OIG: Prior authorization denials raise concerns about Medicaid managed care

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The Office of Inspector General has released a report examining prior authorization patterns from seven managed care companies, and based on the findings is urging increased oversight of prior authorization denials in Medicaid managed care.

According to OIG, three factors raise concerns that some people enrolled in Medicaid managed care may not be receiving all medically necessary healthcare services intended to be covered: the high number and rates of denied prior authorization requests, the limited oversight of prior authorization denials in most states and limited access to external medical reviews.

Overall, the managed care organizations (MCOs) included in the review denied one out of every eight requests for the prior authorization of services in 2019. Among the 115 MCOs in the report, 12 had prior authorization denial rates greater than 25% – twice the overall rate.

Despite the high number of denials, most state Medicaid agencies reported 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. In OIG's view, the absence of robust oversight presents a limitation that can allow inappropriate denials to go undetected in Medicaid managed care.

Although the appeals process is intended to act as a potential remedy to correct inappropriate denials, several factors may inhibit its usefulness, OIG said. Most State Medicaid agencies said they don't have a mechanism for patients and providers to submit a prior authorization denial to an external medical reviewer independent of the MCO. 

Although all state Medicaid agencies are required to offer state fair hearings as an appeal option, these administrative hearings may be difficult to navigate and burdensome on Medicaid patients, OIG said. The agency found Medicaid enrollees appealed only a small portion of prior authorization denials to either their MCOs or to state fair hearings.

By contrast, OIG said the Center for Medicare and Medicaid Services' oversight of Medicare Advantage denials by private health plans is more robust. By way of example, OIG pointed out that each year, CMS reviews the appropriateness of a sample of prior authorization denials and requires health plans to report data on denials and appeals.

Further, Medicare Advantage enrollees have access to automatic, external medical reviews of denials that plans uphold at the first level of appeal. 

"These differences in oversight and access to external medical reviews between the two programs raise concerns about health equity and access to care for Medicaid managed care enrollees," OIG said.

WHAT'S THE IMPACT

As Medicaid managed care enrollment continues to grow, MCOs play an increasingly important role in ensuring that people with Medicaid have access to medically necessary, covered services, OIG said.

The agency issued a number of recommendations, saying that CMS should: require states to review the appropriateness of a sample of MCO prior authorization denials regularly; require states to collect data on MCO prior authorization decisions; issue guidance to states on the use of MCO prior authorization data for oversight; require states to implement automatic external medical reviews of upheld MCO prior authorization denials; and work with states on actions to identify and address MCOs that may be issuing inappropriate prior authorization denials.

In its response, CMS did not indicate whether it concurred with the first four recommendations. It did concur with the fifth recommendation.

THE LARGER TREND

An American Medical Association survey published in March showed 94% of physicians report delays in care associated with prior authorization. 

Physicians spend almost two business days each week on prior authorization requests and 35% have had to hire additional staff to exclusively handle the administrative burden, the AMA said.

The AMA said other survey results show that 80% of physicians report that prior authorization can at least sometimes lead to treatment abandonment; 33% of physicians report prior authorization leading to a serious adverse event for a patient in their care – with 9% reporting it's led to permanent bodily damage, disability or death.

In January the Biden Administration said it's looking to remedy documented abuses in the prior authorization program and ensure patients' timely access to medically necessary care.

Twitter: @JELagasse
Email the writer: Jeff.Lagasse@himssmedia.com