Pre-Claim Review And Traditional Medicare Home Health Spending: Evidence From 4 States

The Centers for Medicare and Medicaid Services (CMS) is increasingly experimenting with prior authorization in traditional Medicare. In 2016, CMS began using pre-claim review, a prior authorization-like system in which claims are reviewed after the service begins but before the claim is paid, for home health care in Illinois. Beginning in 2019, a modified demonstration program was also implemented in Florida, North Carolina, and Ohio. We studied the effect of pre-claim review on health care spending, using a synthetic control approach and Medicare claims data. Pre-claim review led to an immediate 13 percent decline in home health spending in Illinois, driven by declines in home health spending in Chicago and a decrease in the number of home health users in the state. Pre-claim review did not reduce spending in Florida, North Carolina, or Ohio. Our results suggest that pre-claim review can reduce health care spending in traditional Medicare, although effects may vary considerably across states.