CMS: Prior authorization slashed ambulance transportation by 70%

Prior authorization dramatically lowered the use of regular, non-emergency ambulance transportation among Medicare beneficiaries without affecting quality or beneficiaries' access to care, according to a government report on Monday.

Those are the results of a CMS Center for Medicare and Medicaid Innovation experiment to test whether requiring ambulance service providers to get pre-approval for such services would reduce their use among Medicare beneficiaries with End-stage Renal Disease or pressure ulcers.

Researchers found that prior authorization reduced unnecessary use and spending by more than 70%, lowering total Medicare spending by 2.4%. The findings suggest that expanding prior authorization for regular non-emergency ambulance transportation could save Medicare even more money without affecting beneficiaries' health.

"That said, we believe these savings would be smaller than those estimated in this report. Given that CMS initially chose model states with particularly high baseline rates of RSNAT use, the findings here may not generalize to states that have more moderate rates of RSNAT use," the report said.

CMS announced that it plans to expand the program nationwide in September. But it won't add new states until the pandemic is under control.

According to CMMI, prior authorization reduced Medicare spending among the original states far more than the ones added by Congress. For each quarter, spending in New Jersey, Pennsylvania and South Carolina dropped by $481 per beneficiary compared to just $112 per beneficiary in the congressionally-mandated states.

The agency has been testing prior authorization for repetitive, scheduled, non-emergency ambulance transportation for its Medicare beneficiaries in several states since 2014 to address concerns about improper payments for those services.

CMMI selected New Jersey, Pennsylvania and South Carolina to participate in the first year because their spending on those services was much higher than other states. Congress later mandated that Delaware, Maryland, North Carolina, Virginia and West Virginia join the experiment in 2016 because their expenditures were high too.

A 2015 report from HHS' Office of the Inspector General found that Medicare paid $54 million in the first half of 2012 for regular non-emergency ambulance transportation that didn't meet Medicare's requirements or correspond with Medicare-covered services. That followed a 2006 report that found 25% of ambulance claims didn't meet Medicare's requirement, including a large share of payments for transportation to dialysis or other non-emergency services. In addition, ground ambulance services use grew by 33% from 2004 to 2010, according to the Government Accountability Office.

CMS banned new ambulance service providers in several areas in 2013, saying that there was a high risk of fraud, waste or abuse associated with regular non-emergency ambulance transportation in those parts of the country.

Researchers noted that prior authorization had no apparent effect on quality or access to care, as beneficiaries weren't more likely to use emergency services, go to the hospital or die. But some providers reported that some beneficiaries might have experienced delayed or missed treatments because ambulance service providers couldn't get their documentation together quickly enough.

"A large majority of ambulance suppliers reported difficulty obtaining supporting information from physicians and treatment facilities," the report said.

According to the report, many ambulance services and physicians thought the medical necessity criteria were too narrow, unclear and not well understood, and sometimes were applied too rigidly by Medicare Administrative Contractors. MAC staff said that was probably because the rules hadn't been strongly applied or enforced before the experiment began. In addition, physicians didn't get much notice or education about the new prior authorization requirements before they took effect.

Researchers found that claims denials rose soon after the experiment began but went back to the pre-prior authorization rates within two years. MACs ascribed the trend to improved understanding of medical necessity guidelines and documentation requirements among ambulance services.

An astounding 45% of ambulance companies went out of business after prior authorization took effect in New Jersey, Pennsylvania and South Carolina. However, that figure was just 13% in the states that Congress added to the experiment.

"Exiting suppliers tended to be small, depended heavily on RSNAT for revenue, and served primarily urban beneficiaries," the report said.

There was no effect on rural ambulance service providers.