OIG Report Highlights Prior Authorization Denials, Medicaid MCOs

CMS/Medicare

WASHINGTON—A new report from the HHS Office of Inspector General (OIG) puts a spotlight on potential access issues for patients served by Medicaid Managed Care Organizations (MCOs).

The report lists three factors that may be preventing medically necessary care:

  1. The high number and rates of denied prior authorization requests
  2. Limited oversight of prior authorization denials in most states
  3. Limited access to external medical reviews.

The OIG said it conducted this review due to allegations that some MCOs inappropriately related or denied care for thousands of people enrolled in Medicaid, including patients who needed treatment for cancer, cardiac conditions, elderly patients and patients with disabilities who needed in-home care and medical devised. 

Overall, the MCOs included in the OIG’s review denied one out of every eight requests for the prior authorization of services in 2019. Denials were particularly high with some MCOs: among 115 MCOs reviewed, 12 had prior authorization denial rates greater than 25%; twice the overall rate.
 
The American Association for Homecare (AAHomecare) summarized the OIG report, and included recommendations the OIG shared with the Centers for Medicare & Medicaid Services (CMS) on these issues.

The key highlights from the summary included:

  • OIG received a congressional request to evaluate whether MCOs are providing medically necessary health care services to their enrollees. 
  • Most State Medicaid agencies reported that they do not have a mechanism for patients and providers to submit a prior authorization denial to an external medical reviewer independent of the MCO. Although all State Medicaid agencies are required to offer State fair hearings as an appeal option, these administrative hearings may be difficult to navigate and burdensome on Medicaid patients. 
  • The OIG recommended that CMS: (1) require States to review the appropriateness of a sample of MCO prior authorization denials regularly, (2) require States to collect data on MCO prior authorization decisions, (3) issue guidance to States on the use of MCO prior authorization data for oversight, (4) require States to implement automatic external medical reviews of upheld MCO prior authorization denials and (5) work with States on actions to identify and address MCOs that may be issuing inappropriate prior authorization denials. 

According to the OIG, in its response, CMS did not indicate whether it concurred with the first four recommendations, it did concur with the fifth. 

See the full OIG report High Rates of Prior Authorization Denials by Some Plans and Limited State Oversight Raise Concerns About Access to Care in Medicaid Managed Care for additional details.

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