CMS’s Prior Authorization Proposal: It’s a Start


Information in this article has been revised here.

An excellent column in the excellent newsletter by Merrill Goozner, GoozNews, has hit the nail on the head.

The article describes CMS’s recent proposal to require insurers adopt a common prior authorization form and switch to fully electronic communication with providers’ offices. Further, insurers must respond in a timely manner to prior authorization requests, give a specific reason for every denial, and report on their prior authorization process to include denial rate, success of appeals, and the average time between a request and a determination.

These recommendations are fine, as far as they go. Merrill feels, and I concur, that CMS’s proposal is problematic in that it specifically does not allow these new standards to apply to Medicaid or to the rapidly growing Medicare Advantage plans.

According to Merrill: “The irony in excluding MA plans from the new rule is that CMS already pays private insurers a per capita basis when Medicare beneficiaries opt into those plans. Those plans then turn around and pay providers (for the most part) on a fee-for-service basis, often deploying prior authorization rules in ham-handed fashion in their attempts to curb unnecessary care.”

Merrill has nailed it! In practice, the prior authorization process can be used to reduce or delay payments inappropriately. The denials received often do not provide sufficient information to allow the provider or insured to challenge them.

Insurers should prospectively and reasonably reimburse providers on a capped basis for the care they provide and substantiated in their documentation. The result will be providers efficiently caring for their patients without delays, without a third party second-guessing the provider’s care plan, and without excessive administrative burden.

The HCC system is designed to capture the level of services provided to an individual or population and for the reimbursement levels to reflect that complexity. Feeling as I do about the power of the HCC system, let me suggest further that we extend the use of HCCs by all payers for both Part A and B. Doing so eliminates a disjointed set of documentation requirements to support reimbursement (E/M vs. Diagnosis).

If this pandemic does anything good, it could be the moment we shed the E/M system, including the 2021 version edits, and put in its place a single set of reimbursement rules coupled with one set of codes, ICD-10-CM.


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About the Author

Rose Dunn
Rose Dunn is the Chief Operating Officer at First Class Solutions, Inc., a healthcare information management leader since 1988. Rose is the author of “The Revenue Integrity Manager’s Guidebook” available from the National Association of Healthcare Revenue Integrity and other books on Coding Management and Auditing from HCPro. She engaged herself in ICD-10 more than 10 years before it was implemented. She is assisting Libman Education in the development of an HCC educational program. Rose holds a BS and MBA from Saint Louis University.

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