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If you have Medicare — or are about to sign up for the government health insurance program — beware of making uninformed decisions. They could cost you.
Every new Medicare enrollee must choose between the two main types of Medicare plans — Original Medicare and Medicare Advantage. Existing enrollees also must weigh this choice during open enrollment.
The option you choose will determine whether or not you are subject to prior authorization requirements, which can result in your insurer refusing to pay for a health care service.
Original Medicare — also known as traditional Medicare — does not require prior authorization for the vast majority of services. By contrast, Medicare Advantage often does require such prior authorizations.
A recent analysis by the nonprofit Kaiser Family Foundation (KFF) found that 80 percent of folks with Medicare Advantage are enrolled in plans that require prior authorization for at least one Medicare-covered service.
What is prior authorization?
Prior authorization requires enrollees to get approval from the plan before accessing a particular health care service. If the plan does not approve the service beforehand, the plan might not pay for the service — leaving the patient on the hook for the cost.
Ideally, prior authorization deters unnecessary medical care and fraud. In reality, though, prior authorization can delay or prevent access to necessary medical care, according to both KFF and the nonprofit Medicare Rights Center.
According to the center, patients have 60 days to appeal if an insurer declines to cover a service. But if patients miss that deadline, they will be responsible for paying for the service out of pocket.
8 common prior authorization requirements
The KFF analysis found that Medicare Advantage plans frequently require enrollees to get prior authorization for several types of health care services , including the following eight:
- Durable medical equipment: 73 percent of Medicare Advantage enrollees have plans that require prior authorization for this service.
- Part B (doctor-administered) drugs: 71 percent
- Skilled nursing facility stays: 71 percent
- Inpatient hospital stays: 70 percent
- Ambulance services: 62 percent
- Home health services: 62 percent
- Procedures, labs and tests: 61 percent
- Mental health services: 57 percent
The analysis notes that Medicare Advantage plans typically use prior authorization for “relatively high-cost services used by enrollees with significant medical needs.” The first four services listed above are among the costliest.
What it means for you
This does not mean you should automatically choose Original Medicare over Medicare Advantage. While Medicare Advantage plans sometimes come with restrictions that traditional Medicare plans do not have, the former also offer benefits you might not get in Original Medicare plans.
For example, as we note in “7 Facts You Need to Know About Medicare,” Medicare Advantage plans typically include drug coverage while traditional plans do not. Folks with an Original Medicare plan must buy drug coverage, also known as Medicare Part D, separately if they want it.
So, the lesson here is the importance of taking your time to make the best decision for your financial and medical situation when you first sign up for Medicare, and to review your options during open enrollment — which is underway right now and runs through Dec. 7.
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