Medicare Advantage (MA) prior authorization presents several challenges for home medical equipment (HME) companies, primarily due to administrative burdens, delayed care and financial strain.
New data from the Kaiser Family Foundation (KFF) helps illustrate just how big of a pain point prior authorization is becoming in health care.
In fee-for-service Medicare, only a limited set of services – including certain durable medical equipment, prosthetics, orthotics and supplies (DMEPOS) – must be approved before a beneficiary receives those services. Nearly all enrollees in MA, however, are required to obtain prior authorization for services.
This extra red tape, paired with rising MA enrollment rates, has changed the payment landscape for many HME providers. Delays in approvals postpone billing and reimbursement, affecting cash flow, for instance. Additionally, if prior authorization is denied after equipment is provided, HME entities can suffer financial losses if they cannot recover costs.
In 2023, MA insurers made nearly 50 million prior-authorization determinations, according to KFF. That was a major spike compared to the 37 million determinations they made in 2021, just a couple years earlier.
The same year, MA insurers fully or partially denied 3.2 million prior-authorization requests, or about 6.4% of those they received. While only a small share of those denials were appealed, many – 81.7% of them – were partially or fully overturned.
“After dropping in 2020 amid the initial phase of the COVID-19 pandemic, prior authorization determinations increased steadily between 2021 and 2023,” KFF wrote in its recently released analysis. “The decline in 2020 was likely due to both a decline in utilization, as well as the option for insurers to temporarily pause prior authorization requirements during the public health emergency.”
Prior authorization determinations were most common among Humana and Anthem plans, according to KFF.
In November, the Centers for Medicare & Medicaid Services (CMS) proposed a series of new policies meant to hold MA plans more accountable while removing “unnecessary barriers to care” for Medicare beneficiaries.
A month earlier, a report from the Senate Homeland Security Permanent Subcommittee on Investigations detailed the prior authorization and operational practices of some of the MA space’s largest insurers, including UnitedHealth Group, Humana and CVS Health.
“Every day, doctors evaluate thousands of seniors recovering from falls, strokes and other ailments, and enter a recommended course of treatment into an online portal, or in some cases feed it into a fax machine,” the report explained. “But whether the requested service is determined to be medically necessary is a decision that belongs to people at the other end of the line. This is prior authorization. And for beneficiaries of Medicare Advantage, the alternative to traditional Medicare in which private companies contract with the government to administer health plans, it has become not just a bureaucratic maze, but a potential threat to their health.”
With MA enrollment increasing, these challenges will likely grow for the HME industry, unless policy changes or regulatory reforms ease the burden.
