Medicare Advantage Plans Denied 2M Prior Authorization Requests in 2021

BIRMINGHAM, Alabama—Medicare Advantage plans denied two million prior authorization requests for health care services in whole or in part in 2021, or about 6% of the 35 million requests submitted on behalf of enrollees that year, a new analysis from the Kaiser Family Foundation found.

Prior authorization is intended to ensure that health care services are medically necessary by requiring providers to obtain approval before a service or other benefit is covered. While prior authorization has long been used to contain spending and prevent people from receiving unnecessary or low-value services, there are some concerns that it may create barriers to receiving necessary care. (Traditional Medicare only requires prior authorization for some services, including certain durable medical equipment, prosthetics, orthotics and supplies.)

In response to these concerns, the Centers for Medicare and Medicaid Services (CMS) published two proposed rules in December 2022 that include provisions related to prior authorization requirements, among other policy changes. The provisions in the first proposed rule are intended to improve the use of electronic prior authorization processes, as well as the timeliness and transparency of decisions, and apply to Medicare Advantage (MA) and certain other insurers.

The second proposed rule—which also tackles how MA plans are marketed and for which the public comment period closed February 13—clarifies the criteria that may be used by Medicare Advantage plans in establishing prior authorization policies and the duration for which a prior authorization is valid. In the fall of 2022, the House of Representatives passed bi-partisan legislation that would require MA insurers to establish an electronic process for real-time prior authorization determinations, but it did not pass the Senate and become law.

The analysis also found variations in both the volume of prior authorization requests and denial rates across insurers. In general, insurers with higher numbers of prior authorization requests denied a lower share of those requests. The variation across insurers likely reflects differences in the services subject to prior authorization and the frequency with which contracted providers are exempted from these requirements, as well as variations in the use of other tools to manage utilization by plan enrollees, KFF said in a news release. 

Only about 11% of denials of prior authorization requests were appealed, the analysis found. However, of the appeals that were filed, the vast majority (82%) resulted in fully or partially overturning the initial denial.

“The high rate of successful appeals raises questions about whether a larger share of the initial prior authorization requests should have been approved,” KFF wrote in the release. “Alternatively, it could reflect problems with documentation that were subsequently rectified during the appeal. In either case, medical care ordered by physicians or other practitioners ultimately deemed necessary by the insurers was potentially delayed by the prior authorization process.”

As MA enrollment continues to grow, a better understanding of prior authorization will help inform how the policy affects the use of health care services and the quality of the care that beneficiaries receive.