Medicare’s prior authorization has doctors on edge

Axios – Tuesday, December 23, 2025
By Maya Goldman

Medicare in January will begin AI-powered pre-treatment reviews for select health services in a major policy change that’s aimed at rooting out unnecessary care — but alarming providers.

Why it matters: While the change covers only 17 treatments or procedures in a handful of states, it marks a major shift for a program that’s historically required very little prior authorization.

• The reviews have generated huge controversy in privately run Medicare Advantage plans and drawn backlash from patients and physicians in commercial plans, who contend the process causes administrative headaches and delays care.

State of play: The American Medical Association told Axios that some basic information — like how to actually submit a prior authorization request — is still unclear to providers with just a few days to go before the effective date.

• AMA also said it’s having discussions with the administration that “seem to be making progress.”

How it works: Starting Jan. 1, doctors in New Jersey, Ohio, Oklahoma, Texas, Arizona and Washington will have to get extra approval before Medicare pays them for certain outpatient services and procedures.

• The change will apply to skin substitutes, deep brain stimulation for Parkinson’s disease, impotence treatment, arthroscopy for knee osteoarthritis and a dozen other items and services, Centers for Medicare and Medicaid Services says.
• CMS chose six AI tech vendors that will each process prior authorization requests in one of the selected states.
• Providers can decide whether or not to submit an authorization request before delivering a service. If they don’t, they’ll be subject to post-claim review and risk not getting paid.

Flashback: Medicare’s innovation center announced the new reviews in June, saying they would focus on items or services that previous reports linked to fraud, waste and abuse or that were already subject to prior authorization in Medicare Advantage.

• The focus on wasteful spending comes with Medicare projected to run short of money to pay for seniors’ health care by 2033, and evidence shows that the program may have spent as much as $5.8 billion on low-value health care in 2022.

Providers have urged CMS to delay the pilot, and Democrats in Congress introduced bills that would force administrators to stop the program.

• “[T]he prior authorization pilot risks creating barriers to care, undermining patient outcomes, and imposing unsustainable administrative demands on practices,” medical association presidents in the six states wrote to CMS in November.

But CMS isn’t slowing down, and doctors are preparing for the reviews.

• The Washington State Medical Association is encouraging physicians to share feedback on their experiences so the organization can “press for accountability and reform,” it said on its website.
• The AMA last month vowed to work with CMS on prior authorization demonstration projects to ensure they protect patients and include “robust guardrails.”
• The American Hospital Association is still pressing for a delay, saying many of its member facilities haven’t had enough time to understand and test out the new procedures, said Terrence Cunningham, senior director of administrative simplification policy. AHA in October asked for a delay of at least six months.

Between the lines: One of providers’ chief concerns is that the tech vendors managing the prior authorizations will get paid a percentage of the money saved by preventing unnecessary medical care.

• “The more you deny, the more you get reimbursed,” David Introcaso, a longtime health policy consultant, told Stat last month. “I mean, a third grader could see how that’s a problem.”

The other side: CMS is putting the vendors through a rigorous audit process to evaluate what’s getting approved and rejected, said Jeremy Friese, CEO of Humata, one of the companies chosen to participate in the pilot.

• A CMS fact sheet says vendor participants will be “financially penalized” if they inappropriately deny claims.
• Notably, claim denials will have to be reviewed by human clinicians, per CMS.
• “The current [prior authorization] process frankly doesn’t work for anybody, not providers or payers, and it just needs to be done differently,” said Friese, a doctor. “This is the first step in that direction.”

The bottom line: Worries about the model are valid, but they’re also not a reason to avoid trying something new, according to Liz Fowler, who directed the Medicare Innovation Center in the Biden administration.

• “Skepticism about Medicare experiments is warranted, but avoiding experimentation altogether would mean accepting the status quo — a crucial program straining under rising costs and uneven quality,” Fowler wrote in an October Health Affairs essay.

Access this article at its original source.