Currently, Medicare fee-for-service (FFS) beneficiaries receive significantly more choice than standard commercial plans. They can choose any provider they wish (who accepts Medicare). There are no cost-sharing differences between in-network and out-of-network doctors (because there is no ‘in-network’ for Medicare). Although certain Part D prescription drug plans require prior authorization for specific drugs, few services (if any) currently require the beneficiary to receive prior authorization to be covered for a specific service.
Prior Authorization, however, may be on the way. A demonstration for all Medicare beneficiaries who reside in seven states with high populations of fraud- and error-prone providers will have to secure prior authorization for certain medical equipment. The states participating in the demonstration include California, Florida, Illinois, Michigan, New York, North Carolina and Texas.
Some people will claim that prior authorization is rationing. This is 100% true. That doesn’t mean that it is a bad thing or anti-capitalist. Commercial plans, particularly HMOs, often require prior authorization for certain services. Further, the prior authorization can decrease fraud. For example,
“…some suppliers of medical equipment try to cheat Medicare by offering expensive powerwheelchairs and scooters to people who don’t qualify for these items. Also, some suppliers of medical equipment may call you without your permission, even though ‘cold calling’ isn’t allowed.”
With Medicare costs climbing at a rapid, unsustainable pace, I see prior authorization in Medicare as one way to slow the growth of medical spending–particularly unnecessary medical spending. The question remains, although failing to implement prior authorization would create additional fiscal pressures, I am not sure if these types of measures are feasible politically. Especially in a “Keep your government hands off my Medicare” environment.