Hospital-backed proposal would make insurers reveal prior auth denial rates

A recommendation on the 2024 Measures Under Consideration list, brought forward by the Federation of American Hospitals (FAH), would add a quality measure in the Medicare Advantage (MA) star ratings system that mandates health plans to report certain prior authorization denial rates.

The Measures Under Consideration list gives feedback to the Centers for Medicare & Medicaid Services (CMS) on quality and efficiency measures the agency should consider and implement for government health programs. Released today, the list comment period is open through Feb. 16.

FAH is asking CMS to include a performance measure within the star ratings program of the percentage of initial MA plan denials that are upheld, overturned and partially overturned.

Their policy, titled Level 1 Upheld Denial Rate, is intended to add a layer of transparency that is required by insurers. FAH's intention is to financially discourage health plans from abusing the prior authorization system and promote getting the coverage decision correct the first time.

The vote was approved 13-1, with another vote to recommend with conditions. The committee determined the policy could reduce burden and improve transparency, reduce patient stress and complement similar Level 2 measures that are in the MA star ratings program.

“Medicare Advantage plan members need to know the extent to which plans are denying or delaying care due to prior authorization abuse," said FAH President and CEO Chip Kahn in a statement shared with Fierce Healthcare. "FAH developed this important performance measure to shed light on Medicare Advantage plans’ practices that are baselessly denying or delaying care seniors need. We hope CMS will hold managed care companies accountable and increase transparency by including this measure in the next round of rulemaking.”

A MedPAC analysis found that MA plans overturned initial denials 80% of the time in 2021, reported KFF. A 2022 Office of Inspector General report showed 13% of denials would have been covered by traditional Medicare.

Yet FAH argues arbitrary denials face no consequence, and there is no reporting or measurement of initial delay or denial of care, naturally leading insurers to slow-walk decisions.

The MA star ratings program judges health plans on a scale of one star to five based on a series of criteria evaluating performance and care outcomes. This annual score is important, because plans that do poorly receive smaller monetary payouts from CMS and operate within a restricted marketing timeline.

Prior authorization has drawn the ire of policymakers, advocacy groups, providers and patients in recent months. They say prior authorization practices are restrictive and operate against the best interest of patients, going beyond standard cost-cutting measures. Patients can often wait a long time to be approved or denied coverage, and the appeals process is confusing for many individuals.

In January, a rule was finalized that requires health plans to send prior authorization decisions within three days for urgent requests and seven days for standard requests starting in 2026. Although an improvement over current policy, some groups feel that doesn't go far enough. In the case of the American Medical Group Association (AMGA), it says standard requests should take 48 hours and urgent requests just 24 hours.

“These timelines need to be much shorter,” said Jerry Penso, M.D., AMGA president and CEO, in a news release. “There is nothing expedited about three days. Slow-moving prior authorization decisions leave patients in limbo and create a cascading effect of backlogs in the system.”

Meanwhile, MA plans are heavily marketed to seniors on the promise they will receive robust benefits and comprehensive coverage, but MA networks are often more limited for beneficiaries than in traditional Medicare.

The FAH proposal is one of 42 recommendations presented to and voted on by the Partnership for Quality Measurement in pre-rulemaking measure review.