GAO Recommends Extending Prior Authorization

The home health care industry rejoiced after the prior authorization demonstration from the Centers for Medicare & Medicaid Services (CMS) was put on hold indefinitely in 2017. However, the Government Accountability Office (GAO) is urging CMS to extend prior authorization across the general health care space, according to a recent report.

The payment approach requires health care providers to submit claims and demonstrate compliance with coverage and payment rules before they can deliver services or items to beneficiaries.

Since 2012, CMS has required prior authorization for different health care settings, including certain durable medical equipment (DME) and recently, home health care.


The home health pilot, known as the pre-claim review demonstration (PCRD), was launched in August 2016 in Illinois, with the intent of spreading to Florida, Texas, Michigan and Massachusetts. After major outcry from the industry, the demonstration was paused in March 2017. As of 2018, the demonstration has not resumed.

GAO is now recommending prior authorization be extended because it has played a large role in reducing expenditures. The estimated savings from all demonstration through March 2017 could be as high as $1.1 billion to $1.9 billion, according to a GAO analysis of actual expenditures.

GAO did acknowledge that separating the effect of prior authorization from other program integrity efforts is “difficult,” and the agency also noted that provider and supplier groups have reported some challenges.


For Illinois home health care providers, PCRD placed a significant administrative burden and may even have resulted in delayed care for some patients. Providers also had to submit their claims more than once before getting affirmed and cleared for services when the pilot was first starting out.

The stakes for succeeding in PCRD were also high, with payment penalties up to 25% for claims without prior authorization.

During the short-lived demonstration, Illinois health health care agencies submitted 126,132 total initial submissions and 21,623 total resubmissions, according to GAO. The total projected savings for the demonstration from implementation through March 2017 in Illinois were $104.2 million, according to GAO.

The agency recommends subjecting certain DME to a permanent prior authorization program and to continue prior authorization programs based on the results from evaluations.

Written by Amy Baxter

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