As a Medicare agent, it’s important to understand Medicare’s prior authorization requirements so you can better assist your clients. Traditionally, Original Medicare (Part A and Part B) did not require prior authorization for most medical services. However, in recent years, Medicare has implemented pre-authorization requirements for certain services and equipment. Educating your clients on when prior authorization is needed can help them make informed decisions about their coverage—especially when comparing Medigap and Medicare Advantage options. Ensuring they understand these requirements can prevent delays in care and help them choose the plan that best fits their needs.
Understanding Medical Pre-Authorization
Medical pre-authorization, also called prior authorization, is when a doctor or patient needs approval from an insurance company before getting a certain treatment, procedure, or medication. This approval confirms that the service is medically necessary and will be covered by insurance.
Pre-authorization is usually required for special treatments, advanced imaging (like MRIs), surgeries, or expensive medications. Insurance companies use this process to make sure care is needed and to prevent fraud or unnecessary costs.
Medicare requires pre-authorization for certain services and equipment, including:
- Some hospital outpatient procedures
- Regular, scheduled ambulance rides that aren’t emergencies
- Certain medical equipment, prosthetics, and supplies
If a pre-authorization is needed, the beneficiaries doctor will handle the request and submit it to Medicare for approval.
How Does Medicare Pre-Authorization Differ with a Medicare Advantage Plan?
Medicare Advantage (Part C) is a part of Medicare and must cover at least the same services as Original Medicare. However, Medicare Advantage plans can have extra requirements before you get services.
This means that some Medicare Advantage providers may ask for pre-authorization to decide if a service is medically necessary, beyond what Original Medicare requires. They do this to help prevent fraud, waste, and abuse in healthcare.
This doesn’t mean they can deny a legitimate claim that’s medically necessary and covered by Medicare. It also doesn’t mean that every Medicare Advantage carrier requires pre-authorization for the same services.
According to data from KFF, the number of pre-authorization requests in 2023 varied between 0.5 and 3.1 requests per person per year. Plans that required more pre-authorizations often had fewer claims denied and vice versa. So, just because a plan asks for more pre-authorizations, it doesn’t mean they are denying more claims.
Medicare Advantage Denial Rates and Appeals
The rate of denied claims in Medicare Advantage plans varies depending on the provider. Denial rates range from 3.5% to 13.6%. However, higher denial rates usually happen when there are fewer pre-authorization requests. So, the denial rate doesn’t always mean more claims are being denied.
In 2023, 6.4% of pre-authorization claims were denied across Medicare Advantage plans. But, the good news is that over 80% of those denied claims were overturned when they were appealed. Sadly, only 11.7% of people actually filed an appeal. Since most appeals are successful, your clients should always appeal if they believe their claim is medically necessary.
The difference in how many claims are denied and overturned could be linked to artificial intelligence (AI) used by some insurance companies to make coverage decisions. So, if a claim is denied, they should appeal, and it’s likely that it could be overturned. CMS is working on new AI rules that could help reduce the number of denied claims.
What About Part D Pre-Authorizations?
Medicare Part D plans are run by private insurance companies, and most of these plans require pre-authorization for certain medications. They may ask for pre-authorization to make sure the drug is medically necessary or only used for specific conditions. The requirements for pre-authorization vary by insurance company and plan.
How to File an Appeal for Denied Pre-Authorizations
Make sure you understand the appeal process to help your clients! If they disagree with a decision from Medicare or their Medicare Advantage carrier, they can and should file an appeal. There are 5 levels of appeal, and they can keep going to the next level if they’re not happy with the decision at each level. Here’s a quick look at the levels:
- Level 1: Redetermination
- Level 2: Qualified Independent Contractor Reconsideration
- Level 3: Decision by the Office of Medicare Hearings and Appeals
- Level 4: Review by the Medicare Appeals Council
- Level 5: Judicial Review in Federal District Court
Make sure you meet all deadlines for the appeal process! It’s a good idea to work with your doctor to gather information that can strengthen your case.
Conclusion: Original Medicare vs. Medicare Advantage
When helping your clients decide between Original Medicare with a Medicare Supplement or Medicare Advantage, keep in mind that both may require pre-authorization for certain services. Medicare Advantage plans might require more pre-authorization, but this can vary by insurance company. Medicare Advantage plans must cover at least everything Original Medicare covers. So, if your medically necessary claim is denied, appeal it! It’s also helpful to work with a licensed agent to find a plan that fits your needs. On the other hand, Medicare Supplements will only pay Medicare approved claims. If Medicare denies a claim, then the Medicare Supplement will not pay either.