Even for insurers, the administrative process in the private program has drawbacks that may not be worth the cost savings.
Prior authorization, in theory, is intended to manage medical costs and promote efficient utilization of care, but the unintended consequences of the administrative process often turn it into a net negative. There's arguably no program in which the pitfalls of prior authorization are more prevalent than Medicare Advantage (MA).
Nearly all MA enrollees (99%) were in a plan in 2022 that required prior authorization for some services, according Kaiser Family Foundation (KFF), whereas beneficiaries of traditional Medicare are rarely required to receive approval.
The result? Countless prior authorization requests shot down, resulting in medically necessary being delayed or outright denied, as well as providers taking on administrative burden.
KFF analysis found that in 2021 alone, more than two million of the 35 million prior authorization requests made to MA plans were denied in full or in part. Only 11% of the denials were appealed, but when they were, 82% resulted in the denial being either fully or partially overturned, indicating that the denial was unnecessary in the first place.
Another report by the Office of Inspector General in April 2022 highlighted concerns of MA plans putting profits over patients through findings that MA organizations often delay or deny services for medically necessary care, even when prior authorization requests met coverage rules.
Though that report was released more than a year ago, a survey by the Medical Group Management Association put out just this past month revealed that little progress has been made with prior authorization in MA. In fact, based on the poll, it's gone the other way. More than four out of five (84%) surveyed medical groups said prior authorization requirements in MA increased in the past 12 months, with less than 1% reporting requirements had decreased.
The toll has affected providers' practice costs and workflow, as 77% of respondents said they had hired or redistributed staff to work on prior authorizations due to an increase in requests, while 60% said at least three different employees are involved in completing a single prior authorization request.
Prior authorization can negatively impact patients and providers, but it can also hurt payers by creating mistrust with enrollees and hindering relationships with providers. A recent survey by the American Hospital Association (AHA) found that 78% of hospital and health systems said their experience with insurers was worsening, with less than 1% saying it improved.
The scrutiny of prior authorization in MA has brought about changes by CMS, which introduced regulations in its MA 2024 final rule. Going forward, prior authorization approvals are required to remain valid for as long as medically necessary, while denials of coverage based on medical necessity must be reviewed by healthcare professionals with relevant expertise before a denial can be issued. MA plans are also required to annually review utilization management policies.
Furthermore, the rule requires that coordinated care plan prior authorization policies may only be used to confirm the presence of diagnoses or other medical criteria and/or ensure that an item or service is medically necessary. Coordinated care plans must also provide a minimum 90-day transition period when an enrollee underdoing treatment switches to a new MA plan, during which the new MA plan cannot require prior authorization for the active course of treatment.
The changes garnered approval by medical groups, such as the AHA, which said: "Hospitals and health systems have raised the alarm that beneficiaries enrolled in some Medicare Advantage plans are routinely experiencing inappropriate delays and denials for coverage of medically necessary care. This rule will go a long way in protecting patients and ensuring timely access to care, as well as reducing inappropriate administrative burden on an already strained health care workforce."
Whether or not these changes are enough to ultimately fix the prior authorization issue in MA is yet to be seen, but it's a necessary and overdue step in the right direction.
Jay Asser is the contributing editor for strategy at HealthLeaders.
With nearly all Medicare Advantage enrollees in a plan that requires prior authorization, there are no shortage of requests and denials of those requests.
Prior authorization requirements can not only lead to medically necessary care being delayed or denied, they can also create more practice costs and administrative burden for providers.
As part of its 2024 Medicare Advantage final rule, CMS has put in place regulations to streamline prior authorization processes to avoid unnecessary denials.