Dive Brief:
- High rates of prior authorization denials and limited state oversight suggest some Medicaid managed care beneficiaries aren’t able to access necessary medical care, according to a recent report by the HHS’ Office of the Inspector General.
- Overall, Managed care organizations (MCOs) included in the report denied one out of every eight prior authorization requests in 2019, the most recent year that data was available. At 12 of the 115 organizations, the denial rate exceeded 25%.
- Most state Medicaid agencies weren’t routinely monitoring whether prior authorization denials were appropriate, allowing high rates to go unnoticed, according to the OIG. The appeals process is also less comprehensive compared with Medicare Advantage, which could make it burdensome for beneficiaries to push for coverage after a denial.
Dive Insight:
MCOs, where states pay insurers a set amount to provide care to enrollees in the program for low-income Americans, make up a significant portion of the Medicaid landscape.
About 72% of enrollees received their care through a risk-based MCO in July 2020, and Medicaid paid those organizations about $377 billion in fiscal year 2021, according to the report.
“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.”
Molina Healthcare — one of the largest Medicaid managed care insurers — was singled out in the report for having an outsized concentration of MCOs with high prior authorization denial rates. Seven of Molina’s MCOs had denial rates higher than 25%.
Even with high rates of denials, 22 of the states studied said that as of 2019 they didn’t regularly review whether managed care denials were appropriate, though nine reported they sometimes did reviews in response to specific problems or provider complaints.
The review, which included 115 Medicaid managed care organizations in 37 states, found the prior authorization denial rate was much lower in Medicare Advantage, a similar program where insurers are contracted to manage care for Medicare enrollees. While Medicaid MCOs denied 12.5% of prior authorization requests in 2019, MA plans only denied 5.7% of requests.
MA also has more levels of appeal compared with MCOs. If a MA plan upholds a denial, it’s automatically sent to a CMS contractor who reviews whether denials are appropriate, and can overturn the plan’s decision. Enrollees then have access to two more levels of appeal.
By contrast, after appealing to the MCO, Medicaid managed care beneficiaries have access to only one level of appeal, at a state fair hearing — though 14 of the 37 states studied do also offer an external medical review option.
Still, only 5% of upheld denials went to an external review, suggesting to authpatients and providers didn’t know they had the option or struggled to navigate the process.
“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,” the OIG wrote.
MCOs within the same state often had varying prior authorization denial rates, suggesting oversight and program details alone didn’t drive differences, according to the OIG report.
The OIG recommended that the CMS should require states to review samples of Medicaid managed care organization prior authorization denials, collect data on organizations' decisions, issue guidance to states on oversight, require them to implement automatic external reviews of upheld denials and work with states to find organizations that may be issuing inappropriate denials.
