Medicare’s Prior Authorization Policy: A Look at Its Impact on Plastic and Reconstructive Surgery

A new policy aimed at saving money for Medicare has not yielded the expected results concerning outpatient surgeries.

As this policy is rolled out nationwide, analyzing its outcomes could provide insights that guide future modifications.

This Medicare policy adjustment introduced a requirement that is commonly found in private insurance and Medicare Advantage but is quite rare in the traditional fee-for-service Medicare system: doctors must obtain prior authorization from Medicare officials before scheduling specific outpatient procedures.

Designed to cut costs, this policy specifically targeted certain hospital procedures to ensure they were medically necessary rather than purely cosmetic. This includes surgeries like blepharoplasties (eyelid surgery), abdominoplasties (tummy tucks), Botox injections, rhinoplasties (nose surgeries), and vein ablations (removal of visible veins).

The federal policy, CMS-1717-FC, mandates that Medicare patients receive prior approval before undergoing these surgical operations at hospital outpatient departments.

Initially, when this policy was enacted in 2020, it did not apply to care provided at ambulatory surgery centers, where similar day-surgery procedures can also be performed.

Now, a new extension of the policy will require prior authorization for ambulatory surgery centers, beginning in certain regions.

However, at the time of the study, patients covered by traditional Medicare could undergo the same procedures at ambulatory centers without prior authorization, often at a lower cost than in hospital outpatient facilities.

Still, these centers adhere to the Medicare policy that prevents coverage for procedures deemed not medically necessary; charging Medicare for purely cosmetic procedures is regarded as fraudulent.

Dr. Joseph N. Fahmy, a research fellow at the University of Michigan Medical School, and his team, including Kevin Chung, M.D., a plastic surgery professor, aimed to assess whether this policy effectively reduced the volume of surgeries done in hospital outpatient departments.

Their findings indicated that there were no notable changes in the surgical volume at these hospital departments following the policy implementation.

While there was already a prior shift away from these centers before the policy was enforced, the rate of change did not accelerate afterward.

Despite the goal of decreasing surgical volume and encouraging the move to less expensive ambulatory surgical centers, the study authors concluded that the policy was ineffective in hastening this transition.

Dr. Fahmy pointed out that prior authorization generally complicates administrative tasks and disrupts timely patient care.

“Our research indicates that the increase in administrative workload did not lead to the expected reduction in the number of patients undergoing surgeries at hospital outpatient departments,” Fahmy stated.

“This implies that patients may face delays in receiving care due to added paperwork, highlighting the need for administrative teams to be aware of this rising workload and for patients to recognize the potential for delays.”

Fahmy and his colleagues believe this situation indicates a need for changes to efficiently manage surgical patient flow without overburdening administrative staff, who may already be under strain.

“Professionals in our field should push for alternative policy measures to control spending, such as addressing payment disparities between facilities performing the same surgeries,” Fahmy recommended.

“The data imply that other policy options besides prior authorization are better equipped to achieve the goal of reducing national surgical care costs without increasing the administrative burden. These strategies could include adjusting payment differences between hospital outpatient departments and ambulatory surgery centers for comparable services.”