Medicaid Managed Care Has High Rates of Prior Authorization Denials

A report by the Office of Inspector General (OIG) finds Medicaid managed care members may not be receiving all medically necessary services.

Medicaid managed care organizations (MCOs) denied one out of every eight prior authorization requests in 2019 and lack oversight of denials in most states, according to a report by OIG.

The HHS watchdog conducted the review after receiving a congressional request to gauge whether MCOs are properly providing services to their enrollees.

"In recent years, allegations have surfaced that some MCOs 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," the report stated.

Researchers evaluated the seven MCO parent companies with the largest number of enrollees in comprehensive, risk-based MCOs across all states. In total, the companies operated 115 MCOs in 37 states, consisting of 29.8 million enrollees in 2019.

In addition to collecting data on prior authorization denials, OIG also surveyed State Medicaid agency officials to determine oversight of MCO prior authorization denials and appeals.

Of the 115 MCOs reviewed, 12 had prior authorization denial rates greater than 25%, twice the overall rate.

Even though denial rates were high, the report found that most State Medicaid agencies did not routinely review those rates and many did not collect and monitor data on these decisions.

"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," OIG wrote.

The report highlights how oversight of denials by private health plans is different in Medicare Advantage, which has a yearly review of a sample of denials by CMS and requires health plans to report standardized data on denials and appeals.

"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 report said.

To improve access to care for Medicaid manage care enrollees, as well as bolster oversight, OIG recommended CMS do the following:

• Require states to review the appropriateness of a sample of MCO prior authorization denials regularly.
   
• Require 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 to identify and correct MCOs that may be issuing inappropriate prior authorization denials.

OIG said that CMS concurred with the fifth recommendation, but did not concur with the first four.