Prior Authorization Exemptions Coming Into Focus

What You Need to Know

Medicare has published new details regarding its prior authorization exemption program. To provide an integrated and complete description of the exemption process that includes the latest updates, this article contains all the content from our January 15th article plus new information in BOLD ALL CAPS: 

• Eligibility Review: The DME Medicare Administrative Contractors (DME MACs) will review each supplier’s prior authorization approval rates for items that require prior authorization. THAT PROCESS BEGAN THIS MONTH (JANUARY).
• 90% Threshold: Suppliers with an approval rate of 90% or higher will be given the option on an annual basis to opt out from submitting prior authorization requests for devices currently subject to prior authorization. THE 90% PROVISIONAL AFFIRMATION RATE IS BASED ON A REVIEW OF 10 CLAIMS FOR CODES SUBJECT TO PRIOR AUTHORIZATION. THE DME MACS WILL NOTIFY SUPPLIERS OF THEIR EXEMPTION STATUS NO LATER THAN APRIL 2, 2026.  THE FIRST EXEMPTION CYCLE COMMENCES ON JUNE 1, 2026 AND RUNS ANNUALLY THEREAFTER. THE FIRST EXEMPTION CYCLE COMMENCES ON JUNE 1, 2026 AND RUNS ANNUALLY THEREAFTER. The exemption is optional. Even if a supplier qualifies, it can elect to continue submitting prior authorization requests. THE SUPPLIER CAN NOTIFY THE DME MAC OF ITS DESIRE TO OPT OUT VIA EMAIL, FAX, SNAIL MAIL, OR THROUGH THE MAC'S ELECTRONIC PORTAL.
• Post-Payment Monitoring: For suppliers that claim the exemption, the DME MACs will conduct an annual post-payment medical review sample. THE 2027 REVIEW WILL OCCUR IN JANUARY, 2027, AND WILL CONSIST OF A POST-PAYMENT REVIEW VIA ADDITIONAL DOCUMENTATION REQUEST FOR 10 CLAIMS. If the supplier maintains a 90% or greater approval rate it retains the exemption. OVERTURNED APPEALS WILL NOT CHANGE THE SUPPLIER'S EXEMPTION STATUS. IN OTHER WORDS, IF A SUPPLIER ONLY RECEIVED PROVISIONAL AFFIRMATION FOR 80% OF ITS SAMPLED CLAIMS BUT LATER SUCCESSFULLY APPEALED THE OTHER 2 CLAIMS, THE SUPPLIER'S INELIGIBILITY FOR EXEMPTION WOULD NOT GET REVERSED BASED ON THE APPEALS RESULTS. IF THE EXEMPT SUPPLIER HAS SUBMITTED LESS THAN 10 CLAIMS AT THE TIME OF REVIEW, IT WILL LOSE ITS EXEMPT STATUS. Suppliers that fail to meet the 90% threshold during post-payment review will be required to resume submitting prior authorization requests as a condition of payment.
• Advance Notice: The DME MACs will notify suppliers at least 60 days before the effective date when an exemption is either granted or withdrawn. IN 2027, THAT NOTIFICATION WILL OCCUR ON OR AFTER APRIL 2.

What This Means for You

If you qualify for exemption from Medicare's prior authorization requirements, you will need to assess whether you want to claim the exemption or not. Relevant factors guiding that decision could include your organization's current satisfaction level with prior authorization, the degree to which prior authorization affects your operational efficiency, and your company's risk tolerance for a "deliver and bill" model compared to prior authorization.

Once you opt in or out, you will have to wait until the next annual assessment to switch status. So we recommend thoughtful discussion among your company's leadership team to assess the pros and cons of opting in if you are eligible. 

Finally, the 60-day advance notice requirement does give you time to perform a complete assessment of whether you wish to opt in or out, or alternatively, to plan for the reversion back to prior authorization if you opted in but then later fell below the 90% threshold in your annual claims review sample.

For comprehensive information about Medicare's DMEPOS prior authorization program, click here.