Prior authorization is a process requiring healthcare providers to get approval from a payer before performing a service or procedure, ensuring the service is medically necessary and covered under the plan. For beneficiaries needing inpatient surgery, the requirement for prior authorization depends entirely on the type of Medicare coverage they possess: Traditional Medicare (Parts A and B) or a Medicare Advantage Plan (Part C).
Prior Authorization Requirements for Traditional Medicare (Parts A and B)
Beneficiaries enrolled in Original Medicare (Parts A and B) generally do not need prior authorization for standard inpatient surgical admissions. Medicare Part A covers hospital stays, and the core requirement for coverage is that the hospital admission must be deemed medically necessary by the admitting physician.
The Centers for Medicare & Medicaid Services (CMS) uses the “Two-Midnight Rule” as a benchmark to determine whether an inpatient admission is appropriate for Part A payment. This rule indicates that a hospital stay is generally payable under Part A if the physician expects the patient to require care that spans at least two midnights. While this is a verification of medical necessity, it is not a pre-authorization process initiated by the plan, but rather a coverage standard that the hospital must meet for the claim to be paid.
Traditional Medicare does require prior authorization for a limited list of services, primarily certain high-cost durable medical equipment and specific procedures performed in a hospital outpatient department. However, the inpatient admission itself for a major surgery that meets the Two-Midnight Rule criteria is typically exempt from a prior authorization requirement.
Prior Authorization Rules for Medicare Advantage Plans (Part C)
Prior authorization for inpatient surgery is significantly more common and often mandatory for individuals enrolled in a Medicare Advantage (MA) Plan (Part C). These plans are administered by private insurance companies and frequently require prior approval for non-emergency inpatient surgeries and other high-cost services, unlike Traditional Medicare.
The requirement for pre-approval varies considerably between different MA plans, so beneficiaries must check their specific plan documents before a scheduled procedure. Recent CMS regulations, such as the 2024 Medicare Advantage and Part D Final Rule, have sought to streamline these processes. These rules clarify that MA plans must adhere to the same underlying medical necessity standards as Original Medicare, including the Two-Midnight Rule benchmark for inpatient admissions.
The use of prior authorization is widespread in Medicare Advantage, with nearly all enrollees subject to at least one such policy. The goal of these utilization management policies is to ensure procedures align with the plan’s medical necessity guidelines before the service is rendered.
The Healthcare Provider’s Role in the Authorization Process
Securing a prior authorization is primarily an administrative task that falls to the treating healthcare provider, such as the surgeon’s office or the admitting hospital. The process begins with the provider submitting a formal request to the Medicare Advantage plan, detailing the patient’s diagnosis and the specific procedure planned. This request must include comprehensive clinical documentation that demonstrates the medical necessity of the inpatient surgery.
The provider is responsible for responding to any requests for additional information from the plan to support the medical necessity claim. It is crucial for the provider to obtain a written confirmation of authorization from the payer before the surgery is performed. Proceeding with a scheduled surgery while authorization is pending or denied can lead to a denial of the claim.
Financial Liability When Authorization is Denied or Missed
When a prior authorization is required by a Medicare Advantage plan and is denied or not obtained, the beneficiary faces a significant risk of financial liability. If the plan determines the procedure was not medically necessary, the patient may be responsible for the full cost of the inpatient surgery. This situation can occur even if the service would have been covered under Original Medicare.
If the prior authorization is denied, both the provider and the patient have the right to appeal the decision through a multi-level process. Statistics show that a large majority of prior authorization denials that are appealed are ultimately overturned in favor of coverage. To protect themselves, a patient should confirm the prior authorization status with their provider before the procedure.