Part B News, “After WISeR, new ASC prior authorization demo signals a growing trend,” quotes Henry Norwood, Esq., 10-6-2025

Kaufman Dolowich’s Henry Norwood is quoted in a recent Part B News article about a new prior authorization demo targeting ambulatory surgery centers (ASCs).

After WiseR, new ASC prior authorization demo signals a growing trend

By Roy Edroso

Published Oct. 6, 2025

On the heels of the Wasteful and Inappropriate Services Reduction (WISeR) demonstration model for prior authorization comes a new demo targeting ambulatory surgery centers (ASC). Some observers, including physicians and practice consultants, worry that this new development signals a trend toward increased prior authorization in traditional Medicare.

CMS announced in a September 4 transmittal the demonstration model requiring prior authorization “of certain services provided in ASCs in ten states,” to cover some services for “blepharoplasty, botulinum toxin injections, panniculectomy, rhinoplasty, and vein ablation procedures.”

CMS explains that “these targeted services can potentially be provided as cosmetic procedures, rather than medically necessary procedures, resulting in improper or fraudulent payments.” Under the model, providers in California, Florida, Texas, Arizona, Ohio, Tennessee, Pennsylvania, Maryland, Georgia and New York “must request prior authorization for these service categories, or they will be subject to prepayment review.”

The agency provided further detail in a concurrent Medicare Fee-for-Service Compliance Programs page, informing providers they “can submit prior authorization requests beginning on December 1, 2025, for dates of service on or after December 15, 2025,” and including a list of 41 codes for procedures covered by the model.

ASCs draw scrutiny

Outpatient procedures have long been under the watch of CMS for wasteful spending and, while performing them at ASCs is generally considered more cost-efficient than performing them in hospitals, the agency clearly doesn’t believe that alone fixes the problem.

Henry Norwood, of counsel with Kaufman Dolowich in San Francisco, notes that, in the most recent Medicare Payment Advisory Commission (MedPAC) report to Congress, the watchdog agency says that while operations in ASCs cost less than those in hospital outpatient departments, “Medicare spending per FFS beneficiary on ASC services rose at an average annual rate of 7.8% from 2018 through 2022 and by 15.4% in 2023.”

In the same report, MedPAC adds: “Policymakers know little about the costs that ASCs incur in treating beneficiaries because Medicare does not require ASCs to submit cost data, unlike its requirements for other types of facilities. As a result, it is not possible to properly evaluate the level of Medicare’s payments relative to costs for ASCs.”

In the proposed 2026 outpatient prospective payment system (OPPS) rule, the agency requests feedback on the question, “What other methods may be warranted to control unnecessary increases in the volume of outpatient services besides changes to payment rates, including prior authorization or other utilization management policies?” [Emphasis added]

Medicare PA: Rare, targeted

While prior authorization is widespread in Medicare Advantage, it is rare under traditional Medicare. Interestingly, some of the Medicare programs currently requiring prior authorization of selected service types also started as more limited demos such as WISeR and the ASC demo.

In 2014, CMS ran a model for prior authorization of “repetitive, scheduled non-emergent ambulance transport” in three states, and thereafter expanded it until it became nationwide in 2021. In 2012, the agency ran a demo for “certain Durable Medical Equipment, Prosthetics, Orthotics, and Supplies (DMEPOS) items” that it deemed “frequently subject to unnecessary use” in seven states; the demo became a standing national program in 2015, though CMS occasionally changes the codes that are covered in certain states.

Another prior authorization program for “certain hospital Outpatient Department (OPD) services” was established on a national basis in the 2020 OPPS rule.

Also, two pre-claim-review-related demonstration models were recently introduced: A “Review Choice Demonstration for
Home Health Agencies,” which also began as a demonstration model and currently affects seven states, while a similarly
designed “Review Choice Demonstration for Inpatient Rehabilitation Facility Services” began in Alabama in 2023 and
expanded to Pennsylvania in 2024. These two models offer providers a choice of pre-claim review or postpayment review.

In a Sept. 16 “Prior Authorization and Pre-Claim Review Overview” of the OPD program, CMS tracked Medicare spending
on the outpatient interventions and procedures they’ve targeted and how they were affected by its prior authorization
requirements. In the categories that are the same as in the new ASC demo, CMS found that, since they were added to the
demo’s OPD prior authorization requirements in 2020, spending on those procedures actually went up, from $22 million to
$38 million per half-year.

Thin end of the PA wedge?

Lately CMS has pushed for some reforms in prior authorization in Medicare Advantage, and some MA payers have even
made modest gestures toward reforming their PA processes (PBN 8/11/25). Yet this prior authorization demo for traditional
Medicare is the second in less than three months, as the WISeR demo, which covers six states and requires providers to
either do prepayment review or prior authorization, was announced in June (PBN 7/14/25).

Expert observers see this as trend that’s likely to accelerate.

Kat Marie Alvarez, founder and CEO of health care consultancy Katalyst & Co. in Palm Beach, Fla., thinks that in addition
to trying to scale back overspending on the named procedures, CMS is using the demos to test the “administrative
feasibility” of expanded use of prior authorization. “It’s a signal that prior authorization is no longer just a tool for private
insurers, but a policy mechanism CMS itself is willing to deploy” she says.

“Republicans would like to get rid of government-run Medicare primary and just have privately run Medicare Advantage,”
says Alexandra Tien, M.D., a family physician with Medical Associates of Rhode Island in Bristol, R.I. “Medicare members
do not need a [prior authorization] to get a head CT, for example — but MA members do. It’s a slippery slope and that’s
how these things always start.”

William Soliman, founder and CEO of the Accreditation Council for Medical Affairs (ACMA) in Oradell, N.J., believes that
CMS may even tighten up prior authorization for prescription drugs covered under Part B and Part D: “With more specialty
drugs being approved by the FDA and bigger push back from health insurers,” he says, “expect to see more prior
authorization hassles in the future.” Soliman says the push for the FDA to approve drugs more quickly, and for prescribers
to get prescriptions approved via application programming interfaces (API), will add to the pressure.

If you’re in one of the states

If your state is subject to the ASC demo, and you don’t work for the ASC but perform procedures in it, Norwood warns that
your billing arrangements almost certainly won’t exempt you from the terms if you provide billed services for the
procedures. “It is important to note that, in addition to the services specified above, related professional services will also
be subject to the prior authorization requirements, such as anesthesiology or related physician services,” he says.

If you’re directly employed or an officer of an ASC in these states, Norwood says you should “take steps ahead of time to
revise internal policies and procedures to bring them in line with new prior authorization requirements.” It wouldn’t be a
bad idea to reach out to your Medicare contractor for guidance, especially given the tight compliance deadline.

This article is reprinted with permission from Part B News