U.S. Representative Frank Pallone, Jr. (D-New Jersey), a ranking member of the Energy and Commerce Committee, announced an investigation into the “high rates” of prior authorization denials by Medicaid managed care health plans.
Prior authorization is an insurance practice requiring patients to obtain approval for certain healthcare services before receiving the care. This practice is frequently accused of causing delays in patient care.
This investigation emerges in response to a recent report by the Office of Inspector General that discovered Medicaid Managed Care Organizations (MCOs) denied 12.5% of prior authorization requests in 2019. In contrast, the Medicare Advantage prior authorization denial rate was only 5.7% in the same year. The OIG report analyzed seven MCO parent companies, operating 115 MCOs across 37 states, and covering nearly 30 million people in 2019.
Pallone stated, “I’m deeply troubled by reports that Medicaid managed care plans denied an average of one out of every eight requests for treatment, more than double the rate of service denials in Medicare Advantage.”.
He added that the Medicaid MCOs need to be held accountable for these high prior authorization denial rates. “I will be contacting each of these health insurance companies directly for additional information and questions regarding their prior authorization practices. It is essential that these state contracted plans are upholding their responsibility to patients and their families.”
In the analysis, the OIG found that out of the 115 MCOs it observed, 12 had prior authorization denial rates above 25%. The report also found that most state Medicaid agencies did not regularly review the “appropriateness” of denials, nor did they collect data on the denials.
“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,” the OIG stated.
The agency further determined that Medicare Advantage plans have better CMS oversight of prior authorization denials than Medicaid MCOs, including requiring Medicare Advantage plans to provide data on their denials. Several recommendations were made to CMS, including requiring states to review a sample of MCO prior authorization denials regularly, and mandating states to collect data on MCO prior authorization denials.
To read more about this, please refer to the original article.