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Prior Authorization for Certain Procedures to Begin July 1, 2020

Published on 

Tuesday, May 12, 2020

Jig-Saw Puzzles: Gathering all of the Pieces

Depending on the size of a jig-saw puzzle, putting it together successfully can be a very simple or daunting task. Keys to success include having a clear picture of what the puzzle is supposed to look like and not being left with missing pieces.

CMS finalized a Prior Authorization Program for certain hospital procedures in the Outpatient Prospective Payment System (OPPS)/Ambulatory Surgery Center (ASC) CY 2020 Final Rule. Since then I have been waiting for sub-regulatory guidance to provide additional “puzzle pieces” needed for Provider success with this Program.

CMS released the first puzzle piece on April 24, 2020 in the form of a One-Time Notification (Transmittal 10061/Change Request (CR) 11671) titled Provider Education for Required Prior Authorization (PA) of Hospital Outpatient Department (OPD) Services. This CR provides Medicare Administrative Contractors (MACs) with instructions for provider education regarding this Program. The CR also includes a template letter to be sent to Providers, a template letter to be sent to Practitioners, and a table of the HCPCS procedure codes included in this Program. The effective and implementation date of this CR is May 26, 2020.

So now we wait for additional puzzle pieces from the MACs. While we wait, this article is meant to equip you with additional puzzle pieces from the Final Rule, data analysis for Alabama, Georgia and Tennessee utilizing RealTime Medicare Data (RTMD) Medicare Fee-for-Service paid claims data and leave you with potential next steps for implementing a process at your hospital.

Puzzle Piece: CMS Data Analysis

A significant “piece” of CMS’ responsibility to protect the Medicare Trust Funds is data analysis. Specific to the Prior Authorization Program, CMS noted in the Final Rule that they had conducted a compare of “the total number of Medicare beneficiaries served by providers to help ensure the continued appropriateness of payment for services furnished in the hospital outpatient department (OPD).” Following are highlights from CMS’ data analysis in the CY 2020 OPPS/ASC Final Rule:

  • CMS “targeted services that represent procedures that are likely to be cosmetic surgical procedures and/or are directly related to cosmetic surgical procedures that are not covered by Medicare, but may be combined with or masquerading as therapeutic services.”
  • Over 1.1 billion OPD claims were reviewed during the 11-year period from 2007 through 2017.
  • On average, the overall rate of OPD claims submitted for payment increased annually by an average rate of 3.2 percent.
  • The 3.2 percent increase equated to an increase in claims submitted for payment from approximately 90 million in 2007 to approximately 118 million in 2017.
  • On average, the annual rate-of-increase in the Medicare allowed amount (“the amount that Medicare would pay for services regardless of external variables, such as beneficiary plan differences, deductibles, and appeals”) was 8.2 percent.
  • The 8.2 percent equated to an increase in the total Medicare allowed for OPD services claims from $31 billion in 2007 to $65 billion in 2017.
  • The 8.2 percent increase exceeded the average per year overall health care spending increase of 5.8 percent during 2007 through 2017.
  • During this same time, the average annual increase in the number of Medicare beneficiaries per year was only 1.1 percent.
  • Higher than expected volumes were found in five general categories of services (blepharoplasty, Botulinum toxin injections, panniculectomy, rhinoplasty, and vein ablation).

CMS believes “the increases in volume associated with certain covered OPD services described…are unnecessary because the data show that the volume of utilization of these services far exceeds what would be expected in light of the average rate-of-increase in the number of Medicare beneficiaries.”

Puzzle Piece: Program Definitions

  • Prior Authorization Request (PAR): a process through which a request for provisional affirmation of coverage is submitted to CMS or its contractors for review before the service is provided to the beneficiary and before the claim is submitted.
  • Provisional Affirmation: A preliminary finding that a future claim for the service will meet Medicare’s coverage, coding, and payment rules.
  • List of Services: The list of hospital outpatient department services requiring prior authorization. This list includes blepharoplasty, Botulinum toxin injections, panniculectomy, rhinoplasty, and vein ablation.

Puzzle Piece: About the Program

  • The implementation date for this program is July 1, 2020.
  • Prior authorization for the five categories of services listed above will be a condition of Medicare payment.
  • A PAR will need to include all documentation necessary to show the service meets applicable Medicare coverage, coding and payment rules.
  • Claims submitted that require prior authorization that have not received a provisional affirmation of coverage will be denied.
  • A provisional affirmation does not preclude a claim being denied due to a technical requirement that could only be evaluated after the claim has been submitted for formal processing or information not available at the time of the prior authorization request is received.
  • MACs will be the Contractor reviewing PARs for compliance with applicable Medicare coverage, coding, and payment rules.
  • An issuance of Affirmation or Non-Affirmation is to be issued by the MAC within 10 business days of a request.
  • The Program will allow a PAR for an “expedited review when a delay could seriously jeopardize the beneficiary’s life, health, or ability to regain maximum function.” Documentation to support this must be submitted with the request.
  • Expedited reviews are to be completed by the MAC within 2 business days.
  • If a provider receives a Non-Affirmation they are allowed to resubmit a request with additional relevant documentation.
  • Non-affirmations are not appealable, but the provider will receive a detailed explanation as to why the request was non-affirmed can resubmit an unlimited number of requests.
  • When a claim is submitted without provisional affirmation, it will be denied. The denial is considered an initial determination and the provider may submit a redetermination request.
  • Claims associated with or related to a service for which a claim denial is issued will also be denied. These associated services include, but are not limited to, services such as anesthesiology services, physician services, and/or facility services. The associated claims would be denied whether a non-affirmation was received or the provider did not request a prior authorization request.

Puzzle Piece: Potential Provider Exemption

  • CMS may elect to exempt a provider from the PA process if a provider demonstrates compliance with Medicare coverage, coding, and payment rules.
  • Providers achieving a prior authorization provisional affirmation threshold of at least 90 percent during a semiannual assessment would be exempted.
  • An exemption would remain in effect until CMS elects to withdraw the exemption.
  • CMS anticipates that exemptions will take approximately 60 calendar days to effectuate.
  • If evidence becomes available based on claims reviews that a provider has begun to submit claims not payable based on Medicare’s coverage, coding and payment rules then CMS might withdraw an exemption.
  • If the rate of non-payable claims submitted becomes higher than 10 percent during a semiannual assessment, CMS will consider withdrawing an exemption.

Puzzle Piece: CMS Response to Comments

  • Why the Prior Authorization Program is limited to Hospital ODPs: At this time, this process is limited to hospital OPDs as the program is being adopted as part of the OPPS Final Rule. CMS will monitor data and consider additional program integrity oversight if shifts to other settings for these procedures occur (i.e., Ambulatory Surgery Centers).
  • Why Choose the Prior Authorization Process? CMS believes “that the use of prior authorization in the OPD context will be an effective tool in controlling unnecessary increases in the volume of covered OPD services by ensuring that the correct payments are made for medically necessary OPD services.”
  • Who is Responsible for Obtaining Prior Authorization? CMS indicated that “in light of the different arrangement that could exist I different hospitals, we determined that enabling either the physician or the hospital to submit the prior authorization request on behalf of the hospital outpatient department was the best approach, though the hospital ultimately remains responsible for ensuring this condition of payment is met.”
  • Communicating Prior Authorization Decisions as Unique Tracking Number (UTN): All PARs submitted will be assigned a UTN. The UTN must be included on any claim submitted for the services listed. The UTN will be used to verify compliance with the prior authorization process.
  • Claim Denials to Include Associated Claims: “Any claims associated with or related to a service that requires prior authorization for which a claim denial is issued would also be denied. These associated services include, but are not limited to, services such as anesthesiology services, physician services, and/or facility services.”
  • Claims could still be reviewed by CERT and OIG: It is possible for a claim subject to prior authorization to fall within a CERT sample. In this situation, the claim would not be protected from the CERT audit. In addition, the Office of Inspector General’s (OIG) authority to audit claims is not impacted by the protection from future audits provided by the provisional affirmation prior authorization decision.
  • Non-Affirmations: Impact on Care for the Beneficiary: With regard to the impact on care for those beneficiaries for which hospitals receive non-affirmations, CMS specifically chose services that are often cosmetic and believes that it is appropriate to deny such services in the case of a non-affirmation, because a non-affirmation would indicate that Medicare’s coverage, coding, and/or payment rules for the service are not being met.
  • How often are Prior Authorization Requests Affirmed? Our experience in our other prior authorization and pre-claim review processes has been that approximately 95 percent of submissions are affirmed within two requests, and that the impact of non-affirmation decisions has been minimal for necessary, covered services.
  • Prior Authorization for a Specific Course of Treatment: CMS acknowledged that there are circumstances when a prior authorization could apply for a specific course of treatment such a botulinum toxin injections and will allow for prior authorization requests for a number of treatments over a specific period of time.

Puzzle Piece: RealTime Medicare Data (RTMD) Claims Analysis

As I so often do, I turned to our sister company RTMD to have an understanding of the actual volume of claims that will be impacted by this Program. Specifically, I reviewed all paid claims for the applicable HCPSC codes for calendar year 2019 for the Jurisdiction J MAC (Alabama, Georgia, and Tennessee).


Puzzle Piece: CMS March 2020 MLN Booklet – Hospital Outpatient Prospective Payment System (ICN MLN006820)

This MLN Booklet was updated in March of this year. In the Innovation section of the booklet, CMS informs the reader that beginning July 1, 2020, you must request prior authorization for the outpatient department services in the Program and that medical necessity documentation requirements remain the same. So, unless something unforeseen happens between now and July 1, it appears the Prior Authorization requirement is a go.

Missing Puzzle Piece: CMS Additional Resources

CMS informs Providers and Physicians in the template letters to be sent by the MACs that “To facilitate open and ongoing dialogue with both patients and physician/practitioners, and to support program transparency, CMS has established a dedicated website for prior authorization program for Certain Hospital Outpatient Department (OPD) Services with comprehensive information for patients, suppliers, and physician/practitioners at:

CMS has indicated that they will post additional information about this program on this website. However, at the time this article was written, the last time this webpage was modified was January 17, 2020. I encourage you to check this webpage often for any additional information.

Missing Puzzle Piece: MAC Provider and Physician Education

Also, at the time this article was written, First Coast Services the JN MAC for Florida was the only MAC to have posted information about this program on their website.

The first “piece” of information was a May 1st article under the Part A Medical Review section of their website that includes a background and general information about the program and a table of applicable Local Coverage Determinations and Local Articles for the procedures included in this program.

The second “piece” of information was an announcement to participate in one of two webcasts to learn about the prior authorization program. (Thursday, May 28 or Thursday, June 11). Providers can access information about this event under the Education section of their website.

Putting the Puzzle Pieces Together

Now that you are equipped with many of the “pieces” for success and July 1st is less than two months away following are things to consider as you put your processes in place:

  • Decide who the key stakeholders are that need to be involved in this process? (i.e., Outpatient Department Nurse Manager, Scheduling, Physicians performing these procedures, Physician Advisor, etc.)
  • Work with your IT Department to understand the anticipated volume at your hospital and identify which Physicians are performing these procedures.
  • Several other insurance plans already requires prior authorization for these procedures. With that in mind, determine who is currently completing this process at your hospital. Is it feasible for them to incorporate prior authorization for Medicare claims in their process?
  • Who needs to receive education about this program (i.e. Physicians performing the procedures, Outpatient Department Staff, Chief Medical Officer, and Physician Advisors)?
  • How will the Prior Authorization UTN be communicated to the Physician Office and Hospital Billing Department?
  • Identify applicable Medicare Coverage Determinations (NCDs, LCDs, and Articles) specific for the procedures included in this program?
  • Who will be responsible for the Appeals Process if a claim is denied?

MMP has sent a question to Palmetto GBA the JJ and JM MAC to find out what their plan is for education. In the meantime we will continue to monitor the CMS and MAC websites and provide you with any additional “puzzle pieces” in future Wednesday@One newsletters. 

Article Author: Beth Cobb, RN, BSN, ACM, CCDS
Beth Cobb, RN, BSN, ACM, CCDS, is the Manager of Clinical Analytics at Medical Management Plus, Inc. Beth has over twenty-five years of experience in healthcare including eleven years in Case Management at a large multi-facility health system. In her current position, Beth is a principle writer for MMP’s Wednesday@One weekly e-newsletter, an active member of our HIPAA Compliance Committee, MMP’s Education Department Program Director and co-developer of MMP’s proprietary Compliance Protection Assessment Tool.

This material was compiled to share information.  MMP, Inc. is not offering legal advice. Every reasonable effort has been taken to ensure the information is accurate and useful.