Change will save millions by preventing fraudulent claims

Prior authorization will now be necessary before Medicare will cover medical equipment such as wheelchairs and prosthetics. Prior authorization has always been required, but now it will be earlier in the process.

Fraudulent billing for these types of equipment costs Medicare millions. They expect to save big: $10 million in the first year, $200 million within five years and $580 million within ten years. In 2014, “the error rate among durable medical equipment billing was 53.1%, which accounted for $5 billion in improper payments that year.” Not all of those were intentionally fraudulent, but this new rule intends to correct many of those cases.

What is prior authorization?
Before an insurance company will cover something- a prescription or procedure- they will need to talk to your doctor and determine if they will cover it. If not, they could cover a substitute, change the dosage, or provide an alternative.
In this case, before Medicare will cover a piece of medical equipment, they will need to talk to your doctor earlier in the process than they previously had.

What equipment is affected?
The Master List of equipment that requires prior authorization includes items with “a high rate of fraud or unnecessary utilization.” They are also items that have an average purchase cost over $1,000 or an average rental cost over $100.
After 10 years, items are removed from the list. They will also be removed if the prices fall before then. In addition to wheelchairs and prosthetics, equipment like oxygen supplies, orthotics, and braces are listed.

Are there any concerns with this plan?
Some groups are concerned that the new rule will increase wait times for equipment that patients need ASAP.

To read the Centers for Medicare and Medicaid Services’ press release on the change, click here.

For more information on the prior authorization process, see this article from Healthcare Finance.

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