How to improve the prior authorization process for Medicare Advantage

A study from the University of Colorado and Johns Hopkins University on the prior authorization process for Medicare Advantage plans identified several areas for improvement.

The study, published in JAMA, examined the benefits and problems with prior authorizations, which 99% of MA plans use for at least some medical services. The goal of prior authorization is to ensure appropriate use criteria are met and the right care is provided to the patient to reduce unnecessary spending. This also can benefit the patient through reduction in premiums and lower out-of-pocket costs through better care allocation and reduced denials. The study also notes that when applied to medications, prior auths can provide an additional level of safety review.

On the other hand, patients must content with inappropriate denials due to omissions or errors in the medical record, or inappropriate application of clinical practice guidelines. An HHS report in 2018 found that 56% of audited MA contracts inappropriately denied prior auth requests. Approximately 75% of audited denial appeals were successful, raising concerns that MA plans were denying services and payments that should have been approved, according to the report.

Prior auths can also cause delays in care, which for serious conditions, can cause possible harm to the patient, according to the report. Prior auths create a substantial administrative burden, with 93% of physicians reporting care delays and 82% reporting abandonment where the patient does not follow through because of prior authorization policies, and can contribute to physician burnout.

Because of these issues, the report notes that calls for reform have resulted in Congressional bills to establish requirements for MA plans with respect to the timeliness and efficiency of prior auths.

The report outlines the following proposed measures that may help improve the use of prior authorization in Medicare:

Plans should use an electronic-based prior authorization process with time-bound requirements for initial and appeal decisions.

Plans should be mandated to report guidelines used to make prior authorization decisions and seek input from respective medical societies and stakeholder groups on an annual basis.

In addition, to expand the congressional legislation, the following proposed measures could be considered:

The relative benefits and costs of prior authorization should be reviewed by the CMS at the procedure level. Such review could consider evidence from other care rationing mechanisms, including price. All else equal, unnecessary care is less of a concern in clinical scenarios for which demand is inelastic and there is little price sensitivity (eg, high-cost chemotherapy when there is not a lower-cost alternative). In such cases, restrictions on access due to prior authorization will introduce little change in wasteful or unnecessary care while still generating additional administrative costs.

Medicare Advantage insurers should report approval and denial rates annually to the CMS based on beneficiary sociodemographic characteristics and by procedure type so that the CMS can monitor whether prior authorization policies may be increasing disparities in access to care.

Drawing upon MA insurer–submitted data on denial rates, the CMS should audit the denials of plans with high-denial rates. Setting thresholds for audit could be based on a comparison with other MA plans, as well as in consultation with patient, caregiver, clinician, and insurer stakeholders.

The authors conclude that “by improving transparency and accountability of the process, prior authorization can better function as a tool to improve high-value care for Medicare beneficiaries.”