Medicare Advantage Prior Authorizations Are Often Unnecessarily Denied

A report by the Office of Inspector General (OIG) raises concerns about organizations prioritizing profits over patient access to care.

Medicare Advantage organizations (MAOs) often delay or deny services for medically necessary care, even when prior authorization requests meet coverage rules, according to a report by the OIG.

A concern with the Medicare Advantage payment model is the potential incentive for organizations to deny services in an attempt to increase profits, the study states. As more and more people enroll in Medicare Advantage, the issue of inappropriate prior authorization denials can have a widespread effect.

"Denied requests that meet Medicare coverage rules may prevent or delay beneficiaries from receiving medically necessary care and can burden providers," the report said. "Although some of the denials that we reviewed were ultimately reversed by the MAOs, avoidable delays and extra steps create friction in the program and may create an administrative burden for beneficiaries, providers, and MAOs."

After reviewing a random sample of 250 prior authorization denials and 250 payment denials issued by 15 of the largest MAOs in 2019, the OIG found that 13% of prior authorization denials met Medicare coverage rules and 18% of payment denials met Medicare coverage and MAO billing rules.

For the prior authorization denials, the study identified two common causes: MAOs used clinical criteria that are not contained in Medicare coverage rules, and MAOs indicated that some prior authorization requests did not have enough documentation to support approval—though researchers of the report found medical records were sufficient for services.

For the payment denials, the study concluded that most were caused by human error during manual claims processing reviews and system processing errors.

The report also found that MAOs reversed some of the prior authorization and payment denials, often because of patient or provider appeals. In some cases, MAOs identified their own error.

To ensure that MAOs aren't unnecessarily denying timely access to care, the OIG recommends that CMS:

• Issue new guidance on the appropriate use of MAO clinical criteria in medical necessity reviews
   
• Update its audit protocols to address the identified issues
   
• Direct MAOs to take additional steps to identify and address vulnerabilities that can lead to manual review errors and system errors

Better Medicare Alliance, the research and advocacy organization supporting Medicare Advantage, responded to the OIG report by reiterating the benefits of the plan and the importance of prior authorization.

"While this study represents only a narrow sample of Medicare Advantage beneficiaries and polling data shows that less than half of Medicare Advantage beneficiaries have ever experienced a prior authorization themselves, Better Medicare Alliance has strongly supported efforts to streamline and simplify the prior authorization process for patients and providers," Mary Beth Donahue, president and CEO of Better Medicare Alliance, said in a statement. "We look forward to our continued work with policymakers to strengthen Medicare Advantage for today's seniors and tomorrow's enrollees."

The American Hospital Association, meanwhile, said the findings "confirm—and provide data and real-life examples—of the harm that certain commercial insurer policies have on patients and the providers that care for them. The AHA continues to push back forcefully against MA plan policies that restrict or delay patient access to care, and add cost and burden to the health care system, while also contributing to health care worker burnout. We’ll continue to make the case that these commercial health plan abuses must be addressed to protect patients' health and ensure that medical professionals—not the insurance industry—are making the key clinical decisions in patient care."