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For once, Medicare is trying something that actually saves money
Medicare is the second-largest program in the federal budget, topping $1 trillion last year. In 2023, it accounted for 14% of federal spending — a share projected to reach 18% by 2032. After years of ballooning costs, something is finally being done to slow the growth. A new Medicare pilot program, the Wasteful and Inappropriate Service Reduction model, borrows a successful private-sector tool: prior authorization. And that’s good news.Medicare Part B premiums now sit at $185 per month — up 28% from five years ago and a staggering 76% since 2015. Last year, 12% of the 61 million Americans enrolled in Part B spent more than a tenth of their annual income on premiums. That burden is unsustainable.In a system as expensive and fragmented as ours, no one can afford to keep writing blank checks for low-value care.WISeR, set to launch in Ohio, Texas, Washington, New Jersey, Arizona, and Oklahoma, will require prior approval for a short list of “low-value” services — procedures that research shows are frequently overused, costly, and sometimes harmful.To some, the idea of Medicare reviewing certain treatments before covering them may sound like red tape. But when done correctly, prior authorization is not a barrier. It is a guardrail — one that protects patients, improves quality, and helps ensure that both tax dollars and premiums are spent appropriately.The goal of WISeR is simple: Cut unnecessary treatments and shift resources toward more effective, evidence-based care. Critics warn about the possibility of delays or extra paperwork, and those concerns are worth monitoring. But they don’t negate prior authorization’s potential to make U.S. health care safer, more efficient, and more financially stable.Prior authorization directly targets some of the most persistent problems in health care. Medicare spends billions each year on low-value services. A 2023 study identified just 47 such services that together cost Medicare more than $4 billion annually. Those are taxpayer dollars that could be put to better use.The private insurance market shows the same pattern: unnecessary imaging, avoidable specialist referrals, and brand-name drugs chosen over generics all contribute to rising premiums. Prior authorization, when used properly, reins in this waste by ensuring coverage lines up with medical necessity and evidence-based best practices. Research from the University of Chicago shows that Medicare’s prior authorization rules for prescription drugs generate net savings even after administrative costs.Consider one striking example. Medicare Part B covers wound-care products known as skin substitutes. But an Office of Inspector General report found that expenditures on these products skyrocketed over the past two years to more than $10 billion annually. Meanwhile, Medicare Advantage plans — which rely heavily on prior authorization — spent only a fraction of that amount for the same treatments.RELATED: When a ‘too big to fail’ America meets a government too broke to bail it out DNY59 via iStock/Getty ImagesMore importantly, prior authorization helps promote evidence-based medicine. It curbs outdated clinical habits and reduces financial incentives to overtreat. Health plans consistently say that prior authorization aligns care with gold-standard clinical guidelines, particularly in areas prone to misuse.Of course, the system must be designed responsibly. A well-functioning PA process should be transparent, fast, and grounded in strong clinical evidence. Decisions should be made in close coordination with the patient’s treating provider. The appeals process must be straightforward. And both public and private payers should be held accountable for improper denials or harmful delays.When structured this way, prior authorization is far more efficient than the current “pay-and-chase” model, where Medicare pays first and tries to recover improper payments later.Prior authorization already works in the private sector. It can work in Medicare.Public and private payers have an obligation to steward the dollars they spend — whether those dollars come from taxpayers or premium-payers. In a system as expensive and fragmented as ours, no one can afford to keep writing blank checks for low-value care. When implemented wisely, prior authorization keeps coverage aligned with medical necessity, elevates the value of care, and helps deliver better outcomes at a sustainable cost.
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