Prior Authorization for Medicare Outpatient Department Services is a requirement that Medicare approves certain outpatient procedures, services, or equipment before they are provided. This ensures the service is medically necessary and covered under Medicare rules.
Medicare Advantage insurers processed nearly 50 million prior authorization requests. Three and a half million (6.5%) of these were rejected. Interestingly, 81.7% of appealed cases were overturned despite only 11.7% of these denials being appealed. This suggests that there may have been early errors in judgment.
Keeping up with changes to PA procedures, Medicare prior authorization list, and current Medicare policies is crucial. In this article, we will explore everything you need to know about PA for Medicare Outpatient Department Services.
Patients who have not been officially admitted as inpatients can receive a variety of medical procedures and treatments through Medicare Outpatient Department (OPD) services.
These services include radiology, laboratory testing, outpatient surgeries, mental health care, emergency department (ED) visits, and observation services. When provided by hospitals that participate in Medicare, these services are covered under Medicare Part B.
Prior authorization is a utilization management procedure that requires healthcare providers to obtain Medicare’s approval before delivering certain services. In the context of OPD services, prior authorization helps prevent unnecessary increases in service volumes, protects the Medicare Trust Fund from inaccurate payments, and ensures that providers adhere to uniform documentation standards.
The PA process entails providing thorough clinical documentation supporting the necessity of the recommended services. Documentation of the patient’s condition, the planned intervention, and the anticipated results must all be made explicit. Accurate and comprehensive documentation demonstrates the medical necessity of the rendered services.
Prior authorization may cause delays in Medicare beneficiaries’ access to essential care, potentially affecting health outcomes. It also imposes additional administrative responsibilities on providers, such as submitting prior authorization requests and waiting for provisional affirmation decisions before performing specific services. If a claim is submitted without prior authorization, the services may not be reimbursed.
However, when properly implemented, prior authorization helps ensure beneficiaries receive medically necessary care while preventing improper payments.
The Centers for Medicare & Medicaid Services (CMS) has instituted a prior authorization procedure to control unnecessary service volume increases and ensure the delivery of medically necessary care. Under this process, providers must obtain approval before offering specific services to Medicare beneficiaries.
As of July 1, 2023, prior authorization is required for the following OPD services. The following services/treatments are the most common PA:
Note: Medicare Part B covers outpatient physical therapy services when deemed medically necessary by a physician or other qualified healthcare provider. However, Medicare Part B does not cover physical therapy services provided during inpatient hospital stays; these are typically covered under Medicare Part A.
If you notice these treatments, it is evident that CMS is tightening regulations on certain outpatient procedures to curb unnecessary treatments and ensure medical necessity, potentially impacting provider workflows and patient access.
CMS added Facet Joint Interventions in July 2021 to the list of OPD services requiring prior authorization. Providers could begin submitting prior authorization requests for these services from June 15, 2023.
CMS now requires prior authorization for six additional orthoses codes (L0631, L0637, L0639, L1843, L1845, L1951) starting August 12, 2024. These apply to lumbar-sacral and lower limb orthoses for conditions like M54.5 (low back pain) and M47.812 (spondylosis without myelopathy). Providers must secure approval to ensure medical necessity before prescribing these devices.
Additionally, CMS announced changes to the Required Face-to-Face and Written Order Prior to Delivery (WOPD) List and the Master List, which took effect on August 12, 2024. Among these updates are newly added lumbar-sacral and lower limb orthoses requiring prior authorization.
Platforms like Spry’s prior authorization software speed up approvals and decrease errors in manual data entry by automating submissions. Use Spry to expedite approvals and streamline your process today.
The CMS has instituted PA requirements for certain hospital OPD services to ensure that Medicare beneficiaries receive medically necessary care while protecting the Medicare Trust Funds from unnecessary service volume increases and improper payments. The PA process does not change the current standards for medical necessity.
The CMS Interoperability and Prior Authorization Final Rule (CMS-0057-F), published on January 17, 2024, by the Centers for Medicare and Medicaid Services (CMS), aims to improve health information exchange and expedite prior authorization procedures.
CMS announced that starting January 1, 2025, the review timeframe for standard prior authorization decisions will be reduced from 10 business days to 7 calendar days.
This rule requires qualified health plan issuers on the Federally Facilitated Exchanges, Medicaid managed care plans, CHIP managed care entities, Medicare Advantage organizations, and state Medicaid and Children's Health Insurance Program (CHIP) Fee-for-Service programs to implement and maintain specific Health Level 7® (HL7®) Fast Healthcare Interoperability Resources® (FHIR®) application programming interfaces (APIs) to improve the electronic exchange of healthcare data and expedite prior authorization procedures.
The CMS has implemented a prior authorization process for certain hospital OPD services to control service volume and ensure medical necessity. Under this process, providers must obtain approval before offering specific services to Medicare beneficiaries.
Review the list of OPD services requiring prior authorization.
Obtain medical records demonstrating medical necessity, including:
Note: Include any additional supporting documents requested by Medicare Administrative Contractors (MACs).
Complete the appropriate Medicare prior authorization request form.
MACs review the request for completeness and accuracy.
If denied, providers can:
Upon approval, providers receive an authorization number.
Submit the reimbursement claim using the assigned authorization number.
By following these steps, you can streamline the prior authorization process, ensuring timely service delivery while meeting Medicare’s compliance requirements.
The CMS has instituted PA requirements for certain hospital OPD services that apply uniformly across the country, with no regional variation. The PA process requires providers to obtain approval before delivering specific services to meet Medicare coverage requirements.
On July 1, 2023, CMS added facet joint interventions to the list of OPD services requiring prior authorization. Providers have begun submitting prior authorization requests (PARs) for these services starting from June 15, 2023. This addition complements the PA program’s existing services, including blepharoplasty, panniculectomy, rhinoplasty, botulinum toxin injections, vein ablation, implanted neurostimulators, and cervical fusion with disc removal.
Providers must submit PARs before delivering the designated services to ensure compliance and secure payment. CMS has provided an Operational Guide outlining the required paperwork, submission process, and deadlines. Adhering to these guidelines is a must to avoid claim rejections and ensure timely reimbursement.
The PA requirements ensure that OPD services are both medically necessary and compliant with Medicare coverage guidelines. While this process may increase administrative tasks for providers, it helps maintain care quality and proper resource use.
CMS’s prior authorization requirements for specific OPD services apply uniformly across all regions. To maintain efficient practice operations and ensure compliance, providers should familiarize themselves with the services requiring authorization and follow CMS’s operational guidelines.
The goal of PA for Medicare’s Hospital OPD services is to ensure that beneficiaries receive medically necessary care while preventing incorrect payments and unnecessary increases in service volume. However, PA can significantly impact service delivery, affecting both patients and healthcare professionals.
PA processes require providers to submit documentation before delivering specific services. This increases administrative workload, potentially diverting time and resources from direct patient care. The Centers for Medicare & Medicaid Services (CMS) acknowledges that PA programs may place additional demands on providers, necessitating effective management to maintain the standard of care.
PA procedures can lead to service delivery delays since providers must wait for approval before initiating certain treatments. These delays may impact patient outcomes, particularly in cases where timely interventions are critical. To mitigate unnecessary increases in service volume and ensure compliance with Medicare regulations, CMS has implemented PA programs for specific OPD services.
Healthcare professionals report that managing PA approvals consumes significant time, sometimes more than direct patient care. Patients also experience delays and denials, leading to frustration and, in some cases, potential harm due to postponed treatments. These challenges underscore the need for reforms to streamline PA processes and ensure timely access to care.
Balancing PA’s objectives with the need for prompt and efficient patient care remains essential.
By making administrative tasks more efficient, Spry improves the experiences of both patients and providers. Features like customizable workflows and automated insurance eligibility verification cut down on approval time, improving patient outcomes and reducing interruptions to care.
As a utilization management tactic used in Medicare's OPD services, PA aims to prevent improper billing and payments while ensuring that beneficiaries receive medically necessary care. To simplify PA procedures and reduce the administrative burden on healthcare providers, the Centers for Medicare & Medicaid Services (CMS) has implemented several initiatives.
As of January 1, 2025, the Centers for Medicare & Medicaid Services (CMS) implemented updates to the Hospital Outpatient Prospective Payment System (OPPS) and the Ambulatory Surgical Center (ASC) Payment System. The updated PA requirements aim to streamline the authorization process, reduce administrative burdens, and enhance patient access to necessary treatments.
To streamline the PA process and modernize the healthcare system, CMS finalized the Interoperability and Prior Authorization Final Rule (CMS-0057-F) on January 17, 2024. This rule requires impacted payers to publicly post specific metrics about their PA processes annually. These metrics include:
On July 10, 2024, CMS also published the proposed Medicare Physician Fee Schedule Rule for Calendar Year 2025. While these proposed payment policies continue to present challenges in Medicare Part B reimbursement, they also introduce new opportunities. If approved, they will positively impact occupational therapy services beginning in January 2025.
Physicians and physical therapists should stay updated about the Medicare prior authorization list and the expanding list of OPD services requiring prior authorization. Maintaining compliance requires regularly reviewing CMS resources, including the official website and updates from professional organizations like the AAPM&R.
Providers can lessen administrative burdens and improve patient access to essential services by participating in initiatives aimed at streamlining these processes. By proactively adapting to these requirements and engaging in reform efforts, stakeholders can enhance service delivery within the Medicare system.
Spry makes This easier by streamlining documentation, automating eligibility checks, and integrating prior authorization workflows into its EMR system. Spry has an excellent track of a 98% claim approval rate, 40% fewer AR days, and a 30–40% shorter note creation time. Schedule a Free demo with Spry today.
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