OIG report reignites lawmakers' push for action on Medicare Advantage prior authorization

Lawmakers are engaging in a new push to adopt electronic prior authorization in the wake of a major report of certain Medicare Advantage plans denying requests. 

The Department of Health and Human Services’ Office of Inspector General (OIG) issued a report late last week that showed MA plans at times delayed or denied beneficiary access to services that meet Medicare’s coverage requirements. While the report drew a scathing rebuke from the insurance industry, several lawmakers pressed for mandated electronic prior authorization.

“Seniors should not be denied care for routine treatments and procedures that would otherwise be covered,” according to a statement from Reps. Suzan DelBene, D-Washington; Mike Kelly, R-Pennsylvania; and Ami Bera, D-California. “This complicates and delays care and worsens health outcomes for this vulnerable population.”

The bipartisan trio of lawmakers pressed for consideration of the Improving Seniors’ Timely Access to Care Act introduced last May. The legislation would standardize how MA plans use prior authorization and create an electronic prior authorization process. 

However, even though reforming prior authorization has bipartisan appeal in Congress, the legislation has yet to advance in the House. 

“The reforms in this legislation have widespread bipartisan support and the backing of hundreds of leading national healthcare organizations,” the statement said. “The House must move on this bill quickly.”

OIG analyzed a random sample of 250 prior authorization denials and the same number of payment denials from 15 of the largest MA insurers between June 1-7 in 2019. It found that 13% of the denials fit in Medicare’s coverage requirements and so did 18% of the denied payment requests. 

Some of the denials were reversed if a patient or provider disputed it or the plan identified its own error.

One expert said the push for electronic prior authorization could eliminate some of the human error on easy requests for approval. Prior authorization, which requires insurer approval for certain medical services and products, has been used by plans to control costs.

“Electronic prior authorization may help reduce human error on the easiest request but introduce more error on the complicated request,” Michael Lutz, senior consultant for Avalere Health, told Fierce Healthcare. The error rates would subside, though, as the use of electronic prior authorization matures and physicians get more used to the system, he said.

Insurers fight back

Insurer groups pushed back on the report’s findings, noting that they do not reflect the entirety of the MA program, which has grown in popularity over the past few years. 

“The use of medical management tools, including prior authorization, is one way that Medicare Advantage ensures beneficiaries receive the right care, in the right setting, and at the right time,” said Mary Beth Donahue, president and CEO of the advocacy group Better Medicare Alliance, in a statement.

Insurance lobbying group AHIP said in a statement last week that none of the requests for payment that got denied had any “impact on access to care for a patient.”

“When looked at properly, the data actually tell a compelling story of value and access,” the insurance group said. “But some critics misconstrue the report’s context and use it to mistakenly portray MA as a system where care is frequently denied to patients. That is simply wrong.”

AHIP slammed the small sample size used by OIG, noting that out of the 247 requests it found concerns with 33 of them. 

The forceful industry pushback comes amid heightened scrutiny of the MA program, which this year is expected to enroll an estimated 50% of Medicare beneficiaries. 

Several lawmakers and critics have charged that some MA plans press providers to create unnecessary diagnoses for patients to inflate risk scores and glean higher payments from Medicare.

But some analysts say the latest OIG report is unlikely to dent the enrollment growth in the MA program. 

“It’s the growth area for the health insurance industry. It is certainly moving towards a fully-capitated area,” said Dean Ungar, vice president and senior credit officer for Moody’s, in an interview with Fierce Healthcare.

Ungar said that the plans have large overall customer satisfaction, likely in part due to extra perks such as dental or vision benefits. 

In addition, lawmakers’ appreciation for the program is unlikely to wane, even with some progressive lawmakers calling for increased transparency and reforms to address risk adjustment tactics such as upcoding.

“Nobody gets re-elected by annoying the hell out of seniors. This is a product they like,” Ungar said.