Increased use of prior authorization in Medicaid is blocking access for patients

Improper use of prior authorization is creating hurdles for Medicaid participants and getting in the way of their ability to access needed care. Prior authorization is generally an insurance company requirement that health care providers obtain approval from a patient’s health insurance plan for a medicine before it will be covered. The Office of Inspector General (OIG) recently uncovered that Medicaid Managed Care Organizations (MCOs), the insurance companies that administer Medicaid plans across the country, are leveraging prior authorization policies to pad their own bottom line.

The OIG shared three main concerns with the improper use of prior authorization:

• Rate of prior authorization denial. In the OIG’s review, they found MCOs denied 1 out of every 8 requests for the prior authorization of services — over twice the denial rate in Medicare Advantage. Several MCOs had denial rates higher than 25%, which is twice the overall rate.
  
  
• Limited oversight of denials. State Medicaid agencies reported a lack of reviews on MCO denials. Because of this, many did not collect data and monitor decisions. This lack of transparency means MCOs are not held accountable for their decisions.
  
  
• Limited appeals process. Most states do have an appeals process to remedy wrong denials, but this process may be difficult to navigate and burdensome on Medicaid participants, which discourages many patients from advocating for themselves.

In response to this OIG report, Senate Finance Committee Chair Ron Wyden and House Energy and Commerce Committee Ranking Member Frank Pallone, Jr., have launched an investigation into Medicaid managed care prior authorization procedures. Transparency is important for prior authorization requirements, as well as reasonable timelines for prior authorization decisions, to ensure MCO accountability, streamline care and encourage greater shared decision making.

When left unchecked, prior authorization is an obstacle that runs counter to Medicaid’s goals and can:

• Lead to a delay in patients getting the medicines and care they need.
• Interfere with the doctor-patient relationship by preventing providers from being able to select the best medicine for each patient’s individual circumstances.
• Discourage doctors from prescribing the most appropriate therapies.

Medicaid and the Children’s Health Insurance Program (CHIP) provide health coverage for more than 83 million vulnerable Americans, including children and their parents, pregnant women, the elderly and people living with disabilities. This state-federal partnership provides Americans across the country with access to needed medications with low to no cost sharing. 

We urge the Centers for Medicare and Medicaid Services (CMS) to step in and collect information on prior authorization, particularly around access to medicines, to determine if MCOs are excessively using this policy to serve their own financial interests. Improving access to medicines in the United States requires a holistic look at the health care system, including insurance companies’ administrative hurdles imposed on patients. 

For more information on Medicaid, visit PhRMA.org/Medicaid.