High rates of prior authorization denials and limited state oversight have raised concerns about access to care in Medicaid managed care, according to a new report from the Office of Inspector General (OIG).
Three factors indicate that some Medicaid managed care enrollees may not receive all medically necessary health care services that the program covers, a new OIG report finds.
The watchdog conducted the study in response to accusations that some Medicaid managed care organizations 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 and medical devices.
To conduct the review, OIG identified and selected seven parent companies of managed care organizations (MCO) with the largest number of people enrolled in comprehensive, risk-based plans across all states. These companies operated 115 MCOs in 37 states and enrolled nearly 30 million people in 2019. Analysts then used data from the companies about prior authorization denials and related appeals for each MCO they operated. In addition, they surveyed state Medicaid agency officials from the 37 states to examine state oversight of MCO prior authorization denials and appeals and state processes for external medical reviews and fair hearings.
The review found:
- The MCOs fully or partially denied 2.2 million requests for the prior authorization of services in 2019, which is one out of every eight requests
- MCOs denied 12.5 percent of prior authorization requests overall
- Approximately 2.7 million people were enrolled in MCOs with prior authorization denial rates greater than 25 percent
- Only one-third of states reported regularly reviewing the appropriateness of samples of MCO prior authorization denials
OIG said that the lack of oversight of MCO decisions on prior authorization requests may result in inappropriate denials to go undetected in Medicaid managed care. Although there is an appeals process, most state Medicaid agencies report 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 must offer state fair hearings as an appeal options, Medicaid patients may find these administrative hearings difficult to navigate, according to the report. Indeed, the watchdog found Medicaid enrollees appealed only a small number of prior authorization denials to either their MCOs or to state fair hearings.
This is in sharp contrast to the denial rates for prior authorization requests in Medicare Advantage (MA), which has been under scrutiny in recent years for inappropriate denials and delays in care. MA plans denied only 5.7 percent of prior authorization requests in 2019. Despite the criticism of MA for these denials, OIG noted that the Center for Medicare & Medicaid Services (CMS) has a more robust process in place to oversee MA. Each year, CMS reviews the appropriateness of a sample of prior authorization denials and requires MA plans to report on denials and appeals. MA enrollees also have access to automatic external medical reviews of denials.
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“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 in the report.
OIG called on CMS to take action to improve the oversight of denials in Medicaid managed care. The watchdog recommended that CMS:
- Require states to review the appropriateness of a sample of MCO prior authorization denials regularly
- Requires 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
- Work with states on actions to identify and address MCOs that may be issuing inappropriate prior authorization denials
In its response to the report, CMS did not indicate whether it concurred with the first four recommendations but did concur with the fifth recommendation.