Image by Lcg from PixabayAmbulatory surgery centers (ASCs) in 10 states will soon face new prior-authorization requirements for a handful of procedures, as the Centers for Medicare & Medicaid Services (CMS) expands its oversight efforts into the space.
The five-year demonstration, announced earlier this month, is designed to test whether earlier documentation review can reduce improper payments while still protecting beneficiary access, according to CMS.
CMS has long turned to prior authorization as a way to keep unnecessary care and fraud in check. Since 2020, certain services in hospital outpatient departments (HOPDs), like blepharoplasty, botulinum toxin injections, panniculectomy, rhinoplasty and vein ablation, have required approval in advance.
Yet as oversight tightened in hospitals, many of those same procedures started shifting into ASCs. From 2019 to 2021, utilization in the ASC setting climbed sharply, raising concerns at CMS about questionable billing and cosmetic services being billed as medically necessary.
“These targeted services can potentially be provided as cosmetic procedures, rather than medically necessary procedures, resulting in unnecessary increases in the volume of covered OPD services,” the agency wrote in its materials about the demo.
The new demonstration brings those same service categories under review in the ASC space.
Yet the demonstration will apply only in 10 states: California, Florida, Texas, Arizona, Ohio, Tennessee, Pennsylvania, Maryland, Georgia and New York. The selection was based on a mix of claim volumes, Medicare Administrative Contractor (MAC) jurisdictions and improper payment rates, CMS said.
Industry reactions are mixed.
“Like other health care providers, ASCA has concerns about the potential burden attached to prior authorization policies, adding bureaucracy that can delay patient care,” Kara Newbury, ASCA’s chief advocacy officer, told ASC News. “We also question the procedures selected by CMS, as only eight of the 41 codes that will be subject to prior authorization have any meaningful volume in ASCs.”
While the demonstration is voluntary, CMS said that ASCs that choose not to submit prior authorization requests will have their claims stopped for prepayment review. This could mean longer delays and a higher risk of denial.
Under the program, ASCs performing one of the targeted procedures must submit a prior authorization request (PAR) before providing the service. The request must include medical records supporting the necessity of the procedure, consistent with Medicare’s existing coverage and payment rules, CMS wrote.
Medicare administrators are required to respond within seven days for standard requests and two business days for expedited cases, such as when delays could jeopardize a patient’s health. And each approved request will receive a unique tracking number that must be attached to the ASC’s claim for payment.
If an ASC proceeds without authorization, claims will be subjected to prepayment medical review, with Medicare administrators allowed up to 30 days to issue a determination. Associated services, such as anesthesia or professional fees, may also be denied if the facility claim is denied.
Yet the demonstration does not create new documentation requirements; instead, it shifts the timing of documentation submission earlier in the process, CMS noted in their announcement.
Patricia Smith, director of revenue cycle consulting at SYNERGEN Health, told ASC News that the changes reflect a broader trend toward tighter utilization management.
“This expansion by CMS of the prior authorization demonstration for certain ASC procedures is a clear signal of where the industry is headed, which as expected includes more scrutiny around high-cost or high-volume procedures,” Smith said.
The short-term effect will be an increased administrative lift for centers in affected states, she added.
“Teams will need to carefully manage which procedures fall under the demonstration, ensure prior authorizations are submitted in a timely manner, and confirm that the documentation supports medical necessity,” she said. “We often see issues arise with orthopedic and pain management procedures when they lack the proper diagnostic codes or supporting clinical notes. These seemingly small omissions can delay or even derail payment.”
For ASC leaders, the practical implications are clear, Smith said. Facilities in the demonstration states will need to establish workflows for tracking prior authorization requests, training scheduling staff and preventing documentation gaps. And operators should conduct proactive audits and leverage technology like robotic process automation to stay ahead.
ASCs in states not selected should also take note.
“Those in unaffected states who plan for the inevitable can be shrewder in their planning and gradual budget allocation,” Smith said.
The program includes an exemption process for facilities with a strong track record of compliance, which may reduce the long-term burden for some providers.
Still, the initial adjustment period will be resource intensive, Smith said.
“Those who treat this as more than a compliance exercise will be in the strongest position,” she said. “Those who build robust prior authorization processes today will not only weather the CMS demo smoothly but also be prepared as similar requirements expand across the ASC landscape.”
Beyond hospitals, other parts of health care that bill Medicare have seen similar sagas unfold.
In the Medicare-certified home health space, for instance, CMS tried for years to establish a pre-claim review demonstration. The industry pushed back, even enlisting the support of key members of Congress to delay implementation.
Ultimately, CMS moved forward with the demonstration.
