Federal lawmakers are pushing forward a bipartisan bill that would force some Medicare insurers to speed up their prior authorization decisions, but it may ultimately conflict with separate rules set by the agency that oversees Medicare.
On July 26, the House Ways and Means Committee included a prior authorization bill covering Medicare Advantage plans in a broader package addressing health cost transparency. It’s similar to a bill the House approved last year by voice vote but that failed in the Senate.
“The unfortunate reality is that prior authorization is overused, costly, inefficient, opaque, and responsible for patient care delays and denials that often lead to poor healthcare outcomes,” said Jesse M. Ehrenfeld, MD, MPH, the American Medical Association’s (AMA) president.
Medicare pays a fixed amount per enrollee per year to these privately run managed care plans, in contrast to traditional fee-for-service Medicare. Medicare Advantage plans have been criticized for aggressive marketing, for overbilling the federal government for care, and for using prior authorization to inappropriately deny needed care to patients. Insurers say prior authorization is needed to minimize unnecessary care and save patients money.
The House Ways and Means package would require Medicare Advantage insurers to detail the items and services they denied in the prior authorization process. The bill would require insurers to move toward “real-time” decisions for some common items and services. Insurers would be expected to decide within 72 hours on some requests, with a 24-hour timeframe sent for more urgent cases, according to the bill.
Such a tight turnaround time, though, might undermine prior authorization, Zarek Brot-Goldberg, PhD, a University of Chicago, Chicago, Illinois, researcher, told Medscape in an interview.
And while prior authorization draws significant criticism and ire, this common feature of health plans does have benefits for consumers and insurers in terms of controlling costs, said Brot-Goldberg. (For example, the National Bureau of Economic Research published in January an analysis from Brot-Goldberg and colleagues that found the administrative costs of prior authorization were small relative to the reductions in certain spending achieved by these restrictions in Medicare Part D pharmacy plans.)
There could be significant gaming of the insurance system if a 24-hour turnaround time is established for urgent cases, but rules are not clearly defined about what constitutes an urgent request, Brot-Goldberg said.
“I’m wondering how many things will get noted as requiring expedition” when they might not be truly urgent, he said.
Regulatory Difficulties
The Centers for Medicare and Medicaid Services (CMS) may have the ultimate say on what’s an urgent case. Federal laws often set broad goals for changes in policy, which agencies then define through regulations.
CMS is developing its own new rules on prior authorization, moving in parallel to efforts in Congress to pass legislation on this issue. CMS in December released its proposals, which would cover not only Medicare Advantage plans but many Medicaid and commercial health plans.
In June, more than 60 senators and more than 230 members of the House signed bipartisan letters urging CMS to proceed with its efforts to create new rules for prior authorization. They also asked for 24-hour turnaround time for urgent requests.
Unusual Alliance
While pleased to see CMS considering changes to prior authorization processes, the AMA has concerns about the agency’s approach to this work.
The concerns are shared by groups that sometimes oppose the AMA: America’s Health Insurance Plans (AHIP), Blue Cross Blue Shield Association, and American Hospital Association. All four signed a joint July 27 letter to CMS, making the case that its proposed prior authorizations regulations appear to be on a collision course.
Standards for handling prior authorization included in what’s called the Administrative Simplification proposed rule conflict with those in the Interoperability and Prior Authorization rule, AHIP said in a statement.
Thus, CMS is setting the stage for having multiple prior authorization electronic standards and workflows, said AMA, AHIP, and the other groups in the letter to CMS. If CMS continues on this course, it could result in new federal rules that would “cause widespread industry confusion” the groups said.
The result would “be enormously expensive for both health plans and providers, as they would undoubtedly need to implement technologies to meet the requirements of both” sets of requirements, the groups said.
Kerry Dooley Young is a freelance journalist based in Washington, D.C. Follow her on Threads at @kerrydooleyyoung.
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