Over 35 Million Prior Authorization Requests Were Submitted to Medicare Advantage Plans in 2021
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 will be covered by a patient’s insurance. While prior authorization has long been used as a tool to contain spending and prevent people from receiving unnecessary or low-value services, there are some concerns that current prior authorization requirements and processes may create barriers and delays to receiving necessary care, as well as exacerbate complexity for patients and their providers.
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 and certain other insurers. The second proposed rule 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 Medicare Advantage insurers to establish an electronic process for real-time prior authorization determinations, but it did not pass the Senate and become law.
Historically, Medicare beneficiaries were rarely required to receive prior authorization. That is still the case for beneficiaries enrolled in traditional Medicare, who are only required to obtain prior authorization for a limited set of services. However, virtually all Medicare Advantage enrollees (99%) were enrolled in a plan that required prior authorization for some services in 2022. Most commonly, higher cost services, such as chemotherapy or skilled nursing facility stays, require prior authorization. Prior authorization may play a role in helping Medicare Advantage plans reduce costs and maintain profits.
As part of its oversight of Medicare Advantage plans, CMS requires Medicare Advantage insurers to submit data for each Medicare Advantage contract (which usually includes multiple plans) that includes the number of prior authorization determinations made during a year, and whether the request was approved. Insurers are additionally required to indicate the number of initial decisions that were appealed and the outcome of that process. We used these data to examine the use of prior authorization in Medicare Advantage during the 2021 calendar year (the most recent year for which data are available). Unfortunately, we were not able to analyze prior authorization rates by type of service or type of plan because CMS does not collect or report this information. See data limitations.
We find that, in 2021:
- More than 35 million prior authorization requests were submitted to Medicare Advantage insurers on behalf of Medicare Advantage enrollees.
- The volume of prior authorization determinations varied across Medicare Advantage insurers, ranging from 0.3 requests per Kaiser Permanente enrollee to 2.9 requests per Anthem enrollee.
- Over 2 million prior authorization requests were fully or partially denied by Medicare Advantage insurers.
- Just 11 percent of prior authorization denials were appealed.
- The vast majority (82%) of appeals resulted in fully or partially overturning the initial prior authorization denial.
Use of Prior Authorization in Medicare Advantage in 2021
Medicare Advantage plans made over 35 million prior authorization determinations in 2021.
In 2021, data from 515 Medicare Advantage contracts, representing 23 million Medicare Advantage enrollees (87% of Medicare Advantage enrollment), included 35.2 million prior authorization determinations. Determinations reflect a Medicare Advantage insurers decision on a prior authorization request made on behalf of a plan enrollee. On average, that translates into 1.5 requests per enrollee.
Across Medicare Advantage insurers, the number of requests ranged from a low of 0.3 requests per enrollee for Kaiser Permanente to a high of 2.9 for Anthem (Figure 1). While all Medicare Advantage insurers require prior authorization for at least some services, there is variation across insurers and plans in the specific services subject to these requirements. In addition, insurers have the option of waiving prior authorization requirements for certain providers, for example as part of risk-based contracts or through “gold carding” programs that exempt providers with a history of complying with the insurer’s prior authorization policies. Differences across Medicare Advantage insurers in the volume of prior authorization requests likely reflect some combination of differences in the services subject to prior authorization requirements and the frequency with which contracted providers are exempted from those requirements. Kaiser Permanente is atypical among insurers in that it generally operates its own hospitals and contracts with an affiliated medical group.
Just over 2 million prior authorization requests were denied in 2021.
Of the 35.2 million prior authorization determinations, 33.2 million were fully favorable, meaning the requested item or service was covered in full. The remaining 2.0 million requests (6% of the total) were denied in full or in part in 2021. Adverse determinations, in which the prior authorization request was denied in whole, represented the majority of the denied requests (1.6 million). A relatively small number of determinations were partially favorable (380,000), meaning the requested item or service was partially covered. For example, a prior authorization request may have included 10 therapy sessions, but only five were approved.
The denial rate ranged from 3 percent for Anthem and Humana to 12 percent for CVS (Aetna) and Kaiser Permanente (Figure 2). In general, insurers that had more prior authorization requests, denied a lower share of those requests. The exception is Centene, which had both a relatively high number of prior authorization determinations (2.6 per enrollee) and one of the highest denial rates (10%).
The inverse relationship between the volume of prior authorization requests and share of requests that were denied means that there is substantially less variation in the number of denials per enrollee than in the number of requests per enrollee across Medicare Advantage insurers. For example, Humana processed more than three times the number of prior authorization requests per enrollee (2.8) than UnitedHealthcare (0.8), but Humana’s denial rate was one-third of UnitedHealthcare’s denial rate (3% vs. 9%). Thus, the two insurers denied approximately the same number of requests per enrollee (0.07).
Overall, just 11 percent of denied prior authorization requests were appealed.
The majority of denials are not appealed. Across all insurers, just over 212,000 prior authorization determinations, or 11 percent of all denials, were reconsidered (appealed). These include appeals of claims that were both fully and partially denied.
The share of denials that were appealed was almost twice as high for CVS (20%) and Cigna (19%) than average (11%) (Figure 3). While a substantially lower share (1%) of Kaiser Permanente denials were appealed, the rate of appeals was similar across most other insurers.
More than 80 percent of appeals were decided favorably.
Though a small share of denials were appealed, just over 173,000 appeals (82%) resulted in the initial denial being either fully or partially overturned.
Most Medicare Advantage insurers overturned the vast majority of the initial denials that were appealed (Figure 4). Only Kaiser Permanente overturned less than half (30%) of the prior authorization determinations that were appealed. Two insurers overturned at least 9 in 10 denials, with Centene overturning 94 percent of denied requests that were appealed and CVS overturning 90 percent of denied requests that were appealed.
The data we analyzed have several notable limitations, primarily due to gaps in what CMS currently requires Medicare Advantage insurers to report. Specifically, we are unable to answer the following questions:
- How do prior authorization requests, denials and appeals vary across types of services? The data include the aggregate number of determinations and reconsiderations and their outcome, but do not indicate the specific service or service category. While there is plan-level information available about prior authorization requirements by service category, insurers may waive these requirements for some providers.
- Why are prior authorization requests denied? Medicare Advantage insurers are not required to indicate the reason a denial was issued in the reporting to CMS, such as whether the service was not deemed medically necessary, insufficient documentation was provided, or other requirements for coverage (such as trying a more basic service first) were not met.
- Are there differences by plan type? The data are reported at the contract level. Medicare Advantage contracts include plans of different types (i.e., HMO and PPO), as well as plans that are offered to different groups of beneficiaries, including plans that are generally available, special needs plans, and plans sponsored by employers/unions.
- How timely were initial prior authorization determinations and appeal decisions? Medicare Advantage insurers are not required to provide any information about the time between the prior authorization request or appeal and when a determination was made. Whether prior authorization requirements create barriers to care depend in part on how timely determinations are made.
In 2021, more 35 million prior authorization determinations were made by Medicare Advantage insurers, of which 2 million (6%) were denied. While only a small share of these denials were appealed, insurers overturned more than 80 percent of their initial decisions when they were reconsidered. The high frequency of favorable outcomes upon appeal raises questions about whether a larger share of initial determinations should have been approved. Alternatively, it could reflect initial requests that failed to provide necessary documentation. In either case, medical care that was ordered by a health care provider and ultimately deemed necessary was potentially delayed because of the additional step of appealing the initial prior authorization decision, which may have negative effects on beneficiaries’ health.
Prior authorization is one way insurance plans manage utilization of health care services by their enrollees. Insurers use a variety of other tools as well, including requiring referrals for certain types of providers, entering into risk-based contracts where providers are responsible for cost and quality outcomes, and care coordination programs for enrollees for particular conditions. This analysis suggests that Medicare Advantage insurers vary in their use of prior authorization. Despite this variation, little is known about the implications for enrollees, including delays in treatment or differences in the criteria used in making coverage decisions. As the number of Medicare beneficiaries enrolled in Medicare Advantage continues to grow, a better understanding of prior authorization and other processes and programs to contain spending and manage utilization will be important in evaluating the implications of these policies on utilization and quality, including variation across Medicare Advantage plans and compared to traditional Medicare.
This work was supported in part by Arnold Ventures. KFF maintains full editorial control over all of its policy analysis, polling, and journalism activities.
|This analysis uses organization determinations and reconsiderations – Part C data from the Centers for Medicare and Medicaid Services (CMS) Part C and D reporting requirements public use file for contract year 2021. Medicare Advantage insurers submit the required data at the contract level to CMS and CMS performs a data validation check. For the 2021 plan year, 114 contracts did not pass the data validation process, including all contracts for Anthem Blue Cross Blue Shield plans, and so are excluded from this analysis.
This analysis reflects data on service determinations and does not include claims determinations (for payment for services already provided). We also do not include withdrawn or dismissed determination requests in this analysis.
The enrollment data are from the CMS Medicare Advantage enrollment file for March 2021 at the contract-plan-county level. We then sum up to the contract level to merge with the determination and reconsideration data. Contract-plan-county combinations are not included if there are fewer than 11 enrollees.