The Centers for Medicare & Medicaid Services (CMS) will be offering to exempt a select group of durable medical equipment, prosthetics, orthotics and supplies (DMEPOS) providers from prior authorization requirements, CGS Administrators — the Jurisdictions B and C DME MAC — announced on Jan. 13.
At first glance, this sounds like administrative relief, a way to streamline back-office operations. As explained by CGS, the DME MACs will review suppliers’ approval ratings for past prior authorization claims.
“If the supplier’s approval rate is 90% or higher, they will have an option each year to be exempt from submitting prior authorizations for that year,” CGS said. “To determine supplier eligibility for continued exemption, the DME MACs will conduct an annual post-payment medical review sample to ensure compliance. From this claim sample, suppliers must again meet a claim approval rate of 90% or greater to continue their exemption.”
Suppliers who don’t achieve that 90% or greater compliance rate mark “must continue submitting prior authorization requests as a condition of payment,” CGS added.
The protection of prior authorization
Being able to skip that prior authorization step might sound like a back-office time saver that could speed up the DME provision process.
But Noel Neil, JD, CDME, chief compliance officer for ACU-Serve, suggested the prior authorization issue isn’t that simple for DMEPOS businesses.
“A surface level review may make exemption from Medicare’s prior authorization requirements appear attractive for DMEPOS suppliers,” Neil told HME Business. “However, the practical realities of prior authorization within the DMEPOS environment may differ from those experienced by physicians, laboratories or hospitals. Other provider types may welcome the idea of prior authorization exemption. However, for DMEPOS suppliers, prior authorization serves not only as confirmation that an item is reasonable and necessary — it also provides meaningful protection from downstream audit risk.”
Neil explained that when a claim is submitted with “an affirmed prior authorization decision,” that claim is then excluded from review by the Recovery Audit Contractor (RAC) and from Medicare Administrative Contractor (MAC) Targeted Probe and Educate (TPE) audits.
“This safeguard is particularly valuable for suppliers furnishing high-cost, high-complexity equipment, such as customized power mobility devices (PMDs) and pneumatic compression devices (PCDs), both of which will be incorporated into the prior authorization program beginning April 2026,” Neil said. “Prior authorization offers suppliers greater confidence when delivering expensive equipment, reducing financial uncertainty and administrative exposure.”
Seeing prior authorization in a different light
Because of those benefits, “Even suppliers achieving a 90 % or higher affirmation rate should carefully consider the implications before electing exemption,” Neil said, explaining that claims submitted without a Unique Tracking Number may be subject to MAC or RAC review.
“These audits are not only administratively burdensome, they also carry the risk of recoupment,” he noted. “Challenging denials through the appeals process can be costly, time consuming and disruptive to operations.”
Noel also pointed out that transitioning back and forth between skipping and obtaining prior authorizations “introduces unnecessary complexity” that can slow down the provision process and raise the risk of process errors.
If back-office teams must resume submitting for prior authorizations after previously operating without it, “staff must again adjust workflows, increasing the likelihood of documentation errors or missed steps,” Neil said. “Maintaining a consistent, stable process minimizes risk and supports compliance. For example, if the supplier did not receive the notification of the resumption of prior authorization, they may dispense an item without obtaining a prior authorization. This would result in unnecessary denials.”
Neil therefore cautioned suppliers against opting out of prior authorization processes without careful consideration.
“Remaining within the prior authorization framework provides a more predictable, defensible and operationally efficient path for DMEPOS suppliers,” he said. “The protections it affords — particularly in an environment of increasing audit scrutiny — far outweigh the perceived benefits of temporary exemption.”
