CMS Tests Prior Authorization for Ambulatory Surgery Centers: Preparing for the 2025 Demonstration

Overview

CMS is launching a five-year Prior Authorization Demonstration for certain ambulatory surgical center (ASC) services beginning December 15, 2025, in 10 states, including Georgia, Florida, Tennessee, and Texas. The model will require ASCs to obtain prior authorization before performing selected procedures that CMS views as high-growth or medically variable — such as blepharoplasty, botulinum toxin injections, panniculectomy, rhinoplasty, and vein ablation.

The initiative tests whether early review can curb unnecessary procedures, reduce claim denials, and streamline Medicare payments. For hospitals and surgery-center operators, it represents a clear signal: CMS is shifting oversight from post-payment audits to pre-service accountability.

Key Details

• Effective date: December 15, 2025
• Duration: Five years
• States: CA, FL, GA, MD, NY, OH, PA, TN, TX, AZ
• Administered by: Regional Medicare Administrative Contractors (MACs)
• Applies to: Select outpatient surgical procedures performed in ASCs (generally cosmetic-type procedures)

Each request must include documentation establishing medical necessity under existing Medicare coverage rules. MACs will issue an affirmed, non-affirmed, or partially affirmed decision. Procedures performed without an affirmed tracking number may be denied or delayed in prepayment review.

Operational Impact

1. Scheduling and Billing Integration

Prior authorization becomes a front-end requirement. Surgery scheduling, clinical documentation, and billing workflows must now communicate in real time to capture authorization status and unique tracking numbers.

2. Documentation and Staff Training

Incomplete documentation will be the leading cause of delay. ASC staff and surgeons should review documentation templates, update EHR workflows, and train schedulers on the new submission process.

3. Patient Communication

Patients may experience scheduling delays during the initial rollout. Transparent communication — explaining that CMS now requires pre-approval — will help manage expectations and preserve satisfaction.

4. Compliance Risk

Performing procedures without affirmed authorization could create repayment or False Claims Act exposure. Systems should document decision letters and maintain audit trails for every case.

Regional Readiness

The Southeast’s inclusion in this demonstration is deliberate. States like Georgia and Florida have some of the nation’s fastest ASC growth, often through hospital-physician joint ventures. CMS will closely observe whether these markets can meet documentation standards while maintaining timely access to care.

For health systems, this is an opportunity to build scalable workflows now. Integrated scheduling dashboards, centralized pre-authorization teams, and standardized physician documentation can turn compliance into a competitive advantage when the program expands nationally.

Legal and Appeals Notes

CMS has indicated that denials under the demonstration will still be eligible for appeal through standard Medicare channels. However, because the review happens before payment, cash-flow impact will be immediate. Hospitals and ASCs should map appeal workflows in advance and clarify contractual responsibility for documentation between facilities and employed or affiliated surgeons.

Preparing for December 2025

• Inventory affected procedures and identify frequency by site.
• Review MAC guidance and determine documentation requirements.
• Train surgical and revenue-cycle teams on submission and tracking.
• Develop metrics for approval rates, turnaround times, and denials.
• Coordinate with compliance to ensure pre-authorization records are retained.

Why It Matters

This demonstration marks the latest step in CMS’s broader move toward front-end validation and real-time accountability. The agency wants to know not only what was billed, but why — before the claim is paid.

For providers, the demonstration may feel like one more administrative hurdle. But it also offers a chance to build stronger processes that reduce downstream denials and prepare organizations for the next generation of value-based payment.

For patients, the outcome will depend on execution: If ASCs communicate clearly and coordinate well, this could actually make care faster and safer by reducing post-service disputes.

Mandatory participation may offer a strategic advantage. Success here will set the benchmark for how outpatient surgery oversight evolves nationwide.

Want to Go Deeper?

We’ve prepared a set of ASC Prior Authorization Readiness Toolkits designed to help systems operationalize these changes, including appeals mapping and compliance tracking. Please reach out directly for a copy of these resources and to discuss how they can be customized for your organization’s needs.

For additional information, contact: Tara Ravi, Partner