CMS to Test New Prior Authorization Requirements in Traditional Medicare

A new CMS model will introduce new prior authorization requirements to traditional Medicare in six states, raising provider concerns about administrative burden.

Traditional Medicare will add prior authorization (PA) requirements for certain services in six states, according to a recent announcement from CMS. While the scope of new requirements is limited, the move could indicate a shift ahead for traditional Medicare, which has historically had few PA requirements tied to services.

To conduct PA reviews, CMS will partner with technology companies, rather than the usual Medicare Administrative Contractors, through the Wasteful and Inappropriate Service Reduction (WISeR) Model. This model intends to test the ability of enhanced technologies, including AI, to streamline and expedite PA processes.

How It Will Work for Providers

The PA pilot program for traditional Medicare will go into effect on January 1, 2026, and end on December 31, 2031. Requirements will apply to providers in six states: Arizona, New Jersey, Ohio, Oklahoma, Texas, and Washington. Seventeen services particularly vulnerable to waste and abuse will be subject to the new requirements, according to the announcement. These include skin and tissue substitutes, electrical nerve stimulator implants, and knee arthroscopy for knee osteoarthritis.

Providers subject to new PA requirements have some choice in how they pursue payment for the target services. They can either submit PA requests before performing service to ensure claims meet new requirements, or have claims go through pre-payment medical review after services are performed.

While technology will be used to support PA requests, final decisions to deny claims will be made by human clinicians, according to CMS.

Provider Concerns and Industry Context

Anders Gilberg, senior vice president of government affairs for the Medical Group Management Association (MGMA), expressed concern that the new policy will add to the administrative burden that providers already face and claimed it contradicted recent CMS moves to reduce the volume of medical services subject to PA.

"One of the hallmarks of traditional Medicare has been the ability for physicians, not government, to determine what's clinically appropriate for their patient," Gilberg said in a statement.

A key difference between traditional Medicare and Medicare Advantage (MA) has been the latter's extensive use of PA. In 2023, MA plans processed nearly 50 million PA requests, averaging almost two per enrollee, versus 400,000 for traditional Medicare, roughly one for every 100 enrollees, according to an issue brief from KFF. The new model could represent a significant step toward the integration of more utilization management tools into the traditional fee-for-service program, even if on a limited basis.

While CMS announces new PA requirements, more than 40 payers have recently announced that they intend to reduce the volume of services subject to PA. As these developments play out, revenue cycle leaders will need to pay close attention to new rules and consider strategic approaches to managing relations with both government and commercial payers.