Prior authorization: It's not just for private payers anymore

Prior authorization has been a longstanding tool used primarily by private payers for a variety of purposes, including controlling costs. To date, public payers, such as Medicare, have used it less frequently. Based on a recent announcement from the Center for Medicare & Medicaid Services (CMS), that may be changing. CMS is getting ready to launch two new demonstration programs that may impact physicians and make them further justify claims submitted for payment.

First, CMS will conduct a demonstration program, called Fee-for-Service Recovery Audit Prepayment Demonstration, to allow Medicare Recovery Audit Contractors (RACs) to review claims on a prepayment basis in certain states to ensure that the provider complied with all Medicare payment rules. The RACs will conduct prepayment reviews on certain types of claims that historically result in high rates of improper payments (e.g., inpatient hospital claims for short stays). These reviews will focus on seven states with high populations of fraud- and error-prone providers (FL, CA, MI, TX, NY, LA, IL) and four states with high volumes of claims for short inpatient hospital stays (PA, OH, NC, MO) for a total of 11 states.

The agency also will conduct a demonstration program to establish a prior authorization for power mobility device claims (electric wheelchairs). This demonstration project is for all people with Medicare who reside in seven states with high populations of fraud- and error-prone providers (CA, IL, MI, NY, NC, FL, TX). Under the prior authorization program, documentation to support a claim must be submitted before the power mobility device is delivered.

Both demonstrations are expected to begin on or after June 1, 2012. A notice about the demonstrations appeared in the Federal Register on Feb. 7, 2012.

Posted on Feb 10, 2012 by Kent Moore