CMS Asks Medicare Advantage Plans to Relax Prior Authorizations

CMS has requested that Medicare Advantage organizations relax or waive prior authorizations due to the impact of the coronavirus Delta variant.

“The ability of hospitals to transfer patients to appropriate levels of care without unnecessary delays or administrative burdens is critical to ensuring that hospitals have open acute-care beds to treat patients requiring emergent care,” the CMS memo explained.

The agency recommended that Medicare Advantage organizations focus on reducing administrative burdens for general acute-care hospitals to facilities that provide skilled nursing, long-term care, inpatient rehabilitation, and home healthcare.

Even in times when there is no crisis, Medicare Advantage organizations have the ability to relax—or waive entirely—certain administrative processes such as utilization management processes and prior authorizations, as long as these changes are applied equally across beneficiaries with alike circumstances.

CMS also noted that Medicare Advantage organizations cannot impose restrictions that go beyond the fee-for-service Medicare restrictions and that would constrict access to care.

“The rules governing CMS’s payments to Medicare Advantage Organizations remain unchanged, and are not affected by this information. We strongly encourage MAOs to use this flexibility during this time,” the agency concluded.

As recently as February 2021, 12 percent (or 40 of 316 hospitals) of the hospital respondents across the US reported to the Department of Health and Human Services (HHS) that they had surpassed 90 percent inpatient occupancy. Nearly a quarter of the hospitals that had ICUs (or 56 out of 230 hospitals) had exceeded 90 percent occupancy in their ICUs.

Hospital administrators told HHS that such high occupancy made it difficult to transfer COVID-19 patients and other critically ill patients to the appropriate sites of care.

American Hospital Association (AHA) voiced its support for the memo and for waiving prior authorizations. 

Few—if any—payers or payer organizations have made public, direct responses to the CMS request.

Many payers instituted prior authorization waivers in 2020 when the coronavirus pandemic struck the US. These included prior authorizations on prescription drug refills, coronavirus-related diagnostic tests and treatments, and telehealth visits. Some major payers extended these temporary benefits into 2021 as the public health emergency persisted.

However, as the pandemic wore on, some payers began to back away from this leniency and re-introduce prior authorization requirements for certain procedures and services.

An American Medical Association (AMA) survey of 1,000 practicing physicians found that almost seven in ten providers reported payers reinstating prior authorization requirements by December 2020 or reported that payers had never offered relief from prior authorization requirements at all. More than nine in ten respondents stated that these policies delayed care.

Slightly more than a fifth of the respondents said that they saw care delays due to prior authorizations lead to hospitalization. Around the same share of providers said that delays related to prior authorizations caused life-threatening events or required interventions to prevent further damage.

Nearly one in ten provider respondents stated that care delays due to prior authorizations requirements resulted in a patient disability, congenital anomaly, permanent bodily damage, birth defect, or even death.

Tensions between providers and payers regarding prior authorization is not a new trend and the arguments for each side are well-known. Prior authorizations often fit well into value-based contracts as a way to target low-value healthcare spending and to support quality of care goals. 

However, the approach is also known to place an administrative burden on providers who are already strained. It can also prove costly. When providers complete prior authorizations manually, prior authorizations may amount to their highest expenditure.

For this reason, payers have been pressuring providers to transition to electronic prior authorization. Electronic prior authorizations have been used to reduce delays in care delivery and lessen the provider burden.