High Rates of Prior Authorization Denials by Some Plans and Limited State Oversight Raise Concerns About Access to Care in Medicaid Managed Care

High Rates of Prior Authorization Denials by Some Plans and Limited State Oversight Raise Concerns About Access to Care in Medicaid Managed Care

Three factors raise concerns that some people enrolled in Medicaid managed care may not be receiving all medically necessary health care services intended to be covered: (1) the high number and rates of denied prior authorization requests, (2) the limited oversight of prior authorization denials in most States, and (3) the limited access to external medical reviews.

Overall, the MCOs included in our review denied one out of every eight requests for the prior authorization of services in 2019. Among the 115 MCOs in our review, 12 had prior authorization denial rates greater than 25 percent — twice the overall rate. Despite the high number of denials, most State Medicaid agencies reported that they did not routinely review the appropriateness of a sample of MCO denials of prior authorization requests, and many did not collect and monitor data on these decisions. The absence of robust oversight of MCO decisions on prior authorization requests presents a limitation that can allow inappropriate denials to go undetected in Medicaid managed care.

— Office of Inspector General, U.S. Department of Health and Human Services, 17 Jul. 2023

Grimm, Christi A. “High Rates of Prior Authorization Denials by Some Plans and Limited State Oversight Raise Concerns About Access to Care in Medicaid Managed Care.” U.S. Department of Health and Human Services, Office of Inspector General, 17 Jul. 2023. https://oig.hhs.gov/reports/all/2023/high-rates-of-prior-authorization-denials-by-some-plans-and-limited-state-oversight-raise-concerns-about-access-to-care-in-medicaid-managed-care/.

Managed Care Prior Authorization Denials

The report highlights that overall Medicaid managed care organizations (MCOs) denied one out of every eight (12.5 percent) prior authorization requests in 2019. Medicare Advantage health plans denied only 5.7 percent in 2019. Among the 115 MCOs in the OIG review, 12 had prior authorization denials greater than 25 percent.

The OIG recommended the Centers for Medicare & Medicaid Services (CMS) implement the following specific to Medicaid MCO prior authorizations: “(1) Require States to review the appropriateness of a sample of MCO prior authorization denials regularly… (5) Work with States on actions to identify and address MCOs that may be issuing inappropriate prior authorization denials.”

— Myers & Stauffer, 27 Nov. 2023

Wyden, Pallone Launch Investigation into Medicaid Managed Care Plan Prior Authorization Practices

Senate Finance Committee Chair Ron Wyden (D-OR) and House Energy and Commerce Committee Ranking Member Frank Pallone, Jr. (D-NJ) today sent a series of letters to the largest Medicaid Managed Care Organizations (MCOs) across the country as part of a new investigation seeking answers following reports of high rates of prior authorization denials for patients.

An alarming report by the Department of Health and Human Services (HHS) Inspector General found that numerous Medicaid MCOs had staggeringly high rates of denial of health services for patients. Over 70 million low-income Americans are enrolled in Medicaid MCOs, which are responsible for ensuring that people struggling to make ends meet can access the critical treatments they need. “MCOs should not be prioritizing corporate or shareholder profits ahead of the health and well-being of American families.”

— U.S. Senate Committee on Finance, 3 Oct. 2023

Concerns About Access to Care Raised by OIG Findings on Prior Authorization Policies in Medicaid Managed Care

A year after highlighting problems with prior authorization in Medicare Advantage (MA), the HHS Office of Inspector General (OIG) has shined a spotlight on the same issue in Medicaid managed care.

In the title of a new report, OIG says high rates of prior authorization denials by some Medicaid health plans “raise concerns about access to care.” Hindrances include the procedures established by Medicaid managed care organizations (MCOs), a lack of oversight by state Medicaid programs and limited access to external medical reviews. “In recent years, allegations have surfaced that some MCOs inappropriately delayed or denied care for thousands of people enrolled in Medicaid, including patients who needed treatment for cancer and cardiac conditions, elderly patients, and patients with disabilities who needed in-home care.”

— HFMA, 1 Aug. 2023

New OIG Report Examines Prior Authorization Denials in Medicaid MCOs

OIG found that Medicaid MCOs had an overall prior authorization denial rate of 12.5% — more than 2 times higher than the Medicare Advantage rate. In 2019, the Medicaid MCOs included in the OIG review requested over 17 million prior authorizations. Medicaid MCOs denied (fully or partially) over 2.2 million of these requests, meaning they rejected about 1 in 8 or 12.5% of the prior authorization requests.

Prior authorization denial rates ranged widely across and within parent firms and states. For example, the parent firm Molina had individual MCOs with denial rates that ranged from 7% to 41%.

— KFF, 27 Jul. 2023

Prior Authorization Denials Could Limit Access in Medicaid Managed Care, OIG Reports

Medicaid managed care organizations studied by the HHS’ Office of the Inspector General denied one out of every eight requests for prior authorization in 2019.

“MCOs are expected to ensure access to needed care, implement critical program controls and avoid unnecessary costs,” the OIG wrote. “However, capitated payment models, such as the model used in Medicaid managed care, can create an incentive for insurance companies to deny the authorization of services to increase profits.”

— Healthcare Dive, 20 Jul. 2023