Medicare policy on prior authorization falls short on shifting outpatient surgery trends

Editor's Note

A Medicare policy introduced in 2020, which requires prior authorization for certain procedures done at hospital outpatient departments (HOPDs), has not significantly reduced the volume of surgical procedures being done at these facilities, reports a study by Michigan Medicine, University of Michigan, published on October 9. The policy, designed to ensure the medical necessity of surgical procedures such as blepharoplasties, rhinoplasties, and vein ablations, aimed to shift procedures from high-cost hospital-based operations to the more cost-effective ambulatory surgery centers (ASCs).

When the policy went into effect, it did not impact ASCs directly. The policy is the CMS-1717-FC, and it requires patients on Medicare to receive prior authorization from Medicare officials to undergo such surgical procedures at HOPDs before they can even be scheduled, noted the study, adding that this move was already common practice for procedures backed by private insurance and Medicare Advantage but “rare in traditional fee-for-service Medicare.”

The study found the policy has not accelerated the move to ASCs, where prior authorization was initially not required. It revealed no notable decline in surgical volume at HOPDs, indicating that the policy has had minimal impact on shifting care settings. Instead, this change has reportedly increased administrative burdens without improving care efficiency, as prior authorization requirements introduced delays and additional paperwork that has affected timelines and “increased wait time for patients.”

The authors suggest that narrowing payment disparities between HOPDs and ASCs could be a more effective strategy for controlling costs without increasing administrative workload. They advocate for policy changes that focus on leveling reimbursements for similar procedures across different settings, rather than expanding prior authorization requirements.