Dive Brief:
- Top congressional Democrats have launched an investigation into the largest Medicaid managed care organizations in the U.S. over their prior authorization practices, after a watchdog report found high rates of coverage denials for beneficiaries in the plans.
- Senate Finance Committee Chair Ron Wyden, D-Ore., and House Energy and Commerce Committee Ranking Member Frank Pallone, D-N.J., sent letters on Thursday to CVS Health’s Aetna, Centene, Elevance, Molina, UnitedHealthcare, CareSource and AmeriHealth Caritas.
- The letters request information on the plans’ prior authorization processes, rates of appeals and whether they use algorithms in making coverage determinations.
Dive Insight:
More than 70 million low-income Americans are enrolled in Medicaid MCOs. States pay the plans a set amount per month for covering the care of beneficiaries in the safety-net insurance program.
That setup could be creating a financial incentive for MCOs to deny requests for care and retain more money as profit, Pallone and Wyden said in their letters.
An HHS Office of Inspector General report published in July found Medicaid MCOs denied one out of every eight prior authorization requests on average, for a denial rate of 12.5%.
That’s more than double the denial rate in Medicare Advantage, a program with higher federal oversight from the CMS, the OIG said. Plans in MA have also faced recent congressional scrutiny over coverage denials.
Medicaid enrollees appealed only a small number of prior authorization denials to either their MCOs or the state. All states are required to offer hearings as an appeal option, but those can be difficult to navigate for beneficiaries — and most state Medicaid agencies don’t have a mechanism for patients to submit denials to an external medical reviewer independent of the plan, the OIG found.
The report singled out specific plans with higher than average denial rates. Seven of Molina’s 12 MCOs had prior authorization denial rates greater than 25%, while Aetna, UnitedHealthcare and Elevance each operated at least one MCO with a denial rate greater than 25%.
“While plans may use prior authorization as a means to manage care, this report raises serious questions about whether plans are improperly using prior authorization to deny care. This alarming trend cuts across a range of parent companies, evincing a system-wide problem in need of attention,” wrote Pallone and Wyden, both top Democrats on committees with jurisdiction over Medicaid, in the letters.
Payers hold up prior authorization as a tool to curb unnecessary medical spending, while providers malign the process as bureaucratic red tape that contributes to burnout and can worsen patient outcomes. A number of insurers, including UnitedHealthcare and Cigna, have recently reduced prior authorization requirements.
UnitedHealth, Aetna and the other plans contacted by Wyden and Pallone did not respond to a request for comment on the letters.
