(December 09, 2025): The Government Accountability Office (GAO) has long expressed concerns regarding the fraud, waste and abuse risks inherent in the Medicare program. In fact, GAO first designated Medicare as a “High Risk” program due to its size, complexity and susceptibility to improper payments.[1] Throughout 2025, Medicare providers and suppliers were subjected to significant audit scrutiny by one or more contractors working for the Centers for Medicare and Medicare Services (CMS). Unfortunately, 2026 is shaping up to be similarly active. While administrative claims reviews and program integrity audits will undoubtedly continue, CMS is also starting at least two new demonstration projects in the new year, both of which involve the prior authorization of certain high dollar or historically problematic claims.[2] One of these initiatives is targeting Ambulatory Surgical Centers (ASCs) in a handful of states that bill for certain surgical services. This article examines the ASC prior authorization demonstration project and discusses the impact it is likely to have on affected Medicare participating providers.
I. Background – How Did the ASC Prior Authorization Demonstration Project Arise?
With narrow exceptions,[3] since Medicare was first passed in 1965, Original Medicare[4] Part B services have not been subject to prior authorization review. Not surprisingly, Medicare providers have consistently resisted efforts to impose prior authorization requirements on services and supplies covered by Traditional Medicare. Many Medicare providers are concerned that even limited demonstration projects where prior authorization of certain services is required is reflective of a slow deterioration of the broad medical decision-making that has been the general rule under Original Medicare.
A. Implementation of a Prior Authorization Process for Certain Covered Hospital Outpatient Services.
At the outset, it is important to keep in mind that the GAO has long urged CMS to expand its use of prior authorization in the Original Medicare fee-for-service program.[5] Specific hospital outpatient services are one area where prior authorization has already been implemented. As you may recall, in 2019, CMS published an extensive Final Rule [6] in the Federal Register covering a number of topics, including the “Prior Authorization Process and Requirements for Certain Covered Outpatient Department Services.” This Final Rule established a nationwide process for implementing a prior authorization review of a handful of hospital outpatient services.[7] The stated purpose of the hospital outpatient prior authorization project was to help control unnecessary increases in the volume of the following service categories:
- Blepharoplasty;
- Botulinum Toxin Injections;
- Panniculectomy
- Rhinoplasty; and
- Vein Ablation.
B. Expansion of the Prior Authorization Demonstration Project to Ambulatory Surgical Center (ASC) Settings.
As CMS has noted, after implementing prior authorization for the procedures listed above in hospital outpatient settings, it appears that a number of the targeted services were shifted to be performed in ASCs rather than in hospital outpatient departments. The obvious concern is that the transfer of these services to ASCs may be an effort to avoid the hospital outpatient prior authorization process. A brief overview of the ASC Prior Authorization Demonstration Project is provided below:
- Planned Duration of the ASC Prior Authorization Demonstration Project. The ASC Prior Authorization Demonstration Project is currently scheduled to last for five years.
- States Included in the ASC Prior Authorization Demonstration Project. The initial demonstration project is scheduled to be implemented in California, Florida, Tennessee, Pennsylvania, Maryland, Georgia, New York, Texas, Arizona and Ohio.
ASCs in the following states can submit prior authorization requests beginning on January 5, 2026, for dates of service on or after January 19, 2026: California, Florida, Tennessee, Pennsylvania, Maryland, Georgia, and New York.ASCs in the following states can submit prior authorization requests beginning on February 2, 2026, for dates of service on or after February 16, 2026: Texas, Arizona, and Ohio.
- Specific Locations and Procedures Subject to Prior Authorization. The ASC Prior Authorization Demonstration Project only applies to ASCs billing Part B Medicare with a Place of Service (POS) Code 24, Type of Service (TOS) Code F and Specialty Code 49. The service categories targeted by the demonstration are the same as those being reviewed as part of the Hospital Outpatient Prior Authorization Project:
- Blepharoplasty;
- Botulinum Toxin Injections;
- Panniculectomy;
- Rhinoplasty; and
- Vein Ablation Procedures.
While only five service categories are currently slated for review, there are multiple CPT Codes associated with each of the five categories that will be subject to prior authorization. Listings of the affected CPT Codes associated with each service category are detailed below.
Blepharoplasty, Blepharoptosis Repair, and Brow Ptosis Repair Procedures
| CPT Code | CPT Description |
|---|---|
| 15820 | Blepharoplasty, lower eyelid. |
| 15821 | Blepharoplasty, lower eyelid; with extensive herniated fat pad. |
| 15822 | Blepharoplasty, upper eyelid. |
| 15823 | Blepharoplasty, upper eyelid; with excessive skin weighting down lid. |
| 67900 | Repair of brow ptosis (supraciliary, mid-forehead or coronal approach). |
| 67901 | Repair of blepharoptosis; frontalis muscle technique with suture or other material (e.g., banked fascia). |
| 67902 | Repair of blepharoptosis; frontalis muscle technique with autologous fascial sling (includes obtaining fascia). |
| 67903 | Repair of blepharoptosis; (tarso) levator resection or advancement, internal approach. |
| 67904 | Repair of blepharoptosis; (tarso) levator resection or advancement, external approach. |
| 67906 | Repair of blepharoptosis; superior rectus technique with fascial sling (includes obtaining fascia). |
| 67908 | Repair of blepharoptosis; conjunctivo-tarso-Muller's muscle-levator resection (eg, Fasanella-Servat type). |
Botulinum Toxin Injection
| CPT Code | CPT Description |
|---|---|
| 64612 | Chemodenervation of muscle(s); muscle(s) innervated by facial nerve, unilateral (eg, for blepharospasm, hemifacial spasm). |
| 64615 | Chemodenervation of muscle(s); muscle(s) innervated by facial, trigeminal, cervical spinal and accessory nerves, bilateral (e.g., for chronic migraine). |
| J0585 | Injection, onabotulinumtoxin A, 1 unit. |
| J0586 | Injection, abobotulinumtoxin A, 5 units. |
| J0587 | Injection, rimabotulinumtoxin B, 100 units. |
| J0588 | Injection, incobotulinumtoxin A, 1 unit. |
| J0589 | Injection, daxibotulinumtoxin A-lanm, 1 unit. |
Panniculectomy, Excision of Excess Skin and Subcutaneous Tissue (Including Lipectomy), and Related Services
| CPT Code | CPT Description |
|---|---|
| 15830 | Excision, excessive skin and subcutaneous tissue (includes lipectomy); abdomen, infraumbilical panniculectomy. |
| 15847 | Excision, excessive skin and subcutaneous tissue (includes lipectomy), abdomen (e.g., abdominoplasty) (includes umbilical transposition and fascial plication). |
| 15877 | Suction assisted lipectomy; trunk. |
Rhinoplasty, and Related Services
| CPT Code | CPT Description |
|---|---|
| 20912 | Cartilage graft; nasal septum. |
| 21210 | Graft, bone; nasal, maxillary or malar areas (includes obtaining graft). |
| 30400 | Rhinoplasty, primary; lateral and alar cartilages and/or elevation of nasal tip. |
| 30410 | Rhinoplasty, primary; complete, external parts including bony pyramid, lateral and alar cartilages, and/or elevation of nasal tip. |
| 30420 | Rhinoplasty, primary; including major septal repair. |
| 30430 | Rhinoplasty, secondary; minor revision (small amount of nasal tip work). |
| 30435 | Rhinoplasty, secondary; intermediate revision (bony work with osteotomies). |
| 30450 | Rhinoplasty, secondary; major revision (nasal tip work and osteotomies). |
| 30460 | Rhinoplasty for nasal deformity secondary to congenital cleft lip and/or palate, including columellar lengthening; tip only. |
| 30462 | Rhinoplasty for nasal deformity secondary to congenital cleft lip and/or palate, including columellar lengthening; tip, septum, osteotomies. |
| 30465 | Repair of nasal vestibular stenosis (eg, spreader grafting, lateral nasal wall reconstruction). |
| 30520 | Septoplasty or submucous resection, with or without cartilage scoring, contouring or replacement with graft. |
Vein Ablation, and Related Services
| CPT Code | CPT Description |
|---|---|
| 36473 | Endovenous ablation therapy of incompetent vein, extremity, inclusive of all imaging guidance and monitoring, percutaneous, mechanochemical; first vein treated. |
| 36474 | Endovenous ablation therapy of incompetent vein, extremity, inclusive of all imaging guidance and monitoring, percutaneous, mechanochemical; subsequent vein(s) treated in a single extremity, each through separate access sites. |
| 36475 | Endovenous ablation therapy of incompetent vein, extremity, inclusive of all imaging guidance and monitoring, percutaneous, radiofrequency; first vein treated. |
| 36476 | Endovenous ablation therapy of incompetent vein, extremity, inclusive of all imaging guidance and monitoring, percutaneous, radiofrequency; subsequent vein(s) treated in a single extremity, each through separate access sites. |
| 36478 | Endovenous ablation therapy of incompetent vein, extremity, inclusive of all imaging guidance and monitoring, percutaneous, laser; first vein treated. |
| 36479 | Endovenous ablation therapy of incompetent vein, extremity, inclusive of all imaging guidance and monitoring, percutaneous, laser; subsequent vein(s) treated in a single extremity, each through separate access sites. |
| 36482 | Endovenous ablation therapy of incompetent vein, extremity, by transcatheter delivery of a chemical adhesive (eg, cyanoacrylate) remote from the access site, inclusive of all imaging guidance and monitoring, percutaneous; first vein treated. |
| 36483 | Endovenous ablation therapy of incompetent vein, extremity, by transcatheter delivery of a chemical adhesive (e.g., cyanoacrylate) remote from the access site, inclusive of all. |
II. Overview of the ASC Prior Authorization Process:
CMS has issued an “Operational Guide” [8] covering the ASC Prior Authorization Demonstration Project which sets out the process for seeking prior authorization to perform a covered procedure. While providers should expect for each MAC to vary the process in order for documentation and coverage requirements to track any Local Coverage Determination (LCD) guidance that the MAC has in place, the CMS Operational Guide lists a number of core documentation requirements that must be submitted when seeking prior authorization for a specific covered procedure. For example, the “General Documentation Requirements for Blepharoplasty, Blepharoptosis Repair, and Brow Ptosis Repair” include:
- Documented subjective patient complaints which justify functional surgery (vision obstruction, unable to do daily tasks, etc.);
- Documented excessive upper/ lower lid skin;
- Signed clinical notes support a decrease in peripheral vision and/or upper field vision causing the functional deficit (when applicable);
- Signed physician’s or non-physician practitioner’s documentation of functional impairment and recommendations;
- Supporting pre-op photos (when applicable);
- Visual field studies/exams (when applicable). [9]
III. Medical Necessity vs. Cosmetic Surgery:
One of the primary concerns with each of the five service categories is whether the procedure was performed because it was medically necessary OR was it really just cosmetic surgery that was “justified” in the patient’s records as a medically necessary procedure in an effort to have it covered by Medicare? As CMS has noted on its website:
“Medicare usually doesn’t cover cosmetic surgery unless you need it because of accidental injury or to improve the function of a malformed body part.” [10]
If a procedure is performed for appearance only, it will not be considered as medically necessary and will not qualify for coverage and payment by Medicare. Nevertheless, a procedure may in fact be medically necessary (such as the removal of excess eye skin removal to improve a patient’s eyesight) AND it may also improve the look of a patient’s eyelid. Since the procedure was medically necessary, the provider should argue that it qualifies for coverage and payment by Medicare.
More than 25 years ago, researchers conducted a study examining whether physicians were willing to “lie” to private insurance companies in an effort to get a cosmetic surgical procedure paid by a patient’s insurance. As set out in their article[11] titled “Lying for Patients: Physician Deception of Third-Party Payers,” the researchers found that a significant number of physicians were willing to “embellish” the facts in order to get a surgical procedure covered. As discussed in Section IV below, the improper characterization of cosmetic surgeries is merely one of several concerns that have been identified in the administration of these service categories.
IV. Enforcement Efforts Involving the Targeted ASC Services:
Focusing on the specific service categories covered by the ASC Prior Authorization Demonstration Project, Federal prosecutors around the country have a history of prosecuting fraud involving these specific services. Examples of these prior prosecutions are discussed below:
Blepharoplasty
A blepharoplasty involves the surgical removal of extra skin, muscle, and fat from around a patient’s eyes. This helps to correct issues such as sagging upper eyelids, drooping, or puffiness under the eyes, which can sometimes interfere with vision. It can also result in the patient having a more youthful appearance. In light of the obvious cosmetic benefits of such procedures, CMS contractors have often scrutinized these procedures to ensure that the services were medically necessary when they were performed. While most questionable claims are merely denied and treated as an administrative overpayment, more serious cases can result in referrals to law enforcement for civil and / or criminal enforcement action. A case illustrating this type of improper conduct is discussed below:
Florida – Improper Concurrent Billing of Blepharoplasty and Ptosis Surgeries. In this case, the government alleged that two surgeons were alleged to have billed the Medicare program for two surgical procedures -- blepharoplasty and ptosis[12] – when treating Medicare beneficiaries. Medicare considers blepharoplasty and ptosis to be mutually exclusive eyelid repair surgeries that should not be billed simultaneously. A whistleblower filed suit against the defendants under the False Claims Act, citing the wrongful billing of these procedures. To resolve the False Claims Act allegations, the defendants collectively paid more than $ $157,000 to the government.
Botulinum Toxin Injections
Botulinum toxin injections, commonly known as “Botox®” injections are at the top of the list services that may be subject to abuse, due to their widespread use as cosmetic procedures. More often than not, if a CMS auditor finds that a botulinum toxin injection was not medically necessary, it is treated as mere overpayment and the claim is denied. Unfortunately, health care providers administering botulinum toxin injections to patients have managed to run afoul of a number of other Federal statutes. Cases illustrating this improper conduct are discussed below:
Missouri – Billing Medicare for Medications Obtained at No Cost. In this case, a Missouri-based physician received a number of single-dose vials of botulinum toxin at no charge. These vials were supposed to be used for specific patients with private health insurance. After using a portion of the vials on the private insurance patients, the provider failed to discard the remainder of the medications. Instead, the physician kept the leftover medications and used it in the treatment of Medicare patients. The physician then billed Medicare for the botulinum toxin injections administered, as if new vials had been purchased. The physician was also alleged to have falsified the lot numbers of the vials used to treat the Medicare patients in the patients’ records. Federal law generally prohibits health care providers from seeking reimbursement from Medicare for items that they obtained at no cost. The government pursued these violations against the physician and the physician’s practice under the False Claims Act. To resolve the False Claims Act allegations, the physician and the practice agreed to pay the government more than $290,000.
Michigan – The Use of Adulterated and Misbranded Drugs. In this case, a physician and his company had a number of patients who were treated with botulinum toxin in connection with a variety of conditions. To cut costs, the defendants started purchasing the botulinum toxin from foreign, unapproved sources that had not been approved by the Food and Drug Administration (FDA). Government agents subsequently seized numerous packages of these unapproved medications before they could be delivered to the practice. The government subsequently warned the defendants against improperly importing adulterated and misbranded drugs. Despite these warnings, the defendants continued to knowingly use these unapproved drugs and billed the Medicare program for their use in treating Medicare beneficiaries. As the government noted “Providers can place patients at risk of harm through the importation and use of unapproved drugs.” The government alleged that this defendants’ conduct violated the False Claims Act. To resolve the False Claims Act violations, the defendants paid more than $135,000.
Panniculectomy
A panniculectomy is a significant surgical procedure designed to remove the excess skin and fat, known as a pannus, that hangs down from the lower abdomen. This operation is typically performed after substantial weight loss to address health concerns such as skin irritation, infections, and difficulties with movement. When the pannus leads to medical issues such as persistent skin problems or impairs daily function, the surgery may be deemed medically necessary and can be covered by insurance. In contrast, cosmetic abdominoplasty, also referred to as a “tummy tuck,” is usually not covered by Federal or private payors.
Iowa – Performing “Tummy Tucks” and Other Cosmetic Procedures and Billing Them Out as Covered Services. In this case, Federal prosecutors filed a lawsuit against an Iowa-based surgeon and his employer under the False Claims Act, alleging that the surgeon improperly billed Medicare and other Federal health benefit programs payors. More specifically, the government alleged that the defendant surgeon engaged in a number of improper billing practices, including, but not limited to performing cosmetic surgeries, such as “tummy tucks,” and engaged in efforts to mask those surgeries to make them appear to be covered procedures. The defendant surgeon ultimately agreed to pay the Medicare and Medicaid programs more than $190,000 to resolve civil liability in this case. Notably, Federal prosecutors pursued parallel civil and criminal prosecutions against the defendant surgeon. He pleaded guilty to one count of making a false statement relating to a healthcare matter, in violation of Title 18, United States Code, Section 1035(a). The defendant also voluntarily surrendered his medical license.
Rhinoplasty
You may expect for rhinoplasty surgery (also commonly referred to as a “nose job”) to be at the top of the government’s list, with respect to misrepresenting the purpose of this procedure. For example, has the provider purposely misdescribed a procedure as the repair of a deviated septum when, in fact, it was really cosmetic surgery? Interestingly, in their JAMA article titled “Lying for Patients: Physician Deception of Third-Party Payers,” the researchers found that “There was little willingness to use deception for cosmetic rhinoplasty (2.5%).” [13] To the extent that providers have improperly billed for these services, it appears that those billings have been primarily handled as overpayments rather than violations of the civil False Claims Act or prosecuted under a criminal statute.
Vein Ablation
Florida – Medically Unnecessary Vein Ablation Surgeries. In this case, a vascular surgeon and his practice were sued by the Federal government under the civil False Claims Act, alleging that the defendant vascular surgeon engaged in upcoding and billed Medicare and TRICARE for services that contained false diagnoses and symptoms. The defendant vascular surgeon was also alleged to have submitted claims for vein ablation procedures that were medically unnecessary or performed by unqualified personnel, or both. To resolve the False Claims Act violation, the defendant vascular surgeon and his practice agreed to pay the United States more than $2.2 million.
California. In this case, a California-based internal medicine physician was alleged to have recruited Medicare beneficiaries to his clinics and falsely diagnosed them with venous insufficiency. The defendant then performed medically unnecessary vein ablation procedures on these Medicare beneficiaries. When he billed the Medicare program for these procedures, he was alleged to have improperly “up-coded” the services in order to be paid a higher level of reimbursement. After a six-day trial, the defendant physician was found guilty and was later sentenced to more than 7 years in prison.
V. Conclusion:
The ASC Prior Authorization Demonstration Project represents yet another departure from the way Original Medical services have historically been handled. Requiring prior authorization of certain services or procedures is likely to result in significant unexpected claims denials. When performing one or more the covered ASC procedures that are subject to prior authorization, it is essential that the medical necessity of these procedures is fully documented. Are your ASC services subject to prior authorization review? If so, give us a call. Our attorneys are experienced in navigating the complexities of demonstration projects such as this. We represent Medicare providers NATIONWIDE. For a free consultation, call: +1 (202) 298-8750.
- [1] Testimony Before the Subcommittee on Oversight, Committee on Ways and Means, House of Representatives, “CMS’s Efforts to Ensure Proper Payments and Identify and Recover Improper Payments.” Statement of James Cosgrove, Director, Health Care. GAO-17-761T (July 19, 2017).
- [2] Effective January 1, 2026, a number of recently identified CMS contractors will be conducting prior authorization audits of specific high-dollar services billed to Original Medicare by providers in a limited number of states. This initiative is known as the “Wasteful and Inappropriate Service Reduction (WISeR) Model.” For additional information on the WISeR audit initiative, please see our September 2025 article on this demonstration project.
- [3] CMS and its various contractors have long utilized “prepayment reviews” as a compliance and program integrity tool. A limited number of targeted projects have been implemented over the past 60 years that imposed prior authorization requirements on participating Part A and Part B providers and suppliers.
- [4] Sometimes referred to as “Traditional Medicare.”
- [5] Although the GAO has consistently advocated for Medicare to implement prior authorization for certain fee-for-service procedures in its reports, there isn’t one definitive, original recommendation to Congress specifically about broadening the use of prior authorization. Instead, the recommendation developed over time through several reports. Notably, GAO-18-341 from April 2018 advised CMS to further pursue and extend prior authorization for specific services, such as home health care and power mobility devices, as a way to curb costs. These suggestions built upon earlier pilot programs and reflect a progressive approach toward the expansion of the use of prior authorization in Traditional Medicare.
- [6] The full title of the Final Rule is “Medicare Program: Changes to Hospital Outpatient Prospective Payment and Ambulatory Surgical Center Payment Systems and Quality Reporting Programs; Revisions of Organ Procurement Organizations Conditions of Coverage; Prior Authorization Process and Requirements for Certain Covered Outpatient Department Services; Potential Changes to the Laboratory Date of Service Policy; Changes to Grandfathered Children's Hospitals-Within-Hospitals; Notice of Closure of Two Teaching Hospitals and Opportunity To Apply for Available Slots.” 84 Fed. Reg. 61479 (November 12, 2019).
- [7] The hospital outpatient prior authorization project was authorized pursuant to Section 1833(t)(2)(F) of the Social Security Act.
- [8] The CMS Operational Guide sets out the basic procedures that are to be forwarded when a provider seeks to obtain prior authorization to perform one of the specific categories of ASC services subject to review.
- [9] CMS Operational Guide, Page 14.
- [10] See CMS’s website page discussing “Cosmetic Surgery.”
- [11] Journal of the American Medical Association (JAMA), “Lying for Patients: Physician Deception of Third-Party Payers.” (October 1999). As set out in this Article, the authors found that the more severe the condition requiring treatment, the more doctors were willing to “embellish” the patient’s diagnosis. As the journal article notes:
“Physicians were willing to use deception in the coronary bypass surgery (57.7%), arterial revascularization (56.2%), intravenous pain medication and nutrition (47.5%), screening mammography (34.8%), and emergent psychiatric referral (32.1%) vignettes.”
- [12] “Ptosis” refers to a drooping upper eyelid. Ptosis surgery is used to tighten certain muscles in the face that will result in helping to lift the upper eyelid. While ptosis surgery can improve a person's vision by lifting the eyelid, it can also improve the appearance of a patient’s eyes.
- [13] Journal of the American Medical Association (JAMA), “Lying for Patients: Physician Deception of Third-Party Payers.” (October 1999). Interestingly, the researchers found that “There was little willingness to use deception for cosmetic rhinoplasty (2.5%).”