CMS Prior Authorization—operational And Financial Impact

cms-prior-authorization-operational-and-financial-impactCMS has expanded the prior authorization requirement to two new service categories within hospital outpatient department services.

The Centers for Medicare & Medicaid Services (CMS) has expanded the prior authorization requirement for two additional hospital outpatient department (OPD) services. Effective with date of service July 1, 2021, CMS has expanded the prior authorization requirement to two new service categories: cervical fusion with disc removal and implanted spinal neurostimulators.

The original framework of the prior authorization requirement for OPD services was limited to five services: blepharoplasty, botulinum toxin injections, panniculectomy, rhinoplasty, and vein ablation.


The prior authorization requirement does not apply to the following claim types:

  • Veterans Affairs
  • Indian Health Services
  • Medicare Advantage
  • Part A and Part B demonstration
  • Medicare Advantage sub-category IME-only claims
  • Part A/B rebilling
  • Emergency department claims submitted with an -ET modifier or revenue code 045xADVANCE BENEFICIARY NOTICE (ABN)

Appropriately issuing an ABN is a critical mechanism for the provider to preserve the right to bill the patient. For procedures subject to the prior authorization requirement where prior authorization is denied or non-affirmed due to the procedure not being medically necessary or reasonable, the provider should issue an ABN in advance of the service. In this case, the provider would submit the claim with modifier



To help ensure compliance with the prior authorization requirement, hospital OPDs should educate the appropriate operational areas who are responsible for obtaining prior authorization. The new prior authorizations run a slightly different course, and if a non-affirmative determination is made, a number of associated codes will be denied. This further underscores the need for education and training regarding ABNs. Consider having an edit in place: for example, CPT® code 63650 to ensure the unique tracking number (UTN) is placed on the claim to prevent denials. Hospital OPDs who perform both a trial and permanent implant of a spinal neurostimulator using 63650 are only required to submit a prior authorization for the trial procedure. To avoid a denial, the provider must include the UTN for the trial procedure on the claim form.


CMS provides a pathway for hospital OPDs to become exempt from having to submit prior authorizations for the selected services. To qualify for the exemption, the prior authorization provider must:

  • Submit at least 10 prior authorization requests
  • Achieve a prior authorization affirmation threshold of at least 90% during a semiannual assessment

If a provider has demonstrated these compliance requirements, they can become exempt from having to submit the prior authorization. The provider would be issued a notice of exemption, which remains in place until CMS revokes it.

If a provider has already qualified for the prior authorization exemption with the current services, the provider will not need to re-qualify for the exemption for the two new services that are effective July 1, 2021.

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