MEDICARE 

CMS Should Take 

Actions to Continue 

Prior Authorization 

Efforts to Reduce 

Spending

Report to the Committee on Finance, 

U.S. Senate

April 2018

GAO-18-341

United States Government Accountability Office
United States Government Accountability Office

Highlights of GAO-18-341, a report to the 

Committee on Finance, U.S. Senate

April 2018

MEDICARE

CMS Should Take Actions to Continue Prior 

Authorization Efforts to Reduce Spending

What GAO Found

Prior authorization is a payment approach used by private insurers that generally 

requires health care providers and suppliers to first demonstrate compliance with 

coverage and payment rules before certain items or services are provided to 

patients, rather than after the items or services have been provided. This 

approach may be used to reduce expenditures, unnecessary utilization, and 

improper payments. The Centers for Medicare & Medicaid Services (CMS) has 

begun using prior authorization in Medicare through a series of fixed-length 

demonstrations designed to measure their effectiveness, and one permanent 

program. According to GAO’s analyses, expenditures decreased for items and 

services subject to a demonstration. GAO’s analyses of actual expenditures and 

estimated expenditures in the absence of the demonstrations found that 

estimated savings from all demonstrations through March 2017 could be as high 

as about $1.1 to $1.9 billion. While CMS officials said that prior authorization 

likely played a large role in reducing expenditures, it is difficult to separate the 

effects of prior authorization from other program integrity efforts. For example, 

CMS implemented a durable medical equipment competitive bidding program in 

January 2011, and according to the agency, it resulted in lower expenditures.

Many provider, supplier, and beneficiary group officials GAO spoke with reported 

benefits of prior authorization, such as reducing unnecessary utilization. 

However, provider and supplier group officials reported that providers and 

suppliers experienced some challenges. These include difficulty obtaining the 

necessary documentation from referring physicians to submit a prior 

authorization request, although CMS has created templates and other tools to 

address this concern. In addition, providers and suppliers reported concerns 

about whether accessories deemed essential to the power wheelchairs under the 

permanent durable medical equipment, prosthetics, orthotics, and supplies 

(DMEPOS) program are subject to prior authorization. In practice, Medicare 

Administrative Contractors (MAC) that administer prior authorization programs

review these accessories when making prior authorization determinations, even 

though they are not technically included in the program and therefore cannot be 

provisionally affirmed. As a result, providers and suppliers lack assurance about 

whether Medicare is likely to pay for these accessories. This is contrary to a 

CMS stated benefit of prior authorization—to provide assurance about whether 

Medicare is likely to pay for an item or service—and to federal internal control 

standards, which call for agencies to design control activities that enable an 

agency to achieve its objectives. 

CMS monitors prior authorization through various MAC reports. CMS also

reviews MAC accuracy and timeliness in processing prior authorization requests 

and has contracted for independent evaluations of the demonstrations. Currently, 

prior authorization demonstrations are scheduled to end in 2018. Despite its 

interest in using prior authorization for additional items, CMS has not made plans 

to continue its efforts. Federal internal control standards state that agencies 

should identify, analyze, and respond to risks related to achieving objectives.

CMS risks missed opportunities for achieving its stated goals of reducing costs 

and realizing program savings by reducing unnecessary utilization and improper 

payments.

View GAO-18-341. For more information, 

contact A. Nicole Clowers at (202) 512-7114 

or clowersa@gao.gov or Kathleen M. King at 

(202) 512-7114 or kingk@gao.gov.

Why GAO Did This Study

CMS required prior authorization as a 

demonstration in 2012 for certain 

power mobility devices, such as power 

wheelchairs, in seven states. Under 

the prior authorization process, MACs 

review prior authorization requests and 

make determinations to approve or 

deny them based on Medicare 

coverage and payment rules.

Approved requests will be paid as long 

as all other Medicare payment 

requirements are met.

GAO was asked to examine CMS’s 

prior authorization programs. GAO 

examined 1) the changes in 

expenditures and the potential savings 

for items and services subject to prior 

authorization demonstrations, 2) 

reported benefits and challenges of 

prior authorization, and 3) CMS’s 

monitoring of the programs and plans 

for future prior authorization. To do 

this, GAO examined prior authorization 

program data, CMS documentation, 

and federal internal control standards. 

GAO also interviewed CMS and MAC 

officials, as well as selected provider, 

supplier, and beneficiary groups.

What GAO Recommends

GAO recommends that CMS (1)

subject accessories essential to the 

power wheelchairs in the permanent 

DMEPOS program to prior 

authorization and (2) take steps, based 

on results from evaluations, to continue 

prior authorization. The Department of 

Health and Human Services neither 

agreed nor disagreed with GAO’s 

recommendations but said it would 

continue to evaluate prior authorization 

programs and take GAO’s findings and 

recommendations into consideration in 

developing plans or determining 

appropriate next steps.
Page i GAO-18-341 Prior Authorization in Medicare

Letter 1

Background 5

Medicare Expenditures Decreased After Prior Authorization Began 

in Four Demonstrations 13

Providers and Suppliers Reported that Prior Authorization Is an 

Effective Tool, but They Face Difficulty Obtaining 

Documentation, and Concerns Exist for One Program 21

CMS Monitors Prior Authorization But Has Not Made Plans for 

Prior Authorization in the Future 25

Conclusions 27

Recommendations for Executive Action 28

Agency Comments 28

Appendix I List of Items That May Be Selected 

for Prior Authorization 30

Appendix II Expenditure Data for Items and Services 

Subject to Prior Authorization 36

Appendix III Comments from the Department 

of Health and Human Services 40

Appendix IV GAO Contact and Staff Acknowledgments 43

Tables

Table 1: Number of Initial and Resubmission Approval and Denial 

Decisions for Each Demonstration from Implementation 

through March 2017 12

Table 2: Estimated Potential Savings for Prior Authorization in 

Four Demonstrations from Implementation through March 

2017 17

Table 3: Master List of Durable Medical Equipment, Prosthetics, 

Orthotics, and Supplies Subject to Frequent Unnecessary 

Utilization for Prior Authorization 30

Contents
Page ii GAO-18-341 Prior Authorization in Medicare

Table 4: Monthly Power Mobility Device Expenditures from March 

2012 through March 2017, by Initial Demonstration 

States, Expansion Demonstration States, and NonDemonstration States 36

Table 5: Monthly Repetitive Scheduled Non-Emergency 

Ambulance Services Expenditures from June 2014 

through March 2017, by Initial Demonstration States, 

Expansion Demonstration States, and Non-Demonstration 

States 37

Table 6: Monthly Non-Emergency Hyperbaric Oxygen Therapy 

Expenditures from September 2014 through March 2017, 

by Initial Demonstration States and Non-Demonstration 

States 38

Table 7: Monthly Home Health Services Expenditures from 

February 2016 through March 2017, by Initial 

Demonstration States and Non-Demonstration States 39

Figures

Figure 1: Prior Authorization Programs’ Implementation and End 

Dates 9

Figure 2: Prior Authorization Process 11

Figure 3: Average Monthly Expenditures per State for Four Prior 

Authorization Demonstrations in Initial Demonstration 

States, Expansion Demonstration States, and NonDemonstration States from Six Months Prior to Initial 

Implementation through March 2017 (in millions) 14
Page iii GAO-18-341 Prior Authorization in Medicare

Abbreviations

CMS Centers for Medicare & Medicaid Services

DMEPOS durable medical equipment, prosthetics, orthotics, 

and supplies

HHS Department of Health and Human Services

MAC Medicare Administrative Contractor

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Page 1 GAO-18-341 Prior Authorization in Medicare

441 G St. N.W.

Washington, DC 20548

April 20, 2018

The Honorable Orrin Hatch

Chairman

Committee on Finance

United States Senate

Dear Mr. Chairman:

Prior authorization is a payment approach used by private insurers that 

generally requires health care providers and suppliers to first demonstrate 

compliance with coverage and payment rules before certain items or 

services are provided to patients, rather than after the items or services 

have been provided. This approach may be used to reduce expenditures, 

unnecessary utilization, and improper payments.1 The Centers for 

Medicare & Medicaid Services (CMS)—the agency within the Department 

of Health and Human Services (HHS) that administers the Medicare 

program—has begun using prior authorization to help ensure program 

integrity for selected items and services with high levels of unnecessary 

utilization and improper payments. In fiscal year 2017, the federal 

government made an estimated $36.2 billion in improper payments for the 

Medicare fee-for-service program.2 Since 1990, we have designated 

Medicare a high-risk program because of its size, complexity, and 

susceptibility to mismanagement and improper payments.3

 1

In general, improper payments include payments made in error, such as payments that 

should not have been made; payments made in incorrect amounts, including 

overpayments and underpayments; and payments for claims that were not properly 

documented.

2

Improper payment estimates are calculated from claims processed from July 2015 to 

June 2016. Department of Health and Human Services, FY2017 Agency Financial Report 

(Washington, D.C.: Nov. 14, 2017). Medicare is the federally financed health insurance 

program for persons aged 65 and over, certain individuals with disabilities, and individuals 

with end-stage renal disease. Medicare fee-for-service, or original Medicare, consists of 

Medicare Parts A and B. Medicare Part A covers hospital and other inpatient stays. 

Medicare Part B is optional insurance and covers physician, outpatient hospital, home 

health care, certain other services, and the rental or purchase of durable medical 

equipment, prosthetics, orthotics, and supplies (DMEPOS). 

3

See GAO, High-Risk Series: Progress on Many High-Risk Areas, While Substantial 

Efforts Needed on Others, GAO-17-317 (Washington, D.C.: February 2017). 

Letter
Page 2 GAO-18-341 Prior Authorization in Medicare

CMS required prior authorization as a demonstration in 2012 for certain 

power mobility devices in seven states. CMS conducts demonstrations to 

test or measure the effect of program changes, such as new or innovative 

payment approaches. Since that time, CMS has expanded this 

demonstration to additional states and implemented three additional 

demonstrations for other items or services, such as non-emergency 

hyperbaric oxygen therapy, and established a permanent program for 

certain types of power wheelchairs.4 For the purposes of our report, we 

refer to the demonstrations and the permanent program collectively as 

prior authorization programs unless otherwise noted.

You asked us to review CMS’s use of prior authorization in Medicare, 

including findings from current programs, benefits and challenges, and 

any opportunities for expansion. This report examines

1. the changes in expenditures and the potential savings for items 

and services subject to prior authorization demonstrations.

2. the reported benefits and challenges of prior authorization.

3. CMS’s monitoring of prior authorization programs and its plans for 

future prior authorization.

To determine changes in expenditures and the potential savings for items 

and services subject to prior authorization demonstrations, we analyzed 

Medicare monthly expenditure data. We did not analyze expenditure data 

for the permanent program because it was implemented in March 2017. 

We calculated monthly expenditures for each demonstration for 2 time 

periods: 1) the 6 months prior to implementation of each demonstration 

and 2) the start of implementation of each demonstration through March 

2017, the month for which the most recent reliable data were available at 

the time of our analysis. We analyzed these data separately for three 

groups of states: initial demonstration states (states that were part of the 

initial implementation), expansion demonstration states (states added 

after the initial implementation of the demonstration), and non-

 4

Hyperbaric oxygen therapy is a treatment in which the entire body is exposed to oxygen 

under increased atmospheric pressure. 
Page 3 GAO-18-341 Prior Authorization in Medicare

demonstration states (states that were never part of the demonstration).5

We calculated average monthly expenditures by state for each of the 

three groups of states. We then estimated potential savings by comparing 

average monthly expenditures before and after implementation in initial 

and expansion demonstration states. For the power mobility device 

demonstration, we also estimated potential savings from reduced 

expenditures in non-demonstration states, since CMS officials stated that 

savings may occur in all states—even those not part of the 

demonstration—in part because they think that larger nationwide 

suppliers could have improved their compliance with CMS policies in all 

states based on their experiences with prior authorization. Finally, we 

analyzed the effect of prior authorization over time by determining the 

percentage of the total reduction in expenditures that took place in the 

first 6 months of implementation for each demonstration.6 We did not 

independently verify the accuracy of these data on CMS’s Medicare 

expenditures; however, we checked these data for obvious errors and 

omissions, compared analyses results to CMS’s publicly reported 

information about expenditures, and interviewed CMS officials to resolve 

any identified discrepancies. On the basis of these actions, we 

determined that these data were sufficiently reliable for the purpose of our 

reporting objectives. We also interviewed CMS officials and reviewed 

CMS documents, such as CMS’s annual program integrity report, to 

identify other program integrity efforts that may have affected 

expenditures.

 5

For each demonstration, we considered the implementation month to be the same for all 

initial demonstration states. For the power mobility device and repetitive scheduled nonemergency ambulance services demonstrations, CMS increased the number of states 

covered under the demonstration after the initial implementation. We considered the 

implementation month to be the same for all expansion demonstration states for each 

demonstration. Implementation was delayed for the non-emergency hyperbaric oxygen 

demonstration from March 2015 to July 2015 for two states. CMS refers to the various 

prior authorization programs as the certain power mobility devices and home health 

services demonstrations and the repetitive scheduled non-emergent ambulance transport 

services and non-emergent hyperbaric oxygen models. For the purposes of this report, we 

refer to all of these as demonstrations.

6

We calculated total expenditures in the 6th month after implementation and total 

expenditures in March 2017 for initial demonstration states for the repetitive scheduled 

non-emergency ambulance services, power mobility devices, and non-emergency 

hyperbaric oxygen therapy demonstrations. We then used these data, as well as average 

monthly expenditures for the 6 months prior to each demonstration’s initial 

implementation, to determine—from implementation through March 2017—the percentage 

of the total reduction in expenditures that took place within the first 6 months.
Page 4 GAO-18-341 Prior Authorization in Medicare

To identify reported benefits and challenges of prior authorization, we 

interviewed multiple stakeholders. First, we interviewed a nongeneralizable sample of officials from nine Medicare beneficiary and 

provider and supplier groups to learn about their experiences with 

Medicare prior authorization, including challenges they faced and their 

views on program benefits. Second, we interviewed officials from CMS 

and the six Medicare Administrative Contractors (MAC) that administer 

the Medicare prior authorization programs about program benefits and 

challenges implementing and conducting the programs. When possible, 

we reviewed relevant documentation, such as the prior authorization 

programs’ operational guides, to corroborate information reported by 

stakeholders. Third, we interviewed a sample of four private health 

insurers and two associations that represent health insurers about their 

experiences with prior authorization. To identify private health insurers, 

we considered which insurers had the greatest market share among large 

group insurers in states with Medicare prior authorization programs and 

which offered Medicare Advantage plans, as well as whether the insurer 

had been discussed in stakeholder interviews as having particularly 

relevant experience.7 We then compared CMS’s efforts to mitigate 

reported challenges to federal standards for internal controls related to 

control activities.8

To determine the monitoring CMS conducts of prior authorization and its 

plans for future prior authorization, we obtained and reviewed CMS and 

Medicare contractor documents including Federal Register notices, 

proposed and final rules, and CMS prior authorization demonstration 

status updates. We interviewed CMS officials regarding the agency’s 

monitoring of prior authorization and the extent to which the agency has 

plans for future prior authorization. We also interviewed private health 

insurers about their prior authorization programs and the evaluations they 

conduct, including how they determine whether to add or remove items 

and services from prior authorization. We then compared CMS’s efforts in 

 7

The Medicare Advantage program—also known as Medicare Part C—is the private plan 

alternative to the traditional Medicare program. 

8

See GAO, Standards for Internal Control in the Federal Government, GAO-14-704G 

(Washington, D.C.: September 2014). Internal control is a process effected by an entity’s 

oversight body, management, and other personnel that provides reasonable assurance 

that the objectives of an entity will be achieved.
Page 5 GAO-18-341 Prior Authorization in Medicare

these areas to identified federal standards for internal control related to 

risk assessment.9

We conducted this performance audit from November 2016 through April 

2018 in accordance with generally accepted government auditing 

standards. Those standards require that we plan and perform the audit to 

obtain sufficient, appropriate evidence to provide a reasonable basis for 

our findings and conclusions based on our audit objectives. We believe 

that the evidence obtained provides a reasonable basis for our findings 

and conclusions based on our audit objectives.

Since September 2012, CMS has subjected selected items and services 

to prior authorization and pre-claim reviews—a process similar to prior 

authorization where review takes place after services have begun—

through four fixed-length demonstrations and a permanent program.10

The prior authorization demonstrations are for certain power mobility 

devices, repetitive scheduled non-emergency ambulance services, nonemergency hyperbaric oxygen therapy, and home health services; while 

the permanent program is for certain durable medical equipment, 

prosthetics, orthotics, and supplies (DMEPOS) items. By using prior 

authorization, CMS generally seeks to reduce expenditures, unnecessary 

utilization, and improper payments, although specific objectives for the 

programs vary based on the statutory authority CMS used to initiate each.

Power mobility devices demonstration: In September 2012, CMS 

implemented prior authorization for certain scooters and power 

wheelchairs, items the agency has identified with historically high levels of 

fraud and improper payments, for Medicare beneficiaries in seven states: 

California, Florida, Illinois, Michigan, New York, North Carolina, and 

Texas. The demonstration, established under Section 402(a) of the Social 

Security Amendments of 1967, is intended to develop or demonstrate 

improved methods for the investigation and prosecution of fraud in 

providing care or services under Medicare.11 In October 2014, CMS 

 9

See GAO-14-704G. 

10For the purposes of this report, we refer to prior authorization and pre-claim review as 

prior authorization. 

11Pub. L. No. 90-248, § 402(a), 81 Stat. 821, 930 (1968) (codified, as amended, at 42 

U.S.C. § 1395b-1(a)(1)(J)).

Background

Medicare Prior 

Authorization Programs
Page 6 GAO-18-341 Prior Authorization in Medicare

expanded the demonstration to 12 additional states: Arizona, Georgia, 

Indiana, Kentucky, Louisiana, Maryland, Missouri, New Jersey, Ohio, 

Pennsylvania, Tennessee, and Washington. CMS also extended the 

program, which was originally scheduled to end in 2015, until August 

2018.

Repetitive scheduled non-emergency ambulance services 

demonstration: In December 2014, CMS implemented prior 

authorization for repetitive scheduled non-emergency ambulance services 

in three states the agency has identified with high utilization and improper 

payment rates, based on the garage location of the ambulance: New 

Jersey, Pennsylvania, and South Carolina. A repetitive ambulance 

service—which is defined as medically necessary ambulance 

transportation that is furnished three or more times during a 10-day period 

or at least once per week for at least 3 weeks—is most typically 

associated with transportation to services like dialysis or chemotherapy, 

according to CMS officials. According to CMS, previous analysis shows 

that non-emergency ambulance services to and from dialysis facilities 

have grown noticeably in recent years and now represent a large share of 

non-emergency ambulance claims. The demonstration, established under 

Section 1115A of the Social Security Act, is intended to reduce 

expenditures while preserving or enhancing quality of care.12 In January 

2016, CMS increased the number of states included in the demonstration 

in accordance with Section 515(a) of the Medicare Access and CHIP 

Reauthorization Act of 2015: Delaware, District of Columbia, Maryland, 

North Carolina, Virginia, and West Virginia.13 In December 2017, CMS 

 CMS officials reported that since the prior authorization programs’ implementation, the 

agency made more than 100 referrals to its contractors that investigate fraud. However, 

due to the length of time fraud investigations typically take, results from these referrals are 

not yet available. 

1242 U.S.C. § 1315a. 

13Pub, L. No. 114-10, § 515(a) 129 Stat. 87, 174 (2015). For purposes of this report, we 

refer to the increase in the number of states included in the demonstration as a 

demonstration expansion. 
Page 7 GAO-18-341 Prior Authorization in Medicare

extended the program, which was originally scheduled to end in 2017, 

through November 2018.14

Non-emergency hyperbaric oxygen therapy demonstration: In March 

2015, CMS implemented prior authorization for non-emergency 

hyperbaric oxygen therapy in three states the agency has identified with 

high utilization and improper payment rates, based on the therapy 

facility’s location: Illinois, Michigan, and New Jersey. Medicare covers 

hyperbaric oxygen therapy for certain conditions, such as diabetic 

wounds of the lower extremities, after there have been 30 days of no 

measurable signs of healing during standard wound care treatment. 

According to CMS, previous experience indicates that hyperbaric oxygen 

therapy has a high potential for improper payments and raises concerns 

about beneficiaries receiving medically unnecessary care. The 

demonstration, established under Section 1115A of the Social Security 

Act, is intended to reduce expenditures while preserving or enhancing 

quality of care. The demonstration ended in February 2018.

Home health services demonstration: In August 2016, CMS 

implemented prior authorization for home health services in Illinois. The 

demonstration, established under Section 402(a) of the Social Security 

Amendments of 1967, is intended to develop or demonstrate improved

methods for the investigation and prosecution of fraud in providing care or 

services under Medicare. The demonstration was originally scheduled to 

incorporate other states the agency has identified with high rates of fraud 

and abuse: Florida, Massachusetts, Michigan, and Texas. However, as of 

April 2017, CMS paused the demonstration while it considered making 

improvements. As of February 2018, the demonstration has not resumed.

Permanent DMEPOS program: In December 2015, CMS established a 

permanent prior authorization program for certain DMEPOS items under 

Section 1834(a)(15) of the Social Security Act.15 This program aims to 

 14Section 515(b) of the Medicare Access and CHIP Reauthorization Act of 2015 provides 

that the Secretary shall expand the demonstration nationally if the Secretary determines 

that such an expansion (1) is expected to reduce spending without reducing quality of care 

or improve the quality of care without increasing spending, (2) would reduce net program 

spending, and (3) would not deny or limit Medicare coverage. 42 U.S.C. §§ 1395m(l)(16),

1315a(c). 

15Section 1834(a)(15) of the Social Security Act authorizes the Secretary to develop and 

periodically update a list of DMEPOS items that are frequently subject to unnecessary 

utilization and to develop a prior authorization process for these items. 42 U.S.C. § 

1395m(a)(15). 
Page 8 GAO-18-341 Prior Authorization in Medicare

reduce unnecessary utilization for certain DMEPOS items. To select the 

items that would be subject to prior authorization, CMS compiled a Master 

List of items that 1) appear on the DMEPOS Fee Schedule list, 2) have 

an average purchase fee of $1,000 or greater (adjusted annually for 

inflation) or an average rental fee schedule of $100 or greater (adjusted 

annually for inflation), and 3) meet one of these two criteria: the item was 

identified in a GAO or HHS Office of Inspector General report that is 

national in scope and published in 2007 or later as having a high rate of 

fraud or unnecessary utilization, or the item is listed in the 2011 or later 

published Comprehensive Error Rate Testing program’s annual report.16

CMS may choose specific items from this Master List to include on the 

required prior authorization list, and there is no set end date for requiring 

prior authorization for those items. CMS may suspend prior authorization 

for those items at any time. (See app. I for the items on the Master List.) 

In March 2017, CMS began requiring prior authorization for two types of 

group 3 power wheelchairs from the Master List for beneficiaries with a 

permanent address in selected states (Illinois, Missouri, New York, and 

West Virginia) and expanded the program nationwide in July 2017.17 As 

of February 2018, CMS has not identified any other items from the Master 

List for prior authorization. See figure 1 for each prior authorization 

program’s implementation and end dates.

 16See Medicare Program; Implementation Of Prior Authorization Process for Certain 

Durable Medical Equipment, Prosthetics, Orthotics, and Supplies (DMEPOS) Items and 

Publication of the Initial Required Prior Authorization List of DMEPOS Items That Require 

Prior Authorization as a Condition of Payment, 81 Fed. Reg. 93636 (Dec. 21, 2016). CMS 

updates the Master List annually. As of February 2018, it included 135 items that have 

high rates of fraud, unnecessary utilization, or improper payments.

17CMS defines group 3 wheelchairs as those that can accommodate complex 

rehabilitative technology accessories. Group 3 power wheelchairs accommodate 

beneficiaries with limited mobility due to certain neurological conditions, among other 

things. The wheelchairs selected for the permanent DMEPOS program were not included 

in the power mobility device demonstration.
Page 9 GAO-18-341 Prior Authorization in Medicare

Figure 1: Prior Authorization Programs’ Implementation and End Dates

a

The home health services demonstration was scheduled to run through July 2019, but the Centers 

for Medicare & Medicaid Services (CMS) paused the demonstration in April 2017. As of February 

2018, the demonstration had not resumed.

b

There is no set end date for requiring prior authorization for these durable medical equipment, 

prosthetics, orthotics, and supplies (DMEPOS) items. CMS may suspend prior authorization for these 

items at any time.

MACs that administer the prior authorization programs review prior 

authorization requests for items and services, along with supporting 

documentation, to determine whether all applicable Medicare coverage 

and payment rules have been met. CMS expects requests for prior 

authorization to include all documentation necessary to show that 

coverage requirements have been met, for example face-to-face 

examination documentation or the detailed product description.18 The 

referring physician—or the physician who conducts the face-to-face 

 18CMS’s documentation requirements did not change under the prior authorization 

programs. 

Medicare Prior 

Authorization Process
Page 10 GAO-18-341 Prior Authorization in Medicare

examination of the beneficiary and orders the item or service—provides 

this documentation to a provider or supplier who subsequently furnishes 

the item or service. According to multiple MACs’ officials, the provider or 

supplier who furnishes the item or service typically submits the prior 

authorization request.19 CMS has specified that MACs review initial prior 

authorization requests and make a determination within 10 business 

days.20 MACs make one of the following decisions:

• Provisionally affirm (approve) – Documentation submitted meets 

Medicare’s coverage and payment rules. A prior authorization 

provisional affirmation is a preliminary finding that a future claim 

submitted to Medicare for the item or service meets Medicare’s 

coverage and payment requirements and will likely be paid.21

• Non-affirm (deny) – Documentation submitted does not meet 

Medicare rules or the item or service is not medically necessary. 

However, a non-affirmed request may be revised and resubmitted for 

review an unlimited number of times prior to the submission of the 

claim for payment. CMS has specified that MACs make a 

determination on a resubmission within 20 business days.

For the demonstrations, claims that are submitted without a prior 

authorization provisional affirmation are subject to prepayment review, 

which is medical review before the claim is paid.22 In addition, for the 

home health services and power mobility devices demonstrations, claims 

submitted without a prior authorization provisional affirmation that are 

determined payable during the medical review will be subject to a 25 

percent reduction in payment. For the permanent program, claims that 

are submitted without a prior authorization provisional affirmation are 

denied. (See fig. 2 for the prior authorization process.)

 19Beneficiaries may also submit prior authorization requests for the repetitive scheduled 

non-emergency ambulance service, non-emergency hyperbaric oxygen therapy, and 

home health services demonstrations; and referring physicians may submit them for the 

power mobility device demonstration. However, CMS and some of the MACs told us that 

beneficiaries and referring physicians rarely submit prior authorization requests.

20An expedited review process of 2 business days is available for cases where the 

beneficiary’s health could be jeopardized without timely access to the item or service.

21Other requirements necessary for payment can only be determined after a claim is 

submitted, such as proof of delivery of an item or whether it is a duplicate claim.

22Medicare claims are typically not subject to medical review, which includes a review of 

medical records. Less than 1 percent of claims are selected for a medical review.
Page 11 GAO-18-341 Prior Authorization in Medicare

Figure 2: Prior Authorization Process

As of March 31, 2017, MACs had processed over 337,000 prior 

authorization requests—about 264,000 initial requests and about 73,000 

resubmissions, as shown in table 1.23

 23Numbers of decisions do not include 34,976 rejected submissions for all 

demonstrations. Numbers of decisions for power mobility device demonstration do not 

include decisions made by one of the MAC contractors administering the demonstration 

from September 2012 through June 2016. 
Page 12 GAO-18-341 Prior Authorization in Medicare

Table 1: Number of Initial and Resubmission Approval and Denial Decisions for Each Demonstration from Implementation 

through March 2017

Initial submissions Resubmissions

Demonstration

Time 

period

Avg. per 

month

Total 

requests

Avg. per 

month

Total 

requests

Power mobility device Sep 2012 -

Mar 2017

1,861 102,341 628 34,543

Repetitive scheduled non-emergency 

ambulance services

Dec 2014 -

Mar 2017

1,200 33,588 579 16,203

Non-emergency hyperbaric 

oxygen therapy

Mar 2015 -

Mar 2017

105 2,620 24 611

Home health services Aug 2016 -

Mar 2017

15,767 126,132 2,703 21,623

Total 264,681 72,980

Source: GAO analysis of Centers for Medicare & Medicaid Services data. | GAO-18-341.

Notes: Numbers of decisions do not include 34,976 rejected submissions for all demonstrations. 

Numbers of decisions for power mobility device demonstration do not include decisions made by one 

of the MAC contractors administering the demonstration from September 2012 through June 2016.

MACs’ provisional affirmation rates for both initial and resubmitted prior 

authorization requests rose in each demonstration between their 

implementation and March 2017, often by 10 percentage points or more. 

For example, the provisional affirmation rate for initial submissions for 

repetitive scheduled non-emergency ambulance services rose from 28 

percent in the first 6 months after implementation (December 2014 

through May 2015) to 66 percent in the most recent 6 months for which 

data are available (October 2016 through March 2017). Some MAC 

officials attributed this rise in part to provider and supplier education, 

which improved documentation being submitted.
Page 13 GAO-18-341 Prior Authorization in Medicare

According to our analysis, expenditures decreased for items and services 

subject to prior authorization in four demonstrations. For example, 

expenditure decreases in initial demonstration states from implementation 

through March 2017 ranged from 17 percent to 74 percent. Figure 3 

shows the average monthly expenditures per state from 6 months prior to 

the start of each demonstration through March 2017 for each of three 

groups of states: states that were part of the initial demonstration, states 

that were part of the demonstration expansion, and non-demonstration 

states. (See app. II for monthly expenditures for items and services 

covered under each demonstration from their implementation through 

March 2017.)

Medicare 

Expenditures 

Decreased After Prior 

Authorization Began 

in Four 

Demonstrations

Expenditures Decreased 

After Prior Authorization 

Began and Estimated 

Savings May be as High 

as About $1.1 to $1.9 

Billion, with Most 

Occurring Soon After 

Implementation
Page 14 GAO-18-341 Prior Authorization in Medicare

Figure 3: Average Monthly Expenditures per State for Four Prior Authorization Demonstrations in Initial Demonstration 

States, Expansion Demonstration States, and Non-Demonstration States from Six Months Prior to Initial Implementation 

through March 2017 (in millions)

Notes: This analysis includes the 50 states and the District of Columbia. The total number of nondemonstration states in each demonstration is: 32 in the power mobility device demonstration, 42 in 
Page 15 GAO-18-341 Prior Authorization in Medicare

the repetitive scheduled non-emergency ambulance services demonstration, 48 in the nonemergency hyperbaric oxygen therapy demonstration, and 50 in the home health services 

demonstration.

a

Demonstration initially implemented in September 2012 in 7 states: California, Florida, Illinois, 

Michigan, New York, North Carolina, and Texas.

b

Demonstration expanded in October 2014 to 12 additional states: Arizona, Georgia, Indiana, 

Kentucky, Louisiana, Maryland, Missouri, New Jersey, Ohio, Pennsylvania, Tennessee, and 

Washington.

c

Demonstration initially implemented in December 2014 in 3 states: New Jersey, Pennsylvania, and 

South Carolina.

d

Demonstration expanded in January 2016 to 6 additional states: Delaware, District of Columbia, 

Maryland, North Carolina, Virginia, and West Virginia.

e

Demonstration implemented in March 2015 in 3 states: Illinois, Michigan, and New Jersey.

f

Demonstration implemented in August 2016 in 1 state: Illinois.

Our analysis also shows potential savings for items and services subject 

to prior authorization, based on the difference between actual 

expenditures and estimates of what expenditures would have been in the 

absence of the demonstrations. For each demonstration, we estimated 

expenditures had the demonstration not been implemented by assuming 

that expenditures would have remained at their average for the 6 months 

prior to the demonstration starting in each state. We then compared 

actual expenditures to these estimated expenditures and found that 

potential savings could be as high as about $1.1 to $1.9 billion.24

• Estimated potential savings in states that were part of the 

demonstrations since either their initial implementation or expansion 

may be as high as $1.1 billion. For items and services subject to prior 

authorization in these states, estimated expenditures in the absence 

of the demonstrations would have been over $2.1 billion, while actual 

expenditures were about $1.0 billion.

• Estimated potential savings may be as high as about $1.9 billion if, for 

the power mobility device demonstration, we estimate savings in both 

demonstration states and non-demonstration states since 

implementation. With this method, estimated savings since the power 

mobility device demonstration’s implementation change from over 

$600 million in demonstration states since each state’s 

implementation to about $1.4 billion in all states since the 

 24CMS has also estimated savings for the demonstrations. However, these estimated 

savings are not comparable to GAO’s estimates because they do not cover the same 

period of time. For example, CMS’s most recent savings estimate for the non-emergency 

hyperbaric oxygen therapy demonstration is $5.3 million from March 2015 through March 

2016.
Page 16 GAO-18-341 Prior Authorization in Medicare

demonstration began in September 2012, a nearly $800 million 

increase. This increase is due to including non-demonstration states 

in the analysis and changing the assumptions for expanded 

demonstration states in the analysis.25 CMS officials have reported 

that certain power mobility device expenditures have declined 

significantly in both demonstration states and non-demonstration 

states in part because they think that larger nationwide suppliers 

improved their compliance with CMS policies in all states based on 

their experiences with prior authorization. CMS did not make a similar 

statement for the other demonstrations, and in December 2017, CMS 

officials said that the agency has not analyzed expenditures in nondemonstration states for the other demonstrations. See table 2 for 

estimated potential savings for prior authorization demonstrations 

from implementation through March 2017.

 25Of the nearly $800 million increase in estimated savings, about $370 million of the 

increase is due to including estimated savings in non-demonstration states from 

September 2012 through March 2017. The remainder of the increase is due to calculating 

estimated savings in demonstration expansion states beginning in September 2012 

(demonstration implementation) instead of October 2014 (demonstration expansion) and 

calculating the average expenditures for the 6 months prior to the demonstration starting 

in September 2012 instead of 6 months prior to the demonstration expanding in October 

2014. 
Page 17 GAO-18-341 Prior Authorization in Medicare

Table 2: Estimated Potential Savings for Prior Authorization in Four Demonstrations from Implementation through March 2017 

Group of states 

(number of states)

Estimated 

savings (in 

millions)

Estimated potential savings in demonstration statesa

Repetitive scheduled non-emergency ambulance services

Initial demonstration states (3) $349.5

Expansion demonstration states (6) 38.0

Non-emergency hyperbaric oxygen therapy

Initial demonstration states (3) 17.6

Home health services

Initial demonstration state (1) 104.2

Power mobility device

Initial demonstration states (7) 590.1

Expansion demonstration states (12) 17.8

Total estimated savings 1,117.2

Additional estimated potential savings for power mobility device demonstration in expansion and non-demonstration statesb

Power mobility device

Expansion demonstration states (12)c 411.1

Non-demonstration states (32)c 367.5

Total estimated savings, including additional estimated savings for power mobility device demonstration 1,895.8

Source: GAO analysis of Centers for Medicare & Medicaid Services data. | GAO-18-341.

a

Estimated potential savings in states that were part of the demonstrations since either their initial 

implementation or expansion, assuming that total expenditures would have remained at their average 

for the 6 months prior to the demonstration starting in each state.

b

Because CMS stated that the power mobility device demonstration may result in savings in all 

states—even those not part of the demonstration—we also estimated potential savings for that 

demonstration in non-demonstration states.

c

Additional estimated potential savings in expansion demonstration states is due to calculating 

estimated savings in demonstration expansion states beginning in September 2012 (demonstration 

implementation) instead of October 2014 (demonstration expansion) and calculating the average 

expenditures for the 6 months prior to the demonstration starting in September 2012 instead of 6 

months prior to the demonstration expanding in October 2014.

According to our analysis, more than half of the reduction in monthly 

expenditures took place within the first 6 months of each demonstration. 

We calculated the average monthly expenditures for the 6 months prior to 

the start of each demonstration, the monthly expenditures in the 6th 

month after implementation, and the monthly expenditures in March 2017 

for initial demonstration states in the power mobility device, repetitive 

scheduled non-emergency ambulance services, and non-emergency 
Page 18 GAO-18-341 Prior Authorization in Medicare

hyperbaric oxygen therapy demonstrations. We compared these 

expenditures and found that 58, 99, and 91 percent of the reduction in 

monthly expenditures during this time took place during the first 6 months 

of each demonstration, respectively.26

CMS had other program integrity efforts underway before implementing 

prior authorization, and these efforts may have also contributed to the 

reduction in expenditures for items and services subject to prior 

authorization in these demonstrations. CMS officials said that it is likely 

that prior authorization played a large role in the expenditure reduction for 

those select items and services. However, CMS officials also reported 

that it is difficult to separate the effects of prior authorization from other 

program integrity efforts, and the agency has not developed a 

methodology for determining the independent effect of prior authorization 

on expenditures. We found that some of these other program integrity 

efforts have addressed provider screening and enrollment and certain 

durable medical equipment, and these may have contributed to the 

reductions in Medicare expenditures.27

Provider screening and enrollment: CMS has taken steps to keep 

potentially fraudulent providers and suppliers from billing Medicare. For 

example,

• in September 2011, CMS began revalidating providers’ and suppliers’ 

enrollment in Medicare to ensure that they continue to be eligible to 

bill Medicare. Revalidation involves confirming that the provider or 

supplier continues to meet Medicaid program requirements, including 

ensuring that a provider or supplier does not employ or contract with 

individuals who have been excluded from participation in federal 

health care programs.28 We previously reported that screening all 

providers and suppliers—not just the ones subject to prior 

authorization—resulted in over 23,000 new applications being denied 

 26For purposes of this analysis, we excluded the home health services demonstration 

because it was in effect for only 8 months before it was put on pause in April 2017. As of 

February 2018, the demonstration has not resumed.

27We recently reported on some of these efforts as steps CMS has taken to target highrisk areas within the Medicare program. See GAO Medicare and Medicaid: CMS Needs to 

Fully Align Its Efforts with Fraud Risk Framework, GAO-18-88 (Washington, D.C.: 

December 2017). 

2842 CFR 424.515.

Other CMS Efforts May 

Have Contributed to 

Expenditure Reductions
Page 19 GAO-18-341 Prior Authorization in Medicare

or rejected and over 703,000 existing enrollment records being 

deactivated or revoked from March 2011 through December 2015.29

We also reported that CMS estimated the revised process avoided 

$2.4 billion in total Medicare payments to ineligible providers and 

suppliers from March 2011 to May 2015, some of which may have 

been payments for items and services subject to prior authorization.

• in July 2013, CMS implemented moratoria on enrollment of new 

providers for home health services and for repetitive, scheduled nonemergency ambulance transport in select counties. As of January 

2018, CMS had extended the home health services moratoria 

statewide to Florida, Illinois, Michigan, and Texas and the repetitive, 

scheduled non-emergency ambulance transport moratoria statewide 

to Pennsylvania and New Jersey. During a moratorium, no new 

applications to enroll as a billing provider of the affected service types 

are reviewed or approved.30 In October 2017, CMS officials said that 

home health and non-emergency ambulance services’ expenditures 

may have been affected by provider enrollment moratoria.

Certain durable medical equipment pricing, payments, and 

education and outreach: CMS has taken steps to change how certain 

durable medical equipment is paid for and to provide ongoing durable 

medical equipment education and outreach. For example,

• in January 2011, CMS implemented a DMEPOS competitive bidding 

program required by the Medicare Prescription Drug, Improvement, 

and Modernization Act of 2003.31 Under the program, only 

competitively selected contract suppliers can furnish certain durable 

medical equipment items at competitively determined prices to 

Medicare beneficiaries in designated areas. CMS began the program 

in 9 of the largest metropolitan areas, and in July 2013 expanded to 

an additional 100 large metropolitan areas.32 In January 2016, CMS 

 29See GAO, Medicare: Initial Results of Revised Process to Screen Providers and 

Suppliers, and Need for Objectives and Performance Measures, GAO-17-42 (Washington, 

D.C.: November 2016).

30CMS may impose temporary moratoria on a particular provider or supplier type or a 

particular geographic area as a program integrity effort to prevent fraud, waste, and 

abuse. See 42 U.S.C. § 1395cc(j)(7). 

31Pub. L. No. 108-173, § 302(b), 117 Stat. 2066, 2224 (2003) (codified at 42 U.S.C. § 

1395w-3).

32The metropolitan areas are metropolitan statistical areas or a part thereof. Metropolitan 

statistical areas are designated by the Office of Management and Budget and include 

major cities and the suburban areas surrounding them. 
Page 20 GAO-18-341 Prior Authorization in Medicare

implemented competitive bidding program-based adjusted prices for 

non-designated areas for durable medical equipment items that were 

previously, or are currently, included in the competitive bidding 

program. According to CMS, the program—which generally results in 

lower competitively bid prices—is reducing expenditures for 

approximately half of the beneficiaries receiving power mobility 

devices nationwide. We have previously reported that prices 

decreased for power mobility devices in the competitive bidding 

program; some of these devices are also subject to prior 

authorization.33

• in January 2011, CMS eliminated the lump sum purchase option for 

standard power wheelchairs. This change reduced expenditures for 

power wheelchairs used on a short-term basis because payments for 

short-term rentals are lower than for the purchase of these items.

• durable medical equipment MACs and CMS provide continuous 

DMEPOS education and outreach. According to CMS, the education 

and outreach may have contributed to reducing expenditures for 

power mobility devices by helping providers and suppliers to 

understand how to bill correctly and to submit fewer claims that do not 

meet Medicare coverage and payment requirements.

 33See GAO, Medicare: Bidding Results from CMS’s Durable Medical Equipment 

Competitive Bidding Program, GAO-15-63 (Washington, D.C.: November 2014). 
Page 21 GAO-18-341 Prior Authorization in Medicare

Many of the officials we interviewed representing provider, supplier, and 

beneficiary groups, as well as CMS and MACs, reported benefits to prior 

authorization. Officials from some of these groups said that prior 

authorization is an effective tool to reduce unnecessary utilization and 

improper payments. Some officials who reported benefits said that prior 

authorization helps educate providers and suppliers about allowable 

items and services under Medicare and improves providers’ and 

suppliers’ documentation. Some officials also said that providers and 

suppliers appreciate the assurance of knowing that Medicare is likely to 

pay for these items and services. Officials from three provider and 

supplier groups said that by getting provisional prior authorization, their 

claims will likely not be denied, and they can thus avoid the appeals 

process, for which there are significant delays.34 In addition, officials from 

two provider and supplier groups believe that prior authorization may 

deter fraudulent suppliers from participating in Medicare. Because of 

these benefits, these provider and supplier group officials recommended 

that CMS expand its use of prior authorization.

In addition, CMS has improved the prior authorization programs by 

responding to some of the providers’ and suppliers’ initial concerns. For 

 34See GAO, Medicare Fee-For-Service: Opportunities Remain to Improve Appeals 

Process, GAO-16-366 (Washington, D.C.: May 2016).

Providers and 

Suppliers Reported 

that Prior 

Authorization Is an 

Effective Tool, but 

They Face Difficulty 

Obtaining 

Documentation, and 

Concerns Exist for 

One Program

Many Providers and 

Suppliers Reported Prior 

Authorization Benefits, 

and CMS Has Addressed 

Some of Their Initial 

Concerns
Page 22 GAO-18-341 Prior Authorization in Medicare

example, for the power mobility device demonstration, CMS and MAC 

officials that process DMEPOS claims reported that providers and 

suppliers were initially confused about whether beneficiaries with 

representative payees—persons or organizations authorized to accept 

payment on a beneficiary’s behalf—were exempt from the prior 

authorization program.35 To address this issue, CMS revised and clarified 

its guidance related to representative payees. In addition, for the nonemergency hyperbaric oxygen therapy demonstration, officials from CMS 

and a MAC administering the demonstration said that providers and 

suppliers raised concerns that a Medicare-covered condition 

(compromised skin grafts) included in the demonstration required 

immediate care and therefore should not be subject to prior authorization. 

In response, CMS removed the condition from the list of conditions 

subject to prior authorization.

Some provider and supplier group officials we interviewed reported that 

obtaining the documentation necessary to submit a prior authorization 

request can be difficult. For example, some of these officials told us that 

providers and suppliers may spend 3 to 7 weeks obtaining necessary 

documentation from referring physicians and other relevant parties before 

submitting a prior authorization request. While CMS’s documentation 

requirements did not change under prior authorization, officials from a 

provider and supplier group we spoke with said that prior authorization 

exacerbates existing documentation challenges because they must obtain 

all required documentation before providing items and services to 

beneficiaries. As we noted in a previous report, two durable medical 

equipment MACs said that referring physicians may lack financial 

incentives to submit proper documentation since they are unaffected if a 

durable medical equipment or home health claim is denied due to 

insufficient documentation, while the provider or supplier submitting the 

claim loses the payment.36

Furthermore, according to some provider and supplier group 

representatives, CMS’s documentation requirements can be difficult to 

meet. Representatives from one supplier and provider group said that 

 35Beneficiaries may require a representative payee if they are deemed incapable of 

managing their finances, for example, due to a cognitive impairment. 

36See GAO, Medicare Provider Education: Oversight of Efforts to Reduce Improper Billing 

Needs Improvement, GAO-17-290 (Washington, D.C.: March 2017).

Providers and Suppliers 

Report Difficulty Obtaining 

Documentation for Prior 

Authorization Requests, 

and CMS Is Taking Steps 

to Address This Challenge
Page 23 GAO-18-341 Prior Authorization in Medicare

there is a high standard of proof to meet the information needed to 

support their medical necessity requirements. For example, 

documentation in the medical record is required to show whether the 

referring physician considered other options. Also, representatives from 

another provider and suppler group said that, unlike private insurers, 

CMS has more requirements that providers and suppliers consider 

administrative. For instance, MACs deny prior authorization requests for 

missing physician signatures.

In addition, representatives from a provider and supplier group said it may 

be necessary to collect documentation from multiple providers that 

treated the beneficiary in order to meet CMS’s medical necessity 

requirements. However, officials from one private insurer said that their 

medical necessity requirements for certain items and services may 

necessitate receiving documentation from several providers as well, 

although this does not occur often.

CMS officials acknowledged that the agency’s requirements may be more 

difficult to meet than those of private health insurers. However, this 

scrutiny may be beneficial because, unlike private insurers, Medicare 

must pay for health care delivered by any eligible physician willing to 

accept Medicare payment and follow Medicare requirements.

We found that CMS and the MACs have taken some steps to assist 

providers and suppliers in obtaining documentation from referring 

physicians. For example, CMS has created e-clinical templates for home 

health services and power mobility devices that can be incorporated into 

progress notes to help ensure physicians meet medical necessity 

requirements. CMS and the MACs have also created documentation 

checklists, prior authorization coversheets, and other tools to assist 

providers and suppliers in verifying that they have obtained the 

documentation necessary to meet CMS’s documentation requirements. 

Agency officials have stated that they are working on additional changes 

to reduce provider and supplier burden, for example, developing e-clinical 

templates for additional items and services.

Furthermore, representatives from each of the MACs said that they call 

providers and suppliers that receive certain prior authorization nonaffirmations to ensure suppliers and providers understand what 
Page 24 GAO-18-341 Prior Authorization in Medicare

information is required to obtain a provisional affirmation.37 Some MAC 

representatives said that having a phone conversation with suppliers 

allows them to resolve non-affirmations more expediently and reduces the 

number of resubmissions. Representatives from one MAC estimated that 

when they call providers and suppliers, they are able to resolve 50 to 80 

percent of the issues that led to the non-affirmations. Several MAC 

representatives also said calling helps providers and suppliers gain a 

better understanding of CMS’s documentation requirements, which will 

increase their likelihood of having future requests provisionally affirmed. 

In addition, CMS officials said that the agency encourages MACs to call 

referring physicians directly, when necessary, to remedy curable errors or 

obtain additional documentation needed to affirm a request because nonaffirmation may be resolved faster without providers and suppliers serving 

as intermediaries.38

Providers and suppliers reported concerns about whether accessories 

deemed essential to group 3 power wheelchairs are subject to prior 

authorization and can be provisionally affirmed under the permanent 

DMEPOS program. According to CMS, the permanent DMEPOS program 

requires prior authorization for power wheelchair bases, but not for their 

accessories. CMS officials said this is because accessories do not meet 

the criteria for inclusion on the Master List. However, according to CMS, 

the MACs must review these accessories when they make prior 

authorization determinations because their decision to provisionally affirm 

a wheelchair base is based in part on their view of the medical necessity 

of the accessories. Therefore, if an essential accessory does not meet 

medical necessity requirements, a MAC will deny a prior authorization 

request for a power wheelchair base. In other words, in practice these 

accessories are subject to prior authorization, even though they are not 

technically included in the permanent DMEPOS program and therefore 

cannot be provisionally affirmed. As a result, providers and suppliers lack 

assurance about whether Medicare is likely to pay for these accessories.

 37CMS requires the MACs to call providers and suppliers participating in the home health 

demonstration and the permanent DMEPOS program. The MACs that administer the other 

demonstrations call as a best practice. 

38CMS officials said that, for example, a curable error for the home health pre-claim 

review would be when the medical record supports that the person is homebound and 

needs skilled services, but the documentation for the face-to-face examination between 

the person and referring physician is missing or has not been signed by the referring 

physician. 

Providers and Suppliers 

Report Concerns about 

Whether the Permanent 

DMEPOS Program 

Includes Essential 

Accessories
Page 25 GAO-18-341 Prior Authorization in Medicare

In December 2017, CMS officials stated that there have been preliminary 

discussions regarding the feasibility and effect of subjecting accessories 

essential to the group 3 power wheelchairs in the permanent DMEPOS 

program to prior authorization. However, CMS officials did not provide a 

timeframe for reaching a decision about whether they would do so. 

Federal internal control standards state that agencies should design 

control activities that enable an agency to achieve its objectives and 

should respond to any risks related to achieving those objectives.39 By not 

including essential accessories in prior authorization so they can be 

provisionally affirmed as appropriate, CMS may hinder its ability to 

achieve one of the stated benefits of the prior authorization program—to 

allow providers and suppliers to know prior to providing the items whether 

Medicare will likely pay for them.

We found that CMS monitoring includes reviewing MAC reports of the 

results of prior authorization requests, examining MAC timeliness and 

accuracy, and contracting for independent evaluations of the prior 

authorization demonstrations.

• CMS officials told us that they review weekly, monthly, and annual 

MAC reports that include information such as numbers of requests 

received, completed, approved, denied, and resubmitted.

• According to CMS officials, they monitor MAC timeliness through 

these reports and separately have a contractor review MAC accuracy 

in processing requests. According to these officials, they have not 

identified any issues with MAC timeliness, as the MACs currently 

meet the standards for processing initial requests within 10 business 

days and resubmissions within 20 business days. In addition, CMS 

officials said that a sample of MACs’ prior authorization decisions is 

 39See GAO-14-704G. 

CMS Monitors Prior 

Authorization But Has 

Not Made Plans for 

Prior Authorization in 

the Future

CMS Monitors Prior 

Authorization and Has 

Contracted for Evaluations 

of the Demonstrations
Page 26 GAO-18-341 Prior Authorization in Medicare

reviewed each month for accuracy for each of the prior authorization 

demonstrations, and the reviews have not identified any issues with 

these decisions.

• CMS officials said that they meet with providers and supplier groups 

regularly to solicit feedback, to identify issues that need to be 

addressed, and to determine whether there are any problems, such 

as reduced beneficiary access to care. According to CMS officials, 

they have not identified any negative impact on beneficiary access to 

care as a result of implementing prior authorization.

• CMS has contracted for independent evaluations of the power mobility 

device, repetitive scheduled non-emergency ambulance services, and 

non-emergency hyperbaric oxygen demonstrations. In December 

2017, CMS officials told us that evaluations will be completed and 

results available after the demonstrations end.40 In December 2017, 

officials told us that they also plan to contract for an evaluation of the 

permanent program after more time has passed.

Most prior authorization programs are scheduled to end in 2018, with all 

the demonstrations concluding and only the limited permanent program 

remaining.

• The non-emergency hyperbaric oxygen demonstration ended in 

February 2018, the power mobility device demonstration in August 

2018, and the repetitive scheduled non-emergency ambulance 

services demonstration in November 2018.

• The home health services demonstration has been on pause since 

April 2017 with no plans to resume as of February 2018, although 

CMS stated that they are considering improvements to the 

demonstration.

• The permanent program, which currently consists of two group 3 

power wheelchairs, is the only prior authorization program that will 

remain. According to CMS officials, these wheelchairs are very low 

volume, and the HHS Office of the Inspector General reported that 

 40For the power mobility device and repetitive scheduled non-emergency ambulance 

demonstrations, CMS officials provided us interim reports of the independent evaluations. 

An interim report of the non-emergency hyperbaric oxygen therapy demonstration was not 

available at the time of our review. In August 2017 CMS officials told us that they had not 

contracted for an evaluation of the home health services demonstration because it had 

been paused. 

Although Most Prior 

Authorization Is Scheduled 

to End in 2018, CMS Does 

Not Have Plans to 

Continue Efforts
Page 27 GAO-18-341 Prior Authorization in Medicare

these wheelchairs represent just a small percentage of all durable 

medical equipment claims.41

CMS has not made plans for continuing expiring or paused prior 

authorization programs or expanding prior authorization. However, 

officials told us that they would like to see prior authorization for additional 

items. For example, CMS officials said that they have considered prior 

authorization for items such as hospital beds and oxygen concentrators, 

because these have high utilization or improper payment rates. In 

addition, in December 2017, CMS officials said that the agency is 

evaluating whether it has met the requirements for nationwide expansion 

of the repetitive scheduled non-emergency ambulance services 

demonstration established by the Medicare Access and CHIP 

Reauthorization Act of 2015. However, CMS officials also said that have 

not yet determined the next steps for the use of prior authorization. 

Federal internal control standards state that agencies should identify, 

analyze, and respond to risks related to achieving objectives.42 By not 

taking steps, based on results from the evaluations, to continue prior 

authorization, CMS risks missed opportunities for achieving its stated 

goals of reducing costs and realizing program savings by reducing 

unnecessary utilization and improper payments.

Since September 2012, CMS has begun using prior authorization to 

ensure that Medicare coverage and payment rules have been met before 

the agency pays for selected items and services. During this time, 

expenditures for items and services subject to prior authorization have 

been reduced. We estimate potential savings may be as high as about 

$1.1 to $1.9 billion, although other CMS program integrity efforts may 

have contributed to these reductions. Many stakeholders, including 

providers, suppliers, and MAC officials, support prior authorization, citing 

benefits such as reduced unnecessary utilization. However, providers and 

suppliers report concerns about whether accessories deemed essential to 

group 3 power wheelchairs are subject to prior authorization and can be 

provisionally affirmed. By not including essential accessories in prior 

authorization, CMS may hinder its ability to achieve one of the stated 

benefits of the prior authorization program—to allow providers and 

 41See HHS Office of the Inspector General, Medicare Power Wheelchair Claims 

Frequently Did Not Meet Documentation Requirements, OEI-04-07-00401 (Washington, 

D.C.: December 2009).

42See GAO-14-704G.

Conclusions
Page 28 GAO-18-341 Prior Authorization in Medicare

suppliers to know prior to providing the items whether Medicare will likely 

pay for them.

All four prior authorization demonstrations are either paused or will end in 

2018, and CMS does not have plans to extend these programs or expand 

the use of prior authorization to additional items and services with high 

rates of unnecessary utilization or improper payments. By not taking 

steps, based on results from the evaluations, to continue prior 

authorization, CMS risks missed opportunities for achieving its stated 

goals of reducing costs and realizing program savings by reducing 

unnecessary utilization and improper payments.

We are making the following two recommendations to CMS.

• The Administrator of CMS should subject accessories essential to the 

group 3 power wheelchairs in the permanent DMEPOS program to 

prior authorization. (Recommendation 1)

• The Administrator of CMS should take steps, based on results from 

evaluations, to continue prior authorization. These steps could 

include:

• resuming the paused home health services demonstration;

• extending current demonstrations; or,

• identifying new opportunities for expanding prior authorization to 

additional items and services with high unnecessary utilization and 

high improper payment rates. (Recommendation 2)

We provided a draft of this report to HHS for comment, and its comments 

are reprinted in appendix III. HHS also provided technical comments, 

which we incorporated as appropriate.

HHS neither agreed nor disagreed with the recommendations but said it 

would continue to evaluate prior authorization programs and take our 

findings and recommendations into consideration in developing plans or 

determining appropriate next steps. In addition, in response to our 

recommendation to take steps to continue prior authorization, HHS noted 

that the President’s fiscal year 2019 budget for HHS included a legislative 

proposal to extend its statutory authority to permanently require prior 

authorization for specified Medicare fee-for-service items and services to 

all Medicare fee-for-service items and services.

Recommendations for 

Executive Action

Agency Comments
Page 29 GAO-18-341 Prior Authorization in Medicare

As agreed with your office, unless you publicly announce the contents of 

this report earlier, we plan no further distribution until 30 days from the 

report date. At that time, we will send copies to the Secretary of Health 

and Human Services, the Administrator of the Centers for Medicare & 

Medicaid Services, and other interested parties. In addition, the report is 

available at no charge on the GAO website at http://www.gao.gov.

If you or your staff have any questions about this report, please contact A. 

Nicole Clowers at (202) 512-7114 or clowersa@gao.gov or Kathleen M. 

King at (202) 512-7114 or kingk@gao.gov. Contact points for our Offices 

of Congressional Relations and Public Affairs may be found on the last 

page of this report. Major contributors to this report are listed in appendix 

IV.

Sincerely yours,

A. Nicole Clowers

Managing Director, Health Care

Kathleen M. King

Director, Health Care
Appendix I: List of Items That May Be Selected 

for Prior Authorization

Page 30 GAO-18-341 Prior Authorization in Medicare

In December 2015, the Centers for Medicare & Medicaid Services (CMS) 

established a permanent prior authorization program for certain durable 

medical equipment, prosthetics, orthotics, and supplies (DMEPOS).1 To 

select the items subject to prior authorization, CMS compiled a Master 

List of items that 1) appear on the DMEPOS Fee Schedule list, 2) have 

an average purchase fee of $1,000 or greater (adjusted annually for 

inflation) or an average rental fee schedule of $100 or greater (adjusted 

annually for inflation), and 3) meet one of these two criteria: the item was 

identified in a GAO or Department of Health and Human Services Office 

of Inspector General report that is national in scope and published in 

2007 or later as having a high rate of fraud or unnecessary utilization, or 

the item is listed in the 2011 or later published Comprehensive Error Rate 

Testing program’s annual report.2 The information presented in this 

appendix was reprinted from information in a December 2015 final rule. 

We did not edit it in any way, such as to spell out abbreviations. (See 

table 3 for the Master List.)

Table 3: Master List of Durable Medical Equipment, Prosthetics, Orthotics, and Supplies Subject to Frequent Unnecessary 

Utilization for Prior Authorization

Healthcare Common 

Procedure Coding 

System Code

Item 

Description

E0193 Powered air flotation bed (low air loss therapy).

E0260 Hosp bed semi-electr w/matt.

E0277 Powered pres-redu air mattrs.

E0371 Nonpowered advanced pressure reducing overlay for mattress, standard mattress length and width.

E0372 Powered air overlay for mattress, standard mattress length and width.

E0373 Nonpowered advanced pressure reducing mattress.

E0470 Respiratory assist device, bi-level pressure capability, without backup rate feature, used with noninvasive 

interface, e. g. , nasal or facial mask (intermittent assist device with continuous positive airway pressure 

device)

E0601 Continuous Airway Pressure (CPAP) Device.

E1390 Oxygen Concentrator.

 1

Medicare Program; Prior Authorization Process for Certain Durable Medical Equipment, 

Prosthetics, Orthotics, and Supplies, 80 Fed. Reg. 81674 (Dec. 30, 2015). 

2

Section 1834(a)(15) of the Social Security Act authorizes the Secretary to develop and 

periodically update a list of DMEPOS items that are frequently subject to unnecessary 

utilization and to develop a prior authorization process for these items. CMS updates the 

Master List annually. As of February 2018, it included 135 items that have high rates of 

fraud, unnecessary utilization, or improper payments.

Appendix I: List of Items That May Be 

Selected for Prior Authorization
Appendix I: List of Items That May Be Selected 

for Prior Authorization

Page 31 GAO-18-341 Prior Authorization in Medicare

Healthcare Common 

Procedure Coding 

System Code

Item 

Description

E2402 Negative pressure wound therapy electrical pump, stationary or portable.

K0004 High strength, lightweight wheelchair.

K0813 Power wheelchair, group 1 standard, portable, sling/solid seat and back, patient weight capacity up to and 

including 300 pounds.

K0814 Power wheelchair, group 1 standard, portable, captains chair, patient weight capacity up to and including 

300 pounds.

K0815 Power wheelchair, group 1 standard, sling/solid seat and back, patient weight capacity up to and including 

300 pounds.

K0816 Power wheelchair, group 1 standard, captains chair, patient weight capacity up to and including 300 pounds.

K0820 Power wheelchair, group 2 standard, portable, sling/solid seat/back, patient weight capacity up to and 

including 300 pounds.

K0821 Power wheelchair, group 2 standard, portable, captains chair, patient weight capacity up to and including 

300 pounds.

K0822 Power wheelchair, group 2 standard, sling/solid seat/back, patient weight capacity up to and including 300 

pounds.

K0823 Power wheelchair, group 2 standard, captains chair, patient weight capacity up to and including 300 pounds.

K0824 Power wheelchair, group 2 heavy duty, sling/solid seat/back, patient weight capacity 301 to 450 pounds.

K0825 Power wheelchair, group 2 heavy duty, captains chair, patient weight capacity 301 to 450 pounds.

K0826 Power wheelchair, group 2 very heavy duty, sling/solid seat/back, patient weight capacity 451 to 600 

pounds.

K0827 Power wheelchair, group 2 very heavy duty, captains chair, patient weight capacity 451 to 600 pounds.

K0828 Power wheelchair, group 2 extra heavy duty, sling/solid seat/back, patient weight capacity 601 pounds or 

more.

K0829 Power wheelchair, group 2 extra heavy duty, captains chair, patient weight 601 pounds or more.

K0835 Power wheelchair, group 2 standard, single power option, sling/solid seat/back, patient weight capacity up to 

and including 300 pound

K0836 Power wheelchair, group 2 standard, single power option, captains chair, patient weight capacity up to and 

including 300 pounds.

K0837 Power wheelchair, group 2 heavy duty, single power option, sling/solid seat/back, patient weight capacity 

301 to 450 pounds.

K0838 Power wheelchair, group 2 heavy duty, single power option, captains chair, patient weight capacity 301 to 

450 pounds.

K0839 Power wheelchair, group 2 very heavy duty, single power option sling/solid seat/back, patient weight 

capacity 451 to 600 pounds.

K0840 Power wheelchair, group 2 extra heavy duty, single power option, sling/solid seat/back, patient weight 

capacity 601 pounds or more.

K0841 Power wheelchair, group 2 standard, multiple power option, sling/solid seat/back, patient weight capacity up 

to and including 300 pounds

K0842 Power wheelchair, group 2 standard, multiple power option, captains chair, patient weight capacity up to and 

including 300 pounds.
Appendix I: List of Items That May Be Selected 

for Prior Authorization

Page 32 GAO-18-341 Prior Authorization in Medicare

Healthcare Common 

Procedure Coding 

System Code

Item 

Description

K0843 Power wheelchair, group 2 heavy duty, multiple power option, sling/solid seat/back, patient weight capacity 

301 to 450 pounds.

K0848 Power wheelchair, group 3 standard, sling/solid seat/back, patient weight capacity up to and including 300 

pounds.

K0849 Power wheelchair, group 3 standard, captains chair, patient weight capacity up to and including 300 pounds.

K0850 Power wheelchair, group 3 heavy duty, sling/solid seat/back, patient weight capacity 301 to 450 pounds.

K0851 Power wheelchair, group 3 heavy duty, captains chair, patient weight capacity 301 to 450 pounds.

K0852 Power wheelchair, group 3 very heavy duty, sling/solid seat/back, patient weight capacity 451 to 600 

pounds.

K0853 Power wheelchair, group 3 very heavy duty, captains chair, patient weight capacity 451 to 600 pounds.

K0854 Power wheelchair, group 3 extra heavy duty, sling/solid seat/back, patient weight capacity 601 pounds or 

more.

K0855 Power wheelchair, group 3 extra heavy duty, captains chair, patient weight capacity 601 pounds or more.

K0856 Power wheelchair, group 3 standard, single power option, sling/solid seat/back, patient weight capacity up to 

and including 300 pound

K0857 Power wheelchair, group 3 standard, single power option, captains chair, patient weight capacity up to and 

including 300 pounds.

K0858 Power wheelchair, group 3 heavy duty, single power option, sling/solid seat/back, patient weight 301 to 450 

pounds.

K0859 Power wheelchair, group 3 heavy duty, single power option, captains chair, patient weight capacity 301 to 

450 pounds

K0860 Power wheelchair, group 3 very heavy duty, single power option, sling/solid seat/back, patient weight 

capacity 451 to 600 pounds.

K0861 Power wheelchair, group 3 standard, multiple power option, sling/solid seat/back, patient weight capacity up 

to and including 300 pounds

K0862 Power wheelchair, group 3 heavy duty, multiple power option, sling/solid seat/back, patient weight capacity 

301 to 450 pounds.

K0863 Power wheelchair, group 3 very heavy duty, multiple power option, sling/solid seat/back, patient weight 

capacity 451 to 600 pounds.

K0864 Power wheelchair, group 3 extra heavy duty, multiple power option, sling/solid seat/back, patient weight 

capacity 601 pounds or more.

L5010 Partial foot, molded socket, ankle height, with toe filler.

L5020 Partial foot, molded socket, tibial tubercle height, with toe filler.

L5050 Ankle, symes, molded socket, sach foot.

L5060 Ankle, symes, metal frame, molded leather socket, articulated ankle/foot.

L5100 Below knee, molded socket, shin, sach foot.

L5105 Below knee, plastic socket, joints and thigh lacer, sach foot.

L5150 Knee disarticulation (or through knee), molded socket, external knee joints, shin, sach foot.

L5160 Knee disarticulation (or through knee), molded socket, bent knee configuration, external knee joints, shin, 

sach foot.
Appendix I: List of Items That May Be Selected 

for Prior Authorization

Page 33 GAO-18-341 Prior Authorization in Medicare

Healthcare Common 

Procedure Coding 

System Code

Item 

Description

L5200 Above knee, molded socket, single axis constant friction knee, shin, sach foot.

L5210 Above knee, short prosthesis, no knee joint (‘stubbies’), with foot blocks, no ankle joints, each.

L5220 Above knee, short prosthesis, no knee joint (‘stubbies’), with articulated ankle/foot, dynamically aligned, 

each.

L5230 Above knee, for proximal femoral focal deficiency, constant friction knee, shin, sach foot.

L5250 Hip disarticulation, canadian type; molded socket, hip joint, single axis constant friction knee, shin, sach 

foot.

L5270 Hip disarticulation, tilt table type; molded socket, locking hip joint, single axis constant friction knee, shin, 

sach foot.

L5280 Hemipelvectomy, canadian type; molded socket, hip joint, single axis constant friction knee, shin, sach foot.

L5301 Below knee, molded socket, shin, sach foot, endoskeletal system.

L5312 Knee disarticulation (or through knee), molded socket, single axis knee, pylon, sach foot, endoskeletal 

system.

L5321 Above knee, molded socket, open end, sach foot, endoskeletal system, single axis knee.

L5331 Hip disarticulation, canadian type, molded socket, endoskeletal system, hip joint, single axis knee, sach foot.

L5341 Hemipelvectomy, canadian type, molded socket, endoskeletal system, hip joint, single axis knee, sach foot.

L5400 Immediate post surgical or early fitting, application of initial rigid dressing, including fitting, alignment, 

suspension, and one cast change, below knee

L5420 Immediate post surgical or early fitting, application of initial rigid dressing, including fitting, alignment and 

suspension and one cast change ‘ak’ or knee disarticulation

L5500 Initial, below knee ‘ptb’ type socket, non-alignable system, pylon, no cover, sach foot, plaster socket, direct 

formed.

L5505 Initial, above knee—knee disarticulation, ischial level socket, non-alignable system, pylon, no cover, sach 

foot, plaster socket, direct formed

L5510 Preparatory, below knee ‘ptb’ type socket, non-alignable system, pylon, no cover, sach foot, plaster socket, 

molded to model.

L5520 Preparatory, below knee ‘ptb’ type socket, non-alignable system, pylon, no cover, sach foot, thermoplastic 

or equal, direct formed.

L5530 Preparatory, below knee ‘ptb’ type socket, non-alignable system, pylon, no cover, sach foot, thermoplastic 

or equal, molded to model.

L5535 Preparatory, below knee ‘ptb’ type socket, non-alignable system, no cover, sach foot, prefabricated, 

adjustable open end socket.

L5540 Preparatory, below knee ‘ptb’ type socket, non-alignable system, pylon, no cover, sach foot, laminated 

socket, molded to model.

L5560 Preparatory, above knee—knee disarticulation, ischial level socket, non-alignable system, pylon, no cover, 

sach foot, plaster socket, molded to model

L5570 Preparatory, above knee—knee disarticulation, ischial level socket, non-alignable system, pylon, no cover, 

sach foot, thermoplastic or equal, direct formed

L5580 Preparatory, above knee—knee disarticulation ischial level socket, non-alignable system, pylon, no cover, 

sach foot, thermoplastic or equal, molded to model
Appendix I: List of Items That May Be Selected 

for Prior Authorization

Page 34 GAO-18-341 Prior Authorization in Medicare

Healthcare Common 

Procedure Coding 

System Code

Item 

Description

L5585 Preparatory, above knee—knee disarticulation, ischial level socket, non-alignable system, pylon, no cover, 

sach foot, prefabricated adjustable open end socket

L5590 Preparatory, above knee—knee disarticulation ischial level socket, non-alignable system, pylon no cover, 

sach foot, laminated socket, molded to model

L5595 Preparatory, hip disarticulation-hemipelvectomy, pylon, no cover, sach foot, thermoplastic or equal, molded 

to patient model.

L5600 Preparatory, hip disarticulation-hemipelvectomy, pylon, no cover, sach foot, laminated socket, molded to 

patient model.

L5610 Addition to lower extremity, endoskeletal system, above knee, hydracadence system.

L5611 Addition to lower extremity, endoskeletal system, above knee—knee disarticulation, 4 bar linkage, with 

friction swing phase control.

L5613 Addition to lower extremity, endoskeletal system, above knee—knee disarticulation, 4 bar linkage, with 

hydraulic swing phase control.

L5614 Addition to lower extremity, exoskeletal system, above knee—knee disarticulation, 4 bar linkage, with 

pneumatic swing phase control.

L5616 Addition to lower extremity, endoskeletal system, above knee, universal multiplex system, friction swing 

phase control.

L5639 Addition to lower extremity, below knee, wood socket.

L5643 Addition to lower extremity, hip disarticulation, flexible inner socket, external frame.

L5649 Addition to lower extremity, ischial containment/narrow m-l socket.

L5651 Addition to lower extremity, above knee, flexible inner socket, external frame.

L5681 Addition to lower extremity, below knee/above knee, custom fabricated socket insert for congenital or 

atypical traumatic amputee, silicone gel, elastomeric or equal, for use with or without locking mechanism, 

initial only (for other than initial, use code l5673 or l5679)

L5683 Addition to lower extremity, below knee/above knee, custom fabricated socket insert for other than 

congenital or atypical traumatic amputee, silicone gel, elastomeric or equal, for use with or without locking 

mechanism, initial only (for other than initial, use code l5673 or l5679)

L5700 Replacement, socket, below knee, molded to patient model.

L5701 Replacement, socket, above knee/knee disarticulation, including attachment plate, molded to patient model.

L5702 Replacement, socket, hip disarticulation, including hip joint, molded to patient model.

L5703 Ankle, symes, molded to patient model, socket without solid ankle cushion heel (sach) foot, replacement 

only.

L5707 Custom shaped protective cover, hip disarticulation.

L5724 Addition, exoskeletal knee-shin system, single axis, fluid swing phase control.

L5726 Addition, exoskeletal knee-shin system, single axis, external joints fluid swing phase control.

L5728 Addition, exoskeletal knee-shin system, single axis, fluid swing and stance phase control.

L5780 Addition, exoskeletal knee-shin system, single axis, pneumatic/hydra pneumatic swing phase control.

L5781 Addition to lower limb prosthesis, vacuum pump, residual limb volume management and moisture 

evacuation system.
Appendix I: List of Items That May Be Selected 

for Prior Authorization

Page 35 GAO-18-341 Prior Authorization in Medicare

Healthcare Common 

Procedure Coding 

System Code

Item 

Description

L5782 Addition to lower limb prosthesis, vacuum pump, residual limb volume management and moisture 

evacuation system, heavy duty.

L5795 Addition, exoskeletal system, hip disarticulation, ultra-light material (titanium, carbon fiber or equal).

L5814 Addition, endoskeletal knee-shin system, polycentric, hydraulic swing phase control, mechanical stance 

phase lock.

L5818 Addition, endoskeletal knee-shin system, polycentric, friction swing, and stance phase control.

L5822 Addition, endoskeletal knee-shin system, single axis, pneumatic swing, friction stance phase control.

L5824 Addition, endoskeletal knee-shin system, single axis, fluid swing phase control.

L5826 Addition, endoskeletal knee-shin system, single axis, hydraulic swing phase control, with miniature high 

activity frame.

L5828 Addition, endoskeletal knee-shin system, single axis, fluid swing and stance phase control.

L5830 Addition, endoskeletal knee-shin system, single axis, pneumatic/swing phase control.

L5840 Addition, endoskeletal knee/shin system, 4-bar linkage or multiaxial, pneumatic swing phase control.

L5845 Addition, endoskeletal, knee-shin system, stance flexion feature, adjustable.

L5848 Addition to endoskeletal knee-shin system, fluid stance extension, dampening feature, with or without 

adjustability.

L5856 Addition to lower extremity prosthesis, endoskeletal knee-shin system, microprocessor control feature, 

swing and stance phase, includes electronic sensor(s), any type

L5857 Addition to lower extremity prosthesis, endoskeletal knee-shin system, microprocessor control feature, 

swing phase only, includes electronic sensor(s), any type

L5858 Addition to lower extremity prosthesis, endoskeletal knee shin system, microprocessor control feature, 

stance phase only, includes electronic sensor(s), any type

L5930 Addition, endoskeletal system, high activity knee control frame.

L5960 Addition, endoskeletal system, hip disarticulation, ultra-light material (titanium, carbon fiber or equal).

L5964 Addition, endoskeletal system, above knee, flexible protective outer surface covering system.

L5966 Addition, endoskeletal system, hip disarticulation, flexible protective outer surface covering system.

L5968 Addition to lower limb prosthesis, multiaxial ankle with swing phase active dorsiflexion feature.

L5973 Endoskeletal ankle foot system, microprocessor controlled feature, dorsiflexion and/or plantar flexion 

control, includes power source

L5979 All lower extremity prosthesis, multi-axial ankle, dynamic response foot, one piece system.

L5980 All lower extremity prostheses, flex foot system.

L5981 All lower extremity prostheses, flex-walk system or equal.

L5987 All lower extremity prosthesis, shank foot system with vertical loading pylon.

L5988 Addition to lower limb prosthesis, vertical shock reducing pylon feature.

L5990 Addition to lower extremity prosthesis, user adjustable heel height.

Source: Medicare Program; Prior Authorization Process for Certain Durable Medical Equipment, Prosthetics, Orthotics, and Supplies, 80 Fed. Reg. 81674 (Dec. 30, 2015). | GAO-18-341.
Appendix II: Expenditure Data for Items and 

Services Subject to Prior Authorization

Page 36 GAO-18-341 Prior Authorization in Medicare

Tables 4 through 7 present monthly expenditures for items and services 

subject to prior authorization in initial demonstration states, expansion 

demonstration states, and non-demonstration states from 6 months prior 

to each demonstration’s implementation through March 2017, the most 

recent month for which reliable data is available.

Table 4: Monthly Power Mobility Device Expenditures from March 2012 through March 2017, by Initial Demonstration States, 

Expansion Demonstration States, and Non-Demonstration States

Dollars in millions

Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec

2012

Initial demonstration statesa $14.9 $14.5 $14.8 $14.2 $13.9 $14.3 $11.5 $10.3 $9.3 $8.5

Expansion demonstration 

statesb 11.6 11.6 11.7 11.2 11.0 11.2 10.4 10.2 9.6 9.3

Non-demonstration statesc 11.0 10.8 10.8 10.6 10.3 10.3 9.7 9.8 9.3 9.0

2013

Initial demonstration states $7.6 $7.2 6.4 6.2 5.7 5.4 4.5 4.0 3.1 2.9 2.9 3.1

Expansion demonstration 

states

8.5 8.0 7.5 6.9 6.4 6.0 5.1 4.8 3.7 3.3 3.0 3.0

Non-demonstration states 8.3 8.0 7.4 6.9 6.4 6.1 5.5 4.9 4.0 3.6 3.4 3.4

2014

Initial demonstration states 2.6 2.5 2.5 2.6 2.8 2.8 2.8 2.8 2.9 3.1 3.0 3.0

Expansion demonstration 

states

2.6 2.6 2.6 2.6 2.6 2.7 2.9 3.0 3.1 2.9 2.5 2.4

Non-demonstration states 3.0 2.9 3.0 3.0 3.1 3.1 3.1 3.1 3.2 3.3 3.2 3.2

2015

Initial demonstration states 2.9 2.9 3.0 2.9 2.9 2.9 3.1 3.1 3.1 3.3 3.2 3.4

Expansion demonstration 

states

2.3 2.3 2.4 2.3 2.4 2.4 2.5 2.5 2.6 2.6 2.6 2.9

Non-demonstration states 3.1 3.0 3.1 3.1 3.1 3.1 3.2 3.3 3.6 3.5 3.4 3.5

2016

Initial demonstration states 2.7 2.8 2.9 2.8 2.8 2.9 2.0 1.9 2.2 2.3 2.3 2.4

Expansion demonstration 

states

2.2 2.3 2.4 2.3 2.3 2.5 1.6 1.4 1.7 1.8 1.8 1.8

Non-demonstration states 2.7 2.8 2.9 2.8 2.8 3.0 2.0 1.8 2.2 2.2 2.2 2.3

Appendix II: Expenditure Data for Items and 

Services Subject to Prior Authorization
Appendix II: Expenditure Data for Items and 

Services Subject to Prior Authorization

Page 37 GAO-18-341 Prior Authorization in Medicare

Dollars in millions

Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec

2017

Initial demonstration states 1.9 2.0 1.9

Expansion demonstration 

states

1.6 1.6 1.7

Non-demonstration states 2.0 1.8 2.0

Source: GAO analysis of Centers for Medicare & Medicaid Services data. | GAO-18-341.

Note: This analysis includes the 50 states and the District of Columbia.

a

Demonstration initially implemented in September 2012 in 7 states: California, Florida, Illinois, 

Michigan, New York, North Carolina, and Texas.

b

Demonstration expanded in October 2014 to 12 additional states: Arizona, Georgia, Indiana, 

Kentucky, Louisiana, Maryland, Missouri, New Jersey, Ohio, Pennsylvania, Tennessee, and 

Washington.

c

There are 32 non-demonstration states for the demonstration.

Table 5: Monthly Repetitive Scheduled Non-Emergency Ambulance Services Expenditures from June 2014 through March 

2017, by Initial Demonstration States, Expansion Demonstration States, and Non-Demonstration States

Dollars in millions

Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec

2014

Initial demonstration statesa $18.7 $19.8 $18.7 $18.7 $19.4 $16.8 $11.6

Expansion demonstration 

statesb 5.5 5.9 5.6 5.5 5.7 5.1 5.9

Non-demonstration statesc 38.5 40.6 39.4 39.5 41.1 36.4 40.0

2015

Initial demonstration states $5.6 $5.3 $6.1 $6.2 $6.3 6.3 6.4 6.1 6.1 6.3 5.8 6.2

Expansion demonstration 

states

5.7 5.1 5.8 6.0 5.9 6.0 6.2 5.9 5.7 5.9 5.4 5.6

Non-demonstration states 37.9 35.8 39.4 39.2 38.7 38.5 38.8 36.1 35.3 36.4 33.4 35.8

2016

Initial demonstration states 5.8 5.9 6.4 5.7 5.9 6.0 5.9 6.3 6.1 6.0 6.0 6.1

Expansion demonstration 

states

3.4 3.3 3.6 3.3 3.3 3.4 3.3 3.3 3.1 3.1 3.1 3.2

Non-demonstration states 33.6 33.2 34.8 33.3 33.0 32.5 32.0 34.1 32.3 32.2 31.7 32.6

2017

Initial demonstration states 5.9 5.6 6.2
Appendix II: Expenditure Data for Items and 

Services Subject to Prior Authorization

Page 38 GAO-18-341 Prior Authorization in Medicare

Dollars in millions

Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec

Expansion demonstration 

states

3.0 3.1 3.3

Non-demonstration states 31.0 29.5 33.4

Source: GAO analysis of Centers for Medicare & Medicaid Services data. | GAO-18-341.

Note: This analysis includes the 50 states and the District of Columbia.

a

Demonstration initially implemented in December 2014 in 3 states: New Jersey, Pennsylvania, and 

South Carolina.

b

Demonstration expanded in January 2016 to 6 additional states: Delaware, District of Columbia, 

Maryland, North Carolina, Virginia, and West Virginia.

c

There are 42 non-demonstration states for the demonstration.

Table 6: Monthly Non-Emergency Hyperbaric Oxygen Therapy Expenditures from September 2014 through March 2017, by 

Initial Demonstration States and Non-Demonstration States

Dollars in millions

Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec

2014

Initial demonstration statesa $1.8 $1.9 $1.6 $1.6

Non-demonstration statesb 14.2 14.9 11.6 13.1

2015

Initial demonstration states $1.6 $1.7 $1.7 $1.4 $1.4 $1.5 $1.5 $0.9 1.0 1.1 1.0 1.0

Non-demonstration states 12.7 12.6 15.1 15.0 13.7 15.0 15.2 14.2 14.0 12.0 10.6 11.2

2016

Initial demonstration states 0.9 0.9 1.0 0.9 0.9 0.9 0.7 0.9 0.7 0.8 0.7 0.7

Non-demonstration states 10.4 11.3 13.3 12.2 12.1 11.3 10.1 11.9 10.9 10.4 10.5 10.2

2017

Initial demonstration states 0.6 0.7 0.8

Non-demonstration states 10.4 10.4 11.9

Source: GAO analysis of Centers for Medicare & Medicaid Services data. | GAO-18-341.

Note: This analysis includes the 50 states and the District of Columbia.

a

Demonstration implemented in March 2015 in 3 states: Illinois, Michigan, and New Jersey.

b

There are 48 non-demonstration states for the demonstration.
Appendix II: Expenditure Data for Items and 

Services Subject to Prior Authorization

Page 39 GAO-18-341 Prior Authorization in Medicare

Table 7: Monthly Home Health Services Expenditures from February 2016 through March 2017, by Initial Demonstration States 

and Non-Demonstration States

Dollars in millions

Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec

2016

Initial 

demonstration 

statesa

$74.9 $82.8 $79.5 $78.4 $75.8 $77.1 $64.9 $62.7 $64.9 $63.8 $66.7

Nondemonstration 

statesb

1,279.3 1,444.6 1,417.6 1,399.0 1,384.1 1,379.3 1,426.2 1,378.8 1,408.5 1,307.1 1,349.9

2017

Initial 

demonstration 

states 

$69.0 61.5 66.9

Nondemonstration 

states

1,416.2 1,282.4 1,414.7

Source: GAO analysis of Centers for Medicare & Medicaid Services data. | GAO-18-341.

Note: This analysis includes the 50 states and the District of Columbia.

a

Demonstration implemented in August 2016 in 1 state: Illinois.

b

There are 50 non-demonstration states for the demonstration.
Appendix III: Comments from the Department 

of Health and Human Services

Page 40 GAO-18-341 Prior Authorization in Medicare

Appendix III: Comments from the 

Department of Health and Human Services
Appendix III: Comments from the Department 

of Health and Human Services

Page 41 GAO-18-341 Prior Authorization in Medicare
Appendix III: Comments from the Department 

of Health and Human Services

Page 42 GAO-18-341 Prior Authorization in Medicare
Appendix IV: GAO Contact and Staff 

Acknowledgments

Page 43 GAO-18-341 Prior Authorization in Medicare

A. Nicole Clowers, (202) 512-7114 or clowersa@gao.gov

Kathleen M. King, (202) 512-7114 or kingk@gao.gov

In addition to the contact named above, Martin T. Gahart (Assistant 

Director), Lori Achman (Assistant Director), Peter Mangano (Analyst-inCharge), Sylvia Diaz Jones, and Mandy Pusey made key contributions to 

this report. Also contributing were Sam Amrhein, Muriel Brown, Eric 

Wedum, and Jennifer Whitworth.

Appendix IV: GAO Contact and Staff 

Acknowledgments

GAO Contact

Staff 

Acknowledgments

(101242)
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