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3 months ago
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For both patients and clinicians, one of the advantages of traditional Medicare is that it almost entirely lacks the onerous preauthorization reviews that plague the program’s privately administered Medicare Advantage option.
But under a new demonstration program recently announced by the Centers for Medicare and Medicaid Services, that’s about to change. Preauthorization is about to enter the lives of seniors who have chosen traditional Medicare over Medicare Advantage (MA).
CMS is calling this new model “WISeR”: Wasteful and Inappropriate Service Reduction.
We have seen this movie before.
The goal, according to the Innovation Center at CMS, is to test a new model to target “wasteful, inappropriate services in Original Medicare.” Testing new models of payment and rolling out demonstration programs like WISeR is the stock and trade of the Innovation Center, created under the Affordable Care Act. But this foray into preauthorization is hardly innovative. MA plans have been playing these games for years.
Briefly, under the WISeR model, CMS will contract with organizations to approve or deny a clinician’s request to provide a service (in order to be able to receive payment for it). The model will require this prior authorization for a list of outpatient procedures that meet one or more of several criteria, such as a history of overuse. The contractors are supposed to use artificial intelligence as well as other tools to make prompt decisions.
This demonstration will affect anyone on traditional Medicare who receives care from a provider in one of the states that pilot WISeR and seeks out the services subject to prior authorization. Currently, the states that could be included are Arizona, New Jersey, Ohio, Oklahoma, Texas, and Washington.
While the goal of prior authorization — to protect insurance beneficiaries from receiving inappropriate or overly costly care — is laudable, in practice MA plans have turbo-charged their reliance on preauthorization as a tool to increase profits.
MA plans made 50 million prior authorization determinations in 2023 alone. In fact, a 2022 investigation of the use of prior authorization in MA by the Department of Health and Human Services’ Office of Inspector General concluded that Medicare Advantage can create an incentive for plans to “deny the prior authorization of services for beneficiaries, and payments to providers, including some services and payment that would not have been denied in original Medicare.”
Interestingly, the WISeR announcement happened the same week HHS Secretary Robert F. Kennedy Jr. and CMS Administrator Mehmet Oz announced a “breakthrough” in American insurance policy — namely, claiming they’d gotten a set of private insurance companies to agree to voluntarily use prior authorization less often, acknowledging that “there’s violence in the streets over these issues … Americans are upset about it.”
The proposed demonstration project would suggest Oz and Kennedy don’t extend that concern to the 33.3 million American seniors enrolled in traditional Medicare.
CMS defends its new expansion of preauthorization to traditional Medicare by citing high levels of waste in the American health care system, a fact well documented by researchers. CMS is right that this waste represents up to 25% of health care spending in the U.S. But it implies incorrectly that most of this waste is overuse of low-value health care. The paper the agency cites estimates that only 11% of overall waste (i.e., less than 3% of health care spending) is from overuse. The remainder is attributed to administrative complexity, coordination failures, errors in care, excessive pricing, and, to some extent, fraud — little of which this new model addresses. In fact, the preauthorization CMS proposes to add to traditional Medicare is guaranteed to increase administrative costs. And it is bound to impede some high value care, too.
CMS says WISeR participants will consist of companies with “expertise managing the prior authorization process for other payers using enhanced technology like AI.” Each of these companies will be assigned a state to cover. They will be asked to focus on procedures that can pose risks to patient safety; have existing publicly available coverage criteria; and are flagged with prior reports of fraud, waste, and abuse.
There are some guardrails. CMS proposes to exclude inpatient services, emergency services, and services that would put patients at substantial risk if delayed. And not to worry — CMS reassures us that the final decisions will be made by “licensed clinicians, not machines.”
But look closer. In this demonstration program, “participants” (i.e., the companies that win contracts) will be rewarded based on the “effectiveness of their technology solutions” for reducing spending on medically unnecessary or non-covered services. Participants will receive a percentage of the savings attributed to their reduction of wasteful or inappropriate care for each selected service.
In other words, the more care they deny, the more money contracting companies make. What could possibly go wrong?
CMS proposes to adjust payments based on performance in three categories: 1) “process quality” (i.e., how many rejections are issued and upheld on appeal); 2) “provider/supplier and beneficiary experience” (i.e., timeliness and clarity of explanation); and 3) “clinical quality outcomes” (i.e., patients’ use of alternative services and evidence of ongoing urgent need to address the clinical issue). It’s hard for patients to find reassurance in this language.
CMS proposes that the WISeR model demonstration will continue for six years. If the desire to test new technologies for discovering unnecessary care were the real motive, why conduct a demonstration over such a long horizon?
Perhaps more puzzling still, why conduct this demonstration within the traditional Medicare program instead of attempting to improve the efficiency of existing prior authorization policies that are already falling short and causing so much anger toward the MA program?
Compared with prior authorizations in the traditional Medicare program (for which only 29% of denials, when appealed, are overturned), MA prior authorization denials are successfully overturned a startling 82% of the time. Why not make those prior authorizations “wiser”? In testing a model designed to improve efficiency, it would seem prudent to start with MA — unless the model is merely a pretext for creating more friction within the traditional Medicare program, consistent with the CMS administrator’s stated goal of fully privatizing Medicare.
At the end of the day, what the WISeR project portends is unwise. It takes the bureaucratic, wasteful, and risky processes of permission-seeking that have plagued MA plans for years, and simply imports them into traditional Medicare. The companies that will become participants in this new model are very likely to be the same consultants and subdivisions that have been enabling MA plans to make money on preauthorization to the disadvantage of patients and clinicians for years.
It’s important for health care providers and payers to develop effective approaches to decrease overuse of care that doesn’t help patients, including by utilizing management practices that protect beneficiaries and allow the government to be a responsible steward of tax dollars.
But the WISeR model is not the way to do it. Bounties for companies that decrease costs by denying care have failed in the past and continue to fail in MA. Why spread the virus to all Medicare enrollees?
Donald M. Berwick is a senior fellow for health policy and Andrea Ducas is the vice president of health policy at the Center for American Progress. Berwick is a former administrator of the Centers for Medicare and Medicaid Services.
