A Deeper Dive on Prior Authorization in Medicare Advantage

By Mary Beth Donahue

Recently an HHS Office of Inspector General (OIG) report and accompanying New York Times article raised questions about the use of prior authorization in Medicare Advantage.

While there are over 28.5 million Medicare Advantage beneficiaries today, the OIG report calls into question 33 denials of prior authorization requests during a single week in June 2019 – an extraordinarily small sample of Medicare Advantage beneficiaries – to make broad conclusions about Medicare Advantage practices.

The Times’ reporting ignored data shared with the reporter by Better Medicare Alliance prior to the story’s publication and offers a sensational headline warning “Medicare Advantage plans often deny needed care, federal report finds.”

While Better Medicare Alliance has long supported efforts to streamline and simplify the prior authorization process, policymakers, beneficiaries, and Times’ readers deserve greater clarity on the role of prior authorization in Medicare Advantage, the extent of its use, and its impact on the consumer.

What is prior authorization?

Prior authorization is a medical management tool in which a beneficiary’s health care provider works with their health plan to make certain a treatment or service is the best option for the needs of the individual patient.

As findings published in JAMA explain, “the rationale for prior authorization is to identify and discourage costly low-value services, thereby reducing health care spending without impairing health care quality.”

Data suggests this is working: new research shows that Medicare Advantage beneficiaries save an average of $1,965 per year in total health expenditures compared to fee-for-service Medicare, even as Medicare Advantage beneficiaries see lower avoidable hospitalization rates, fewer readmissions, higher rates of preventive care and screenings, and a lower COVID-19 mortality rate, compared to fee-for-service Medicare.

As Better Medicare Alliance advocates for solutions to simplify prior authorization, we also work to increase understanding of its important function in protecting patients from unexpected medical bills, reducing exposure to duplicative and unnecessary services, and ensuring each beneficiary receives the most clinically appropriate care.

Prior authorization use in Medicare Advantage  

While most Medicare Advantage beneficiaries are enrolled in plans that utilize prior authorization, a full one-fifth of Medicare Advantage beneficiaries are in plans that do not require prior authorization for any services, according to research from Kaiser Family Foundation.

A June 2021 poll of seniors on Medicare Advantage shows that less than half of seniors on Medicare Advantage say that they have ever encountered a prior authorization themselves and only 6% of seniors on Medicare Advantage say they have encountered prior authorizations “often.” Even among the minority of Medicare Advantage beneficiaries who have encountered prior authorizations, 66% say it imposes “no burden” on their health care experience.

Importantly, prior authorization may also be used in fee-for-service Medicare. While these scenarios may be rare, the Center for Medicare Advocacy explains, “the law has subsequently been changed to allow prior authorization for limited items of Durable Medical Equipment and physicians’ services” in fee-for-service Medicare.

Measuring the impact of prior authorization

 In its report, OIG explains that its findings provide opportunities to “ensure that beneficiaries enrolled in Medicare Advantage have timely access to all necessary health care services.” Better Medicare Alliance strongly agrees with this aim. Notably, there are already mechanisms in place to that end.

One way that Medicare Advantage plans are held accountable for efficiently adjudicating prior authorizations and ensuring timely access to care is through the Centers for Medicare & Medicaid Services’ (CMS) Star Ratings system – a rigorous quality scoring metric in which Medicare Advantage plans are graded on up to 38 unique measures.

Many of these measures specifically address health care access issues that relate to prior authorization. These measures include “getting needed care,” “care coordination,” “customer service,” “rating of health care quality,” and “plans make timely decisions about appeals,” to name a few.

According to CMS, the latest scores in Medicare Advantage show that “approximately 90 percent of people currently in Medicare Advantage plans that offer prescription drug coverage are enrolled in a plan that earned four or more stars” on a five-star scale. CMS goes on to add that, “the number of plans with a rating of 4 or more stars is higher for 2022 compared to last year” which the agency says “reflects improvements in [health plans’] scores on several measures.”

A closer look at the data shows that Medicare Advantage plans specifically improved their performance on measures like “reviewing appeals decisions,” “getting appointments and care quickly,” and “rating of health care quality” year-over-year.

Clearly, this is a more robust set of data than OIG’s narrow sample of 33 disputed prior authorization denials – representing 0.0001% of Medicare Advantage beneficiaries – and a far cry from the Times’ warnings that beneficiaries “are denied necessary care that should be covered under the program.”

What do beneficiaries say?

Perhaps the most important consideration in the use of prior authorization is its impact on beneficiaries’ health care experience. Here, there are several sets of data beyond the earlier poll on prior authorization that may be instructive.

First, CMS conducts an annual Medicare Current Beneficiary Survey (MCBS) to track beneficiaries’ experiences in both Medicare Advantage and fee-for-service Medicare. The latest data, from 2019 – the same year studied in OIG’s report – shows Medicare Advantage beneficiaries continuing to give high marks for health care access and quality.

94.9% of Medicare Advantage beneficiaries report being satisfied with their healthcare quality, while 95.6% are satisfied with their ease of getting to a doctor, and 93.6% report having a usual source of care.

This tracks closely with data from Better Medicare Alliance-commissioned polling which shows Medicare Advantage with an overall 94% satisfaction rate, while 95% of beneficiaries are satisfied with their network of providers, hospitals, and specialists and 88% of beneficiaries say that Medicare Advantage “lets them see the doctors they want on their own terms.”

Looking ahead

 Better Medicare Alliance continues to support commonsense efforts to modernize the prior authorization process while protecting medical management tools that help Medicare Advantage ensure each beneficiary receives the right care, in the right setting, at the right time.

By OIG’s own admission, this is largely the case today. Its report notes that Medicare Advantage plans “approve the vast majority of prior authorization requests and provider payment requests” – a fact that was disappointingly left out of the Times’ reporting.

In many cases, Medicare Advantage health plans are already taking action on their own to refine prior authorization processes. A 2020 industry survey finds that roughly 9 in 10 health plans are streamlining their prior authorization process for both prescription medications and medical services.

Better Medicare Alliance looks forward to our ongoing efforts to educate stakeholders and policymakers on the proper role of this clinical tool even as we work toward its continued improvement.

Mary Beth Donahue is the President and CEO of Better Medicare Alliance.