FutureFocus June 6, 2018: Pre-Claim Review Demo Re-Start - What You Need to Know

Lisa Remington

News permeated the industry as notice of the pre-claim review demonstration is restarting and expanding. The demonstration will impact 1.3 million claims each year. Of interest to our readers is the report issued by the congressional watchdog agency, the General Accounting Office (GAO). CMS wants to identify new opportunities for expanding prior authorizations for additional items and services with high unnecessary utilization and high improper payment rates. The CMS asked for public input on how it can ensure the new experiment doesn't harm access to care. Comments are due July 31.

Lisa Remington, President, Remington Health Strategy Group

By: Ronald M. Schwartz, Writer, The Remington Report

Since September 2012, the Centers for Medicare & Medicaid Services has subjected selected Medicare items and services to prior authorization and pre-claim reviews. Now, the congressional watchdog agency, the Government Accountability Office GAO), wants CMS to continue such efforts and identify “new opportunities for expanding prior authorization to additional items and services with high unnecessary utilization and high improper payment rates.”

And, one such GAO recommendation sure to cause a stir in the home health industry: resuming the paused home health services pre-claim review demonstration.

Specifically, in its recent report—entitled “CMS Should Take Actions to Continue Prior Authorization Efforts to Reduce Spending”—are two recommendations:

  • CMS should subject accessories essential to the group 3 power wheelchairs in the permanent DMEPOS program to prior authorization.
  • CMS should take steps, “based on results from evaluations,” to continue prior authorization. These steps include: “resuming the paused home health services demonstration; extending current demonstrations; or, identifying new opportunities for expanding prior authorization to additional items and services with high unnecessary utilization and high improper payment rates.”

" 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,” of which $104.2 million is attributed to home health savings in the one state (based on submitted and resubmitted claims)."

In the final months of the Obama administration, CMS’ prior authorization plan for home health morphed into the pre-claim review demonstration, to eventually have been phased in for all Medicare home health claims in Florida, Illinois, Michigan, Texas, and Massachusetts by 2019. CMS initiated the program in Illinois, but with a change in administrations, and reacting to stakeholder and congressional opposition, came the April 2017 “pause” before the demo advanced to the second state, Florida. To date, the agency has announced no plans to restart.

Though the home health program was truncated, GAO still harvested data to include in estimated cost savings for a range of prior authorization/pre-claim review programs. 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,” of which $104.2 million is attributed to home health savings in the one state (based on submitted and resubmitted claims).

HHS Reminds GAO Ball In Congress’ Court

Given the chance to review the report, Department of Health and Human Services Matthew Bassett, assistant secretary for Legislation, wrote GAO that HHS “only has statutory authority to permanently require prior authorization for specified Medicare Fee-For-Services items and services.” Therefore, it’s up to Congress to extend such authority, as proposed in the administration’s budget for FY 2019, “to all Medicare fee-for-service items and services, specifically those items that are at high risk for fraud, waste, and abuse.”

By Congress allowing prior authorization on additional items and services, “CMS can ensure in advance that the correct payment goes to the right provider for the appropriate service, and avoid future audits on those payments,” according to the budget proposal.

CMS has used prior authorization/pre-claim review demonstrations for certain power mobility devices, repetitive scheduled non-emergency ambulance services, non-emergency hyperbaric oxygen therapy, and home health services; while the permanent program is for certain durable medical equipment, prosthetics, orthotics, and supplies (DMEPOS) items. 

GAO notes that 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.

However, when the Obama administration proposed prior authorization, the National Association for Home Care & Hospice called it “an extraordinary action that triggers significant costs for all parties and establishes barriers to the timely and effective use of home health services. Past trials of prior authorization in Medicare home health services have shown that it has negligible impact on program abuse.”

Stakeholders expressed similar opposition when the pre-claim review demo was launched, emphasizing better ways to address program abuse and improper payment of claims.