Navigating new Medicare hospital outpatient department authorization requirements

Kristin-Stewart-1On July 1, a new rule from CMS will go into effect. It requires organizations to obtain an authorization prior to specific outpatient department services provided to Medicare beneficiaries. Without authorization, hospitals will risk insurance denial and avoidable lost revenue.

Today I'll walk you through the specifics of this rule and how your organization can prepare for it.

Historically, traditional Medicare fee-for-service typically did not require an authorization. The advanced beneficiary notice (ABN) was the mechanism for your organization to review the medical necessity of services prior to care to understand coverage determination and financial implications. The medical necessity process and provider documentation requirements from Medicare are unchanged, but this is another step that has to be considered as part of the pre-service process.

As outlined in the 2020 Outpatient Prospective Payment System/Ambulatory Surgical Center Final Rule, the following hospital outpatient department services will be subject to the new authorization and claim requirements:

  • Blepharoplasty
  • Botulinum Toxin Injections
  • Panniculectomy
  • Rhinoplasty
  • Vein Ablation

If a denial is received, Medicare will also not reimburse any associated provider and facility claims. The authorization process will enable you and your Medicare patients to be informed of Medicare’s coverage determination prior to service. This is another move toward price transparency and quality initiatives for patients to receive medically necessary services while being informed in a timely fashion of any out-of-pocket amounts.

Authorization submission requirements

Medicare will allow four ways for your team to submit a prior authorization request: via mail, fax, through the Medicare Adminstrative Contractors’ (MAC) portal, or electronic submission of medical documentation (esMD). Note that esMD will not be available until July 6.

MACs will mail, fax, or electronically notify via esMD the determination (and redeterminations) within 10 business days of the request. MACs will allow for expedited review requests if the service is determined to be urgent and cannot be delayed. Determination for expedited requests will be received within two business days of request receipt.

Specifics regarding the information to include as part of the request can be found on Medicare’s website, as referenced above. A request coversheet may be available on the MACs’ websites, if your MAC requires one; otherwise there is no standard form to submit prior authorizations.

Prioritizing activities for your organization

Before initiating the following activities, you should review the Medicare patient volumes associated with these services to help understand the organizational impact.

Establish a workgroup

  • Convene a workgroup of key revenue cycle and department leaders from scheduling, patient access, business office, and information technology immediately to enhance existing workflows and hardwire an authorization process for these Medicare services prior to the service effective date of July 1.
  • Beginning June 17, you can submit authorization requests to receive prior authorization for visits in early July.

Evaluate impact

  • Conduct a staff-to-demand analysis to understand any staffing implications. Given that this process is new and more manually intensive than other payer authorization processes, additional time/resources may need to be considered.
  • Meet with your physician offices and providers to help them understand the impacts. This may include reviewing the scheduling timeframes to ensure the pre-authorization team has a long enough window to wait for Medicare’s determination to prevent rescheduling and provider schedule impacts.

Enhance Workflows

  • Compile workflows to outline team’s roles, timeframes, and escalation processes to review these visits prior to service. Depending on the organization, the scheduling, pre-registration, or the department may be responsible for securing the prior authorization. Ensure that these teams understand the change.
  • Partner with your IT team to include these Medicare services as part of the staff’s daily worklists/work queue. Given the nuances with submitting Medicare authorizations, it may be helpful to create a separate worklist/work queue to capture and work these accounts separately.
  • Evaluate if your pre-service team uses a third-party tool to help identify which accounts need prior authorization. If your team leverages this type of technology, work with your vendor to validate that the tool will return these results for the staff. Understand timeframes to update tools and validate accuracy of build by comparing the scheduled visits against the pre-authorization team’s worklist to ensure that all accounts are captured.
  • Validate/establish correct system access and communication avenues for request submissions and determination notification. Staff can leverage esMD, but it is important that correct access is granted prior to workflow implementation to limit barriers and delays. Also, Medicare will provide fax determinations, but it is important to validate the fax number on file and if there are staff designated to timely monitor.
  • Create a communication process, workflow, and/or EHR enhancement to capture the unique tracking number (UTN) from the determination letter on the claim to receive payment.
  • Consider implementing a bill hold/work queue and designate a business office team member to review these accounts prior to billing to validate that the claim includes the UTN. If this process is implemented, it is crucial that the team works these accounts daily to prevent timely filing denials.

Develop job aides, standard operating procedures, and supporting materials

  • Review existing procedures and/or create a medical necessity/deferral of service standard operating procedure to include Medicare services.
  • Develop job aides and provider and patient scripts to help educate teams on new process expectations.
  • Create communication memo/scripts for the scheduling and pre-registration teams to inform patients that MACs will be sending them determination letters in order to help limit patient confusion and potential dissatisfaction, and potential customer service calls.

Also, providers that secure prior authorizations for at least 90% of accounts during the semiannual assessment period could be exempt from the prior authorization process in the future (84 FR 61448). This showcases that there are additional incentives to implementing a strong Medicare authorization process.


It has never been as important as now to focus on ways to mitigate future avoidable losses given the financial impacts from COVID-19. Strategic and immediate planning is essential to your organization as Medicare implements the prior authorization requirement in less than one month for select hospital outpatient services. Workflows and training will need to be enhanced/developed for key revenue cycle teams to quickly ramp-up to meet the new Medicare requirement.

Please visit the CMS website for the most up-to-date information.

Based on our years of experience, Nordic is well positioned to help lead clients through this change. We have both technical and operational revenue cycle and performance improvement expertise to help strategically navigate requirement changes to minimize workflow and revenue impacts. Want to learn more? Ask Nordic.


This material is provided for information purposes only and should not be relied upon as legal, financial, or tax advice. Nordic does not represent or warrant that the information provided will be complete or accurate.

Topics: featured, Performance Improvement

Subscribe to receive blog updates