Prior Authorization in DME, With 2026 Rules

0:00Introduction

In the name of God, the Most Merciful. Peace and God's blessings be upon you. The series we started on DME training, we are starting it again today with another session. Sorry, I am coming back after a week, because the problem is that I was handling an audit for one client, and I got very busy with it. Basically, what that audit was and what I identified in it, and where that audit stands now, I will tell you about that, okay. It is quite detailed, but I will tell you at the end of the video. For now, today's topic is prior authorization, so let's try to understand it.

0:41What is Prior Authorization

Okay, if I explain prior authorization to you in simple words, it is like when we enter a country, or need to travel to a country, we need a visa for it. In the same way, for some particular DME products that have seen a lot of scams and a lot of improper billing, they have put this visa-style system in place, to put it simply: before you provide these products to the patient, before you deliver, before billing insurance, you must first get prior authorization from the insurer. And once prior authorization is approved, in billing terminology it is called an affirmation.

You get an affirmation number, and with that affirmation you then bill the claim, okay. And if your prior authorization is denied, that is a non-affirmation, okay, in Medicare terminology. Before we go further and understand prior authorization in depth and detail, Ansar is also with us today. Ansar, peace be upon you. How are you, are you well? And peace be upon you, thank God, I'm well, brother. Ansar, would you like to say something about today's prior authorization session? I would just add that it plays a very important role in DME, because without it we cannot bill, and the denial rate goes up if we do not understand it. So it is important. First of all, we will try to understand prior authorization for Traditional Medicare, which is Medicare fee-for-service, or FFS.

2:21The three PA worlds and World 1: Medicare DME MAC process

Medicare FFS has chosen three to four of its product categories and put this prior authorization requirement on them, so you cannot bill for them without prior authorization. For these products, you first have to submit to the insurance the patient's documents and medical notes, and once their system verifies that it is medically necessary and reasonable, they will give you an affirmation, and with that affirmation you can bill. Okay, so in Traditional Medicare, the prior authorization you have to submit, goes to the Medicare Administrative Contractor for your jurisdiction. You have to send it to them. And the CMS-0057-F payer rule is basically about prior authorization for Medicare Advantage plans.

3:01World 2: CMS-0057-F payer reform

Their rules also changed in 2026. And it applies to Medicaid, and to Children's Health Plans, and to QHP payers, too, that kind of prior authorization. Of course, in these, Medicare Traditional Medicare, you know the rules, if you have to submit through the payer's portal, then it gives affirmations.

3:55World 3: WISeR pilot, AI-assisted PA

But because there was a lot of debate, and stakeholders did a lot of litigation, because of this, Medicare has now made it so that when the WISeR pilot denies any prior authorization, there is a clinical medical practitioner with it, whose notes have been made mandatory. So if any pilot denies any prior authorization, what will happen is that the clinical medical professional will basically provide their notes too. It was not denied by AI alone; it was also re-verified by a clinical specialist. So the WISeR pilot is basically their new system, which they have rolled out in 6 states and for now it only works on Traditional Medicare.

It does not apply to Medicare Advantage or Medicaid. And CMS-0057 is prior authorization for Medicare Advantage, Medicaid and Children's Health Plans. Traditional Medicare, the classic DMEPOS prior authorization, goes to the Medicare Administrative Contractor. We have to submit it there, and once we get our unique tracking number, meaning the number we receive with an affirmation, that is called the UTN.

5:34UTN explained

You need to remember that the UTN number is needed not only for an affirmation, but for a non-affirmation too, because to appeal further, you must save the non-affirmation number. If you do not have it saved, you will run into problems later. So the DME prior authorization workflow, let's try to understand it. First, we have to check what the patient's eligibility is and what active benefits they have.

6:01Before you submit: eligibility and the key documents

I told you before, there is a difference between eligibility and verification of benefits. Eligibility means whether the patient's plan is active or not active. And verification of benefits means whether, within that plan, that particular benefit is covered or not. Okay, so we have to check and verify both of these things. After that, we will gather the documentation. Okay, what do we need to gather in the documentation? Look, remember this. In DME, the important documents are only about 5 or 6. If you have these 5 or 6 documents, you are sitting audit-ready.

You have complete audit documentation. If an audit comes tomorrow, you can submit all the documents the day after. What are they? One is the standard written order. It has the doctor's signature and the date of the prescription. Okay? So these four or five things are in a standard written order. There is also a mistake people make, which I have commonly seen. They also put diagnosis codes on the standard written order, even though that is not a Medicare requirement. And Medicare auditors never audit by looking at those diagnosis codes.

An example of this is that Medicare's system says that medical necessity will be supported by the chart notes, meaning the progress notes, the diagnosis there, and the face-to-face sheet, not the standard written order. Whatever codes are written on a standard written order, they don't have much value at all, no value at all, okay. So the mistake people make is that, on top of the standard written order, they write diagnosis codes, and those are not reflected in the chart notes or on the face-to-face sheet. So that is a problem, that is an issue, and it is not a compliant way.

Anyway, the face-to-face and clinical notes, which are also called chart notes, are also called progress notes, or medical notes. Okay, what is a face-to-face sheet? It is a face-to-face encounter, where a patient goes to the doctor and the doctor assesses them and makes a plan. So a face-to-face sheet is created for that, and in this sheet the full assessment is there, along with their vitals. Besides that, whatever medical plan is recommended for them is there too. And you can think of these as part of the medical notes themselves.

And the other thing is clinical notes and progress notes, in which all the logs for the patient's profile and their health profile are being managed, including all their medical conditions. And the face-to-face encounter, which is their most recent encounter, has what was assessed and the plan the doctor recommended, all of it. These two, you could say documents, are the most important, the ones from which medical necessity is established. Medicare had shut that down at one point, because people were taking advantage of it. So now there is a document, an addendum, under which, if the chart notes, clinical notes and face-to-face sheet don't show medical necessity, but in a chart note, in the progress notes there is a diagnosis code which you feel you should check with the doctor's office and ask them to specify it, because medical necessity is not being established.

Did the patient have anything else assessed? If, before the service, before the service, they produce a document, meaning they clarify the diagnosis, and again, that clarification should show up in the chart notes. It should not be that this is a diagnosis code whose meaning is not at all reflected in the chart notes. Then of course it will not be accepted, it will be denied. So this is a very technical thing to understand, and these two are the most important documents. If you understand them properly and manage them properly for every patient, then of course you are audit ready.

And of course you need a standard written order for every order. And clients often make mistakes in this, one way or another. As I told you at the start, in this case the client who came to me had a nursing facility in Illinois, where a social worker had signed the order. Now social workers and chiropractors do not sign a standard written order, and the billing was done under the doctor there. He was an approved doctor, but the SWO was basically a fax sheet with the product and the HCPCS code written on it, and it had the signature and date, on the nursing facility's letterhead, but no doctor's signature, so it will not be accepted.

Medicare triggered it. So SMRC, the medical records review contractor, which randomly reviews medical records, and mostly it reviews records of products that already have a lot of scams, like CGMs, braces, wheelchairs, and CPAP and BiPAP, catheters, okay, and in incontinence supplies, absorbent supplies, diapers, there is a lot of improper billing. They mostly check only these. So if you have learned to manage the standard written order, face-to-face sheet and clinical notes properly, that means you can run a facility, and it will stay safe. Because when an audit comes, a post-payment audit comes, and then they will recoup, and whatever it is, that will be a pretty big loss.

On the patients he serviced, I estimated about four or five thousand dollars, which will hit him hard. Because I told him, brother, you cannot defend those two claims, because in them medical necessity is incomplete. Hypoglycemia should be mentioned, and it is not. Anyway, there was a gap. I will call the doctor's office and get it from there, from the old documents, because you cannot backdate, that is illegal, and he of course will not do that, meaning the client follows proper billing practices and is ethical. So two can be won, because they had hypoglycemia events, but there was just the SWO and the face-to-face sheet, and that also had an issue.

Its date of service, anyway, I will tell you about this at the end of the call. Okay? In the same way, the documentation you gather, you have to gather these three documents, and together they will prove it.

12:47MAC decision, UTN and appeal levels

Then, within just a few days, you will get the determination. I will tell you further down how many days it takes for the determination to come. We will talk about that further down. So once the determination reaches you, it will either be approved or it will not be approved, either an affirmation or a non-affirmation. And you will have to keep its tracking number safely with you. On your sheet, or in whatever EHR you are using, you will have to save it, which is called the UTN number.

The UTN is the unique tracking number. You have to keep it saved, because it can happen that you had an emergency patient and felt sure the prior authorization would be approved, and you serviced the patient meanwhile, thinking approval is coming anyway, but it got denied. It is not that if it is denied, you will not submit the claim at all. No, you will submit the claim with the UTN number, okay, because once the claim is denied, you can then move toward its appeal, okay. Then there are levels of appeal after that, and each level has different criteria.

God willing, we will cover that in this course, but not in today's session. Okay, bill and resolve, okay. After that, once you have the UTN, you will service the patient, and after servicing, once it ships, you will bill, and it is mandatory to enter the UTN number. If you forget to enter the prior authorization number, then... prior authorization has a whole workflow. Now let's try to understand this illustration I made, it is of the Medicare MAC portal.

14:42myCGS portal walkthrough, Smart Submission

In it, next to Eligibility, the Claim Preparation section, you go into that, you go into Smart Submission, and first this screen will open, the Smart Submission screen. In it, this provider information is already filled in, whichever provider it is. All of this information will be there. You go below. If they want to contact someone on your team regarding prior authorization, regarding any question, you have to enter their contact details. After that is this delivery confirmation. Here you have to enter the patient's information, and after that, here you have to select the prior authorization category, meaning which category you want to request prior authorization for.

After that, the HCPCS code for the base equipment, you select it from here, and if there is an upgrade of it, you click Yes here, and if there is no upgrade, you click No, okay. In the same way, we move forward. If there is a stolen, lost or damaged mobility device, you click Yes here, otherwise you click No.

15:51Expedited requests

Meaning, if it is urgent, meaning an emergency case, and you need the prior authorization result quickly, here you have to remember that if you tick the expedited box for every prior authorization, that will become a red flag. So in whichever case there is jeopardy, meaning the patient could be harmed if they do not get that device on time, for example the oxygen supply is running out but the patient requires oxygen, So jeopardy means that the patient could be harmed if they do not get the medical device on time, their health and life could be harmed.

So there is an exception: you can click Yes on expedited request and then you get the result quickly, but you cannot do it every time. You cannot do this every time. And yes, if there is a jeopardy situation where the patient is at risk, such as with an oxygen supply, you can do it. And if this is an initial submission, you click Initial. If it is a resubmission, you click Resubmission. Resubmission means that it was a non-affirmation and you have updated the documentation, meaning you received additional documentation from the doctor's office. Maybe the patient had another visit too, with a new assessment.

17:00Non-affirmation: resubmit, appeal, or decline

Then you will resubmit with that. Next, in this tab, what is there is that you need the medical records, like the face-to-face examination, and the medical records and written order prior to delivery, you will upload these, and after that you will submit. After you submit, the result will come to you. Okay, it will be either an affirmation or a non-affirmation, okay. Now let's try to understand this. Look, the DME MAC, meaning Traditional Medicare, has placed prior authorization on power wheelchairs, and on certain pressure-reducing surfaces it has also placed prior authorization, and it has placed it on lower limb prostheses too, and on certain bone growth stimulators.

17:30Which items need prior authorization

And prior authorization is mostly, almost always, on those products that are red-flagged, which are on the OIG's hit list, the products whose reimbursement is above a thousand dollars, and those whose reimbursement is less than a thousand dollars. That is also the reason CGMs do not have prior authorization, and the prior authorization pilot is the one that is working in six states of Traditional Medicare. These are wound care supplies, skin and tissue substitutes. It is working on these, and more on electrical nerve stimulator implants, and on surgical incontinence control devices.

These are on its list. These three categories, okay? And usually, on incontinence supplies and continuous glucose monitors, there is no prior authorization right now, but down the line, prior authorization was going to come on them too. This WISeR in this case, let's understand it too. This WISeR was announced on June 22, 2025, and after that it went into service on January 15, and in mid-2026 this new rule has now come out.

19:16Gold carding and affirmation rate

About the gold carding details, now, as I told you before too, if any provider achieves a 90% affirmation rate on prior authorization, they will be exempt from prior authorization, that provider will not need to get prior authorization. As illustrated here, you can see that as you go back, your prior authorization rate is up to 80%, then you will not get an exemption, but once you hit 90% you become gold card eligible, you will become gold card eligible, meaning you will not need to get authorization. In Traditional Medicare you are exempt.

It is not yet happening for Medicare Advantage or Medicaid. If you all have any questions, ask me in the comments or anywhere. Now I have already started getting a lot of messages, now they come on WhatsApp too. I enjoy talking to them. Some people come on LinkedIn, some come on WhatsApp, some come in the comments, so I am enjoying it a lot. I am getting the chance to meet new people. One person contacted me from Chicago, one contacted me from California, and just recently too, one person came to me, and I told him that I will talk to you.

So it seems to me that he is from Dallas, from how he talks, it seems. Anyway, let's discuss red flags and compliance gaps. These are the mistakes I have seen a lot while looking at and understanding audits. I saw that these providers make mistakes, they put on the wrong modifiers.

20:30Documentation, KX modifier and audit triggers

Look, understand one thing: if you properly learn how to keep documentation according to Medicare's criteria, and you learn to apply modifiers properly, and you learn how to properly check coverage determination, consider yourself an expert, you will become an expert in the DME niche, because in the DME niche, the expert is the one who can do verification of benefits properly, the one who knows how to check coverage determination properly, the one who knows how to use modifiers properly, and the one who knows how to keep documentation properly, okay?

Now, the KX modifier, this is used because all of CMS's criteria regarding that product, all of that documentation has been met, then you apply KX. Meaning you attest that you have met all the requirements, and then you put KX on. This is the mistake suppliers and DME providers make, then fines are imposed, and prepayment reviews happen too. So KX should not be put in the wrong place. The KX modifier should be used only when all the documentation is met according to the policy article. Only then should you apply it.

The second is about the date of service before delivery, that was a problem in the software of the client whose audit I was doing, their software basically took that date as the date of service, the date on which you go into the documents folder and upload the proof of delivery document, it took that as the date of service, and sometimes before that, it had been clean submitted, so it would automatically be on the CMS-1500, populated, and Medicare red-flagged it, and Medicare caught it, so the date of service In DME, the date of service will basically not be the date it was shipped, not the date you shipped it, but the date on which it was delivered to the patient.

That will be the date of service. And with that date of service, you will then bill for the patient. If there is a problem in this, if you billed before the date of service, then this is a very big red flag, okay. This is an audit trigger. This puts your integrity in question, okay. Wrong chart attached: documentation from the wrong patient or the wrong encounter makes the order non-billable. Meaning this happens rarely, I have rarely seen that you attach the wrong documentation of some other patient onto another patient.

And yes, it happens sometimes that the wrong encounter, like a face-to-face sheet, is attached in the patient's documents, one that is not important for this product and this case, so because of that too, it becomes a trigger. And that is a red flag, and it should be avoided too. Missing or incomplete SWO: there are four or five guidelines for the SWO, it should have the doctor's information, the doctor's signature and the date should be there. These are the guidelines. People, as I told you, add diagnosis codes on their own, but diagnosis codes are not on that list at all.

And if it is not proper, that is also an audit trigger, a red flag. If a product required prior authorization and you got the UTN number, and you did not put the UTN number on the claim, on the CMS-1500 form, or whichever one you bill, Medicare Advantage, commercial or Medicaid, you did not put it in there, then that claim can be rejected, and this is also a red flag. And manufactured documentation, what is it? It is where this is a very big red flag, that you are creating documents on your own, creating backdated documents, and getting inappropriate addenda from the doctor's office that do not reflect the clinical note or its status at all.

That is also a red flag. If you have any questions, you can ask me. In today's class I did not use slides. I made this artifact, and if you like it, we will keep making artifacts, and do the trainings on it. But if you feel the slides I make are better, then I will make slides instead. Now let me tell you about that client's audit, so the scenario with this client was that SMRC, SMRC reviewed four patients' CGM claims, and the problem in it was that for the four claims, the additional documentation they requested in the ADR had no CMS-1500 form at all, oh sorry, I mean SWO, there was no standard written order at all, and the order that was there was a fax sheet, signed by a social worker, so it was not valid.

25:04A real ADR example

And then when I audited it, I found that for two of them medical necessity is met, but for two it is not. For the two where it is met, there was no face-to-face sheet, meaning there was no encounter, and the modifier was also put wrongly. In one place they put the wrong KF modifier, which does not go on CGM products at all. On that Dexcom device they were billing, the modifier was the mistake. In another patient the modifier had been put wrongly too. Besides that, the date of service, as I told you, was a problem with their software.

That is a very big trigger. So this SMRC audit is post-payment, it is an audit of patients for whom Medicare has already paid you money. When things get triggered in an SMRC audit, first there will be a review, and then training. There are training calls for it. They are called TPE calls, there are TPE training programs. In them they train you, teach you and explain things, so that you do not make these mistakes, and even then mistakes still happen. And if there is any fraud, crime, abuse or waste, then they revoke the PTAN, or they impose a penalty on you, or they demand all the money back.

So those were some of the issues in this audit that I pointed out. I made a report and gave it to him. I said it is simple, call the doctor's office, see, look at the old records at the doctor's office, the old ones, because you cannot create new ones backdated. And look for the face-to-face encounter, who knows, it may turn up in the doctor's office documents. Also, explain the software issue, address it with CMS, and besides that, you will tell them about the modifiers too, that we made a mistake, and in the same way you will mention coverage determination too, that we made mistakes on the early claims, but going forward we are checking everything properly, and refund the money for the two claims, so that good credibility is built.

27:04Key takeaways

That was today's session and today's program, and I hope that everyone who stayed connected till now got a lot of information. And if you also have some suggestions, you can share those suggestions with me too. God willing, I will try to, in the next sessions, add them. The upcoming sessions we are going to have will all be in detail. You will follow them when you have watched the earlier videos, because those have basic concepts. So, God willing, it happens that when you come into a new industry, and try to learn and understand things, they slip out of your mind, and this is a natural phenomenon, there is nothing to be tense about.

As the course moves ahead and you are also doing practical work alongside, then it becomes easy, and then you start to understand it. If you are only doing the course and not doing practical work, not working at any agency, so then there is a problem. If you are doing practical work alongside and also doing the course, doing your own research too, trying to go in depth, and you find some mistakes of mine too, then it means you are on the right track. So Ansar, would you like to add anything?

No, Usman bhai, you explained it well. I just wanted to add that we face these kinds of things in DME. About audits, I want us to, in the next videos, explain about audits: why an audit happens, how it happens, in what way it happens, what not to do. So we should shoot a video on that. Look, you have made a very important point, and it is a very important point, because look, now the AI era has arrived, and now the payers have AI bots, they have full visibility into how providers are billing.

Now, the pilot we talked about, we talked about the WISeR pilot, that is just an AI bot, just an AI assistant. So what they basically do is first review your claims, and if any of them has a red flag, then they send an audit: send us its documentation, send us a response about the claim you submitted, we feel there is a problem in it. And then when you send the documentation, and in it medical necessity is not met, or the reviewer sees in the documentation that it is incomplete, and that a modifier was applied, and there is some issue with the date of service or the face-to-face sheet.

So naturally it then moves forward, and then it goes on to the SMRC. So what I mean is that, yes, always, as much as I have understood and tried to learn, and tried to understand, what I feel is this: you are running a DME, your product, your product comes from documentation. If you do not know how to manage documentation properly, if you do not know how to check coverage determination, if your prior authorization you, look, brother, you can do prior authorization like this too, you can check coverage determination like this too.

For you, things have become so easy; earlier you had to review all the notes and find in them a diagnosis code that establishes medical necessity. Now you can build your own AI bot that is helpful for you. Even after that, if your prior authorization rate is not 90%, and you are not collecting documentation properly, and after that review requests and additional documentation requests keep coming from Medicare, and it is getting red-flagged, then it means there is a problem within the system. This is important. Audits do come, and they will review, of course.

It is natural, it is federal money, it is citizens' money in this. About Medicare's approach, I told you before too: they pay first and chase later, so that the patient gets service quickly, gets the service rendered, and no health issue arises. But they chase later, which is why there are so many scams. And this security guard of prior authorization that they have put in place, you can call it a security guard or call it a visa, they put this in place because so many scams were happening, and so much when they went to look into it, they found millions of dollars had been billed, and the person was the sole owner of a shell company, and he has run away, and the money can no longer be recovered from anyone.

So on the products where the most scams happen, they put prior authorization. But now, naturally, people too, when in one place a guard is posted, the people who do this kind of work, they move on to other products that have no prior authorization, and in the other product millions of dollars get billed, and Medicare puts prior authorization on that too. Prior authorization started with one product, I think with wheelchairs, and now, going further and further, who knows how far it has reached. So that's it, Ansar, that is all, so God willing we will close this session here, and God willing we will meet you all again soon in the next session.

And God willing, we will keep coming with new and interesting things. And I have already told you all the vision and the plan. For one, I am very happy that I did not think that so many subscribers would be added, that so many comments would come, people would like, messages would come, so all of this is more than I imagined, meaning I was not expecting this much, and that is why I have gotten more motivation to make videos. And I am making a promise from here, no, I am not making a promise, we will see later, I am taking the promise back, that I will take this to a very advanced level. meaning I will bring case studies, after taking permission from the clients' owners, and removing PHI, because including that is a compliance issue.

So audits will be covered too. This DME course is really a basic course, and we will complete it in seventeen chapters and seventeen videos, but if I get the chance to make the next 20, then consider it next level. And if someone completes the whole course, and does it two or three times, and understands things in depth, then he will become a DME expert. And in this, then you, then all of it, meaning in DME, all the aspects involved, all the segments there are, One thing is, we have been at this for ten years but are still not experts, every day we find things to learn.

Policies are changing too. I told you on day one, in the first video, that I have come here to learn as well, not only to teach, because when I prepare for a session, and make all these artifacts and everything, a lot of things come up in front of me, that make my concepts better. So why would I, in front of you, sit as an expert saying I am a big expert? Anyway, that was a lot of talk. Thank you so much, all of you, for sitting so calmly and patiently and listening to this session.

And I have said before that this channel and these videos are for those people who have a good attention span, who are serious people. So if you are one of those who have watched the video up to here, it means your attention span is very good, and you are among the five percent of people worldwide with an attention span this long, because people's attention spans are not that long now. God willing, we will meet again. May God reward you with goodness. Peace be upon you.