Traditional Medicare to add prior authorizations
Add Axios as your preferred source to
see more of our stories on Google.
Illustration: Sarah Grillo/Axios
Medicare is requiring more pre-treatment approvals in its fee-for-service program in a bid to root out unnecessary care, federal regulators announced Friday.
The big picture: Traditional Medicare historically hasn't required prior authorizations to access most drugs or services, a major perk for enrollees.
- Prior authorization in privately-run Medicare Advantage plans has become a hot-button issue, with Congress and federal regulators working to rein in the practice. Federal inspectors found in 2022 that prior authorization in MA prevented some seniors from getting medically necessary care.
- Major health insurers this week made a voluntary pledge to streamline and improve the prior authorization process across all health insurance markets.
State of play: Medicare's innovation center announced that it will solicit applications from companies to run the prior authorization program.
- Medicare is looking for companies with experience using AI and other tools to manage pre-approvals for other payers, and with clinicians who can conduct medical reviews to check coverage determinations.
- The program will start Jan. 1, 2026 and run through the end of 2031.
- It will only apply to providers and patients in New Jersey, Ohio, Oklahoma, Texas, Arizona and Washington.
The change will apply to 17 items and services, including skin substitutes, deep brain stimulation for Parkinson's Disease, impotence treatment and arthroscopy for knee osteoarthritis.
- CMS selected the services based on previous reports and evidence of fraud, waste and abuse, as well as what's already subject to prior authorization in Medicare Advantage.
- Overuse of skin substitutes to help heal wounds has especially come under fire in recent years. Medicare spent more than $10 billion on the products in 2024 — more than double what was spent the year before, according to the New York Times.
- CMS noted that it may make other services subject to the prior authorization program in future years.
Providers in the geographic areas can choose whether or not they want to submit an authorization request before delivering a service. But if they decide not to, they'll be subject to post-claim review and risk not getting paid for a service that was already delivered.
- "In general, this model will require the same information and clinical documentation that is already required to support Medicare FFS payment but earlier in the process, namely, prior to the service being furnished," the notice reads.
Zoom in: The companies hired to manage the program will be paid based on how much they saved the government by stopping payments for unnecessary services.
- "Under the model, we will work to avoid any adverse impact on beneficiaries or providers/suppliers," CMS wrote in the notice.
- "We will hold model participants accountable for the accuracy and timeliness of prior authorization determinations" and monitor quality and health outcomes, regulators said.
