult to separate the effects of prior authorization from other program integrity efforts.

For example, CMS implemented a durable medical equipment competitive bidding program in January 2011, and according to the agency, it resulted in lower expenditures.

Providers are also positive for these CMS programs due to the fact that prior authorizations ensured providers received complete reimbursement for DME services.

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

After this program’s execution, GAO found that some states are experiencing a decrease in DME expenditures that totaled between 17 and 74 percent. Provider and enrollment screening programs also contributed to savings, creating an estimated $2.1 billion savings opportunity by removing unqualified or unfitting providers from Medicare participation. CMS also directed provider education and outreach programs about the DMEPOS competitive bidding program.

Medicare providers faced a mix of benefits and challenges for this prior authorization programs and correct financial reimbursements, GAO said. According to the provider with the help of this program, they came to know which devices and services require additional documentation requirements.

Many providers were not sure if certain beneficiaries with life-threatening conditions required a prior authorization request. Because of this, CMS has eliminated many of its prior authorization requirements over a five-year period. Providers also faced long waiting times and a huge 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 the 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 believes that CMS will be unable to manage excessive Medicare spending, reduce healthcare fraud, and help compliant providers secure Medicare reimbursement.

According to Resumption of Prior Authorization Activities of July 2020, given the importance of medical review activities to CMS’ program integrity efforts, CMS will discontinue exercising enforcement discretion for the Prior Authorization Process for Certain Durable Medical Equipment, Prosthetics, Orthotics, and Supplies (DMEPOS) items beginning on August 3, 2020, regardless of the status of the public health emergency.

For Power Mobility Devices and Pressure Reducing Support Surfaces that require prior authorization as a condition of payment, claims with an initial date of service on or after August 3, 2020, must be associated with an affirmative prior authorization decision to be eligible for payment.

Additionally, prior authorization will be required for certain Lower Limb Prosthetics (L5856, L5857, L5858, L5973, L5980, and L5987), with dates of service on or after September 1, 2020, in California, Michigan, Pennsylvania, and Texas. On December 1, 2020, prior authorization for these codes will be required in all of the remaining states and territories. Click here for the required Prior Authorization list.

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