Medicare Advantage Plans Rejected 2M Prior Authorization Requests in 2021

Medicare Advantage plans denied 2 million prior authorization requests in 2021 and just 11 percent of those requests were appealed, according to an issue brief from the Kaiser Family Foundation (KFF).

Prior authorization aims to reduce spending on unnecessary or low-value services, but it has also been associated with care delays and administrative burden.

Beneficiaries enrolled in traditional Medicare must only obtain prior authorization for a limited set of services. However, almost all Medicare Advantage beneficiaries were enrolled in a plan in 2022 that required prior authorization for some services.

Medicare Advantage plans must submit data to CMS on Medicare Advantage contracts that includes the number of prior authorization determinations made and whether the request was approved. KFF researchers analyzed this data to determine prior authorization use by Medicare Advantage plans during 2021.

Over 35 million prior authorization requests were submitted to 515 Medicare Advantage contracts in 2021, representing 23 million beneficiaries. This translates to 1.5 requests per beneficiary.

The number of requests varied across Medicare Advantage insurers, as plans can have different prior authorization requirements. Some insurers require prior authorization for more services, while others waive requirements for certain providers.

At the low end, Kaiser Permanente received 0.3 requests per beneficiary, while Anthem received a high of 2.9 requests per beneficiary.

Out of 35.2 million prior authorization requests, 33.2 million were favorable, indicating that the requested item or service was fully covered. Six percent of the requests, or 2 million, were denied fully or partly. Most of these determinations (1.6 million) were denied fully, while 380,000 requests had a service or item that was partially covered.

Insurers that received more requests generally denied a lower share of the requests, with the exception of Centene, which had a high number of determinations (2.6 per beneficiary) and one of the highest denial rates (10 percent).

CVS and Kaiser Permanente had the highest denial rates of 12 percent, while Anthem and Humana had the lowest ones at 3 percent.

Among the 2 million prior authorization requests denied, 212,000, or 11 percent, were appealed. The share of appealed denials ranged from 1 percent for Kaiser Permanente to 20 percent for CVS.

Most appeals (83 percent) resulted in the denial being fully or partially overturned. Kaiser Permanente was the only insurer that overturned less than half of its determinations that were appealed. Meanwhile, Centene and CVS overturned 94 percent and 90 percent of appealed requests, respectively.

“The high frequency of favorable outcomes upon appeal raises questions about whether a larger share of initial determinations should have been approved. Alternatively, it could reflect initial requests that failed to provide necessary documentation,” researchers wrote. “In either case, medical care that was ordered by a healthcare provider and ultimately deemed necessary was potentially delayed because of the additional step of appealing the initial prior authorization decision, which may have negative effects on beneficiaries’ health.”

As Medicare Advantage enrollment grows, it’s critical for policymakers to understand prior authorization and how it impacts healthcare utilization and care quality, the brief stated.

CMS released a proposed rule in December 2022 that aims to improve electronic prior authorization processes for Medicare Advantage, Medicaid, and the Children’s Health Insurance Program (CHIP). Another proposed rule detailed the criteria that Medicare Advantage plans can use when establishing prior authorization policies.