Medicare Prior Authorization Expands to Ambulatory Surgical Centers

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Medicare beneficiaries in ten states will soon be participating in a new prior authorization program. The Centers for Medicare & Medicaid Services (CMS) is implementing a five-year demonstration project for prior authorization of certain services provided in Ambulatory Surgical Centers (ASCs), starting in December 2025. The targeted services are procedures that can be medically necessary, but could also be considered cosmetic procedures.

Previously, CMS instituted a similar prior authorization process for the same procedures in 2020. However, the 2020 scheme was nationwide and only applied to hospital outpatient department (OPD) services. This demonstration will only cover 10 states, including: California, Florida, Texas, Arizona, Ohio, Tennessee, Pennsylvania, Maryland, Georgia and New York. It also differs from the 2020 initiative by focusing on ASCs.

The preauthorization requirement goes into effect for dates of service on or after December 15, 2025. Providers can begin submitting prior authorization requests beginning on December 1, 2025.

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CMS is changing the timeline, not the requirements

The new demonstration program does not change existing medical necessity or documentation requirements. Instead, it requires the same information to be submitted before the procedure is performed to help providers avoid claim denials and appeals.

"Prior authorization does not create new clinical documentation requirements. Instead, it requires the same information that is already required to support Medicare payment, just earlier in the process," CMS said on its website.

Services included in the prior authorization demonstration

The demonstration targets specific services that have shown a significant increase in utilization in the ASC setting. These services can potentially be provided as cosmetic procedures, rather than medical, making them vulnerable to improper use and payments.

The services to be included in the prior authorization demonstration are:

Blepharoplasty — eyelid surgery
Botulinum toxin injections
Panniculectomy — abdominal wall contouring
Rhinoplasty — nose repair
Vein ablation procedures — treatment for varicose veins

For instance, a blepharoplasty is the medical term for eyelid surgery. It is a common cosmetic procedure that can rejuvenate the area surrounding your eye by removing excess skin from the upper or lower eyelids. This surgery can also be medically necessary when someone's vision becomes impaired due to excessive tissue or droop in the upper eyelids.

And although Botox is synonymous with smoothing wrinkles, it also has some FDA-approved medical applications for migraines, overactive bladders and certain muscle spasms.

The purpose of the new prior authorization

Medicare's prior authorization plan for certain ambulatory surgical services is intended to ensure that services are medically necessary and to prevent improper payments and fraudulent billing. This plan follows a similar program that's already in place for hospital outpatient departments (OPDs).

"Prior authorization helps CMS to make sure services frequently subject to unnecessary utilization are provided in compliance with applicable Medicare coverage, coding, and payment rules before they are provided..." according to the ASC Demonstration FAQs.

The CMS is playing catch-up. After the prior authorizations were implemented for hospital outpatient procedures, there was a shift of these services out of OPDs to ambulatory surgical facilities. "These increases are likely related to OPD services shifting to the ASC, as the OPD prior authorization program continues," the CMS said in the FAQ.

Medicare patients who need these services shouldn't have to wait longer due to the prior authorization process. Decisions will be sent within seven days of the request for standard review and two business days for expedited review.

Use of prior authorizations in original Medicare is growing

This new demonstration doesn't go as far as the current prior authorization requirements for services received in hospital outpatient departments. In the OPD setting, cervical fusion with disc removal, implanted spinal neurostimulators, and facet joint interventions are also subject to the prior authorization requirements.

Once a rarity in original Medicare, the use of prior authorization to identify and reduce improper billing and fraud is expanding. In 2026, six states — New Jersey, Ohio, Oklahoma, Texas, Arizona, and Washington — will begin using the Wasteful and Inappropriate Service Reduction (WISeR) Model to perform prior authorization evaluations for 17 services that CMS says "are vulnerable to fraud, waste and abuse."

Donna joined Kiplinger as a personal finance writer in 2023. She spent more than a decade as the contributing editor of J.K.Lasser's Your Income Tax Guide and edited state specific legal treatises at ALM Media. She has shared her expertise as a guest on Bloomberg, CNN, Fox, NPR, CNBC and many other media outlets around the nation. She is a graduate of Brooklyn Law School and the University at Buffalo.