Prior authorization rules are stressful for Medicare Advantage customers — but changes are coming

Medicare Advantage (MA) plans — private insurers’ alternatives to traditional Medicare — have grown in popularity in recent years with 28 million Americans signing up. But they have one big problem that frustrates many enrollees, as well as doctors and hospitals: prior authorization. 

The plans call prior authorization a “utilization management tool” designed to keep costs down by requiring all Medicare Advantage members to request permission before they receive medical care. If a plan determines the requested care would be unnecessary or could be provided for less money elsewhere, it ca n— and will — deny the requests. 

There has been a lot of negative media coverage from STAT and the Kaiser Family Foundation on issues with prior authorization. And damning U.S. Health and Human Services (HHS) Inspector General reports found “widespread and persistent problems related to denials of care and payment.” As a result, new laws and rules from states and the Biden administration could mean a change to this troublesome practice.

“There’s been some attention around the fact that prior authorization is not serving people. And people are mad about it,” says Casey Schwarz, senior counsel for education and federal policy at the Medicare Rights Center. 

“It doesn’t do any good for everyone to think the [insurance] company is evil.” 

Many physicians and hospitals are mad about MA prior authorization policies, too, Schwarz adds. They find the requirements “really burdensome and onerous,” she noted.

Prior authorization: not in traditional Medicare

Traditional Medicare doesn’t require prior authorizations for medical care. Medicare Advantage plan executives argue that’s a problem because, they say, traditional Medicare’s fee-for-service system encourages doctors to prescribe unnecessary tests, health scans, and medical procedures.

“A classic example is back pain in older adults, where a lot of clinicians reflexively order MRIs, when a lot of the data suggests that within six to eight weeks, people are going to be fine,” says Dr. Sachin Jain, CEO of the Medicare Advantage SCAN Health Plan.

Jain wants the medical community, the government, and insurers to look at the “underlying cause” of prior authorization, arguing that “there’s a lot of overutilization and unnecessary tests that provide low value to seniors.”

In theory, prior authorization should prevent doctors and hospitals from prescribing unnecessary procedures. But in reality, it often keeps people from getting medical care their doctors recommend and leads them to pay more for their health problems and concerns.

The endemic nature of Medicare Advantage prior authorizations

Nearly all Medicare Advantage enrollees (99%) are in plans requiring prior authorization. Often, the prior authorization is for more expensive services, such as an MRI or being transferred from a hospital to a skilled nursing facility. 

An American Medical Rehabilitation Providers Association (AMRPA) survey of rehab hospitals and units found that MA plans overrule rehabilitation physician judgment 53% of the time. Often, it involves whether someone in the hospital can be moved to a rehab facility for treatment. An AMRPA report called prior authorizations “a widespread and common problem that can harm patients.”

Millions of Medicare Advantage members see their prior authorization requests denied each year. In 2021, 2 million MA prior authorization determinations were denied, according to a February 2023 Kaiser Family Foundation (KFF) analysis. That’s 6% of the 35 million requests. 

David Lipschutz, associate director of the Center for Medicare Advocacy, calls prior authorization “endemic.”

The denial rate ranges dramatically among Medicare Advantage plans, though. In 2021, it was as high as 12% for CVS Health’s Aetna and Kaiser Permanente plans and as low as 3% for Anthem plans.

Prior authorization denial rates are on the rise

Medicare Advantage prior authorization denial rates are increasing, says Lipschutz, especially at skilled nursing facilities and in-home health settings. Partly, he notes, that’s because some plans have been hiring subcontractors and using algorithms to make these decisions.

“Prior authorization is touted by Medicare Advantage plans as a way to ensure that people don’t get unnecessary care and get appropriate care,” says Lipschutz. “But often, it serves as a significant barrier to care and leads to denial or premature termination of coverage for things that would otherwise be covered under traditional Medicare.”

In a 2022 American Medical Association survey, 94% of the 1,001 doctors polled said prior authorization delayed medical care. Roughly a third said it led to a serious adverse event for a patient.

Prior authorization roadblocks have led some older Americans to leave their Medicare Advantage plans. The Commonwealth Fund, a health research group, found that MA plan disenrollments rose from 10% in 2017 to 17% in 2021, and roughly one in five who left cited problems getting the plan to cover medical services.

In some cases, Lipschutz noted, “we have seen plans give nonsensical reasons or justifications for turning down coverage.”

The 2022 HHS Inspector General’s report said: “These denials can delay or prevent beneficiary access to medically necessary care; lead beneficiaries to pay out of pocket for services that are covered by Medicare, or create an administrative burden for beneficiaries or their providers who choose to appeal the denial.” 

The denials, the Inspector General noted, “may be particularly harmful to beneficiaries who cannot afford to pay for services directly and for critically ill beneficiaries who may suffer negative health consequences from delayed or denied care.”

Four years earlier, another HHS Inspector General report found “widespread and persistent problems related to denials of care and payment in Medicare Advantage plans.”

Very few Medicare Advantage beneficiaries whose prior authorization requests are denied bother to appeal—just 11%, according to the Kaiser Family Foundation. Others don’t want to deal with the bureaucracy, forms, and delays in the appeals process.

Yet a striking 82% of appealed prior authorization denials are overturned, the foundation said.

“That indicates, I think, in many people’s minds that the plans are being too restrictive on the front end,” says Lipschutz.

How prior authorization is evolving

Prior authorization rules are gradually changing, though.

Louisiana, Michigan, and Texas passed prior authorization laws in recent years on behalf of their states’ residents and health care providers. The laws’ “gold card” provisions mean certain doctors and hospitals in Medicare Advantage networks are exempt from prior authorization because the plans almost always approve their requests. 

More than two dozen other states are considering similar legislation, according to the Wall Street Journal.

In April, the Biden administration released new, stricter prior authorization rules to help Medicare Advantage beneficiaries.

The rules, which take effect in 2024, are designed to ensure people with MA plans get access to the same necessary care—prescriptions, medical tests, equipment, and procedures—they would receive in traditional Medicare.

They’re also intended to streamline prior authorization requirements by, for example, preventing patients from having their medical care discontinued just because they’ve switched Medicare Advantage plans or from traditional Medicare to Medicare Advantage.

The American Medical Association says the new rules “have taken important steps toward rightsizing the prior authorization process.”

Lipschutz wishes the administration had also required more shared decision-making by doctors and hospitals in prior authorization determinations and more stringent requirements for MA plans to tell enrollees what their prior authorization rules and criteria are.

The rule, he notes, doesn’t prohibit MA plans from using algorithms to reject prior authorization requests.

What the Medicare Advantage plans are doing

The Wall Street Journal recently reported that major insurers such as UnitedHealthcare, Cigna, and Aetna say they’re working on reducing prior authorizations, partly by eliminating them for so-called gold-card doctors and hospitals. The insurers are also trying to streamline the processes for getting answers to both the medical requests and appeals after denials. 

UnitedHealthcare told the Journal its changes are projected to cut its number of prior authorizations from 13 million a year to around 10 million.

At Jain’s SCAN, it’s the doctors in the plan’s network who decide whether to grant or deny prior authorization requests—not the insurer. “I think maybe that’s the future,” Jain says.

He believes, however, that “there absolutely need to be guardrails” for Medicare Advantage plans’ prior authorization rules because “sometimes, these systems can overreach.”

Prior authorization denials should come quickly, as should appeals decisions, Jain says. “Because people’s lives are at stake,” he adds.

What can you do in the meantime?

For now, though, if you’re in a Medicare Advantage plan or considering joining one, the only way to learn about its prior authorization practices is to ask doctors and hospitals in the plan’s network. 

You’ll want to ask your medical providers how often the plan rejects their care recommendations and why. The answers may make you want to reconsider where and how to get your Medicare coverage.

Will the new prior authorization rules and policies have a notable impact on the number of Medicare Advantage members prevented from receiving the urgent medical care they need? 

“I think it will go a significant way toward trying to address some, if not all, of the problems we’re currently seeing with prior authorization,” says Lipschutz.

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