Virtually all enrollees in Medicare Advantage (99%) are required to obtain prior authorization for some services – most commonly, higher cost services, such as inpatient hospital stays, skilled nursing facility stays, and chemotherapy. This contrasts with traditional Medicare, where only a limited set of services require prior authorization. Prior authorization requirements are intended to ensure that health care services are medically necessary by requiring approval before a service or other benefit will be covered. Medicare Advantage insurers typically use prior authorization, along with other tools, such as provider networks, to manage utilization and lower costs. This may contribute to their ability to offer extra benefits and reduced cost sharing, typically for no additional premium, while maintaining strong financial performance.
Some lawmakers and others have raised concerns that prior authorization requirements and processes, including the use of artificial intelligence to review requests, impose barriers and delays to receiving necessary care. In response to some of these concerns, the Centers for Medicare and Medicaid Services (CMS) recently finalized three rules. Among other changes, the three rules clarify the criteria that may be used by Medicare Advantage plans to establish prior authorization policies, streamline the prior authorization process for Medicare Advantage and certain other insurers, and require Medicare Advantage plans to evaluate the effect of prior authorization policies on people with certain social risk factors. Additionally, lawmakers in Congress have introduced several bills to reform various aspects of prior authorization (see Box 1 at the end).
To inform ongoing discussions about the use of prior authorization, this analysis uses data submitted by Medicare Advantage insurers to CMS to examine the number of prior authorization requests, denials, and appeals for 2019 through 2022, as well as differences across Medicare Advantage insurers in 2022.
Key Takeaways:
- More than 46 million prior authorization requests were submitted to Medicare Advantage insurers on behalf of Medicare Advantage enrollees in 2022, up from 37 million in 2019.
- In 2022, there were 1.7 prior authorization requests per Medicare Advantage enrollee, similar to the amount in 2019. The rise in the total number of prior authorization requests corresponded to increasing enrollment in Medicare Advantage and so translated into a similar number of requests per enrollee.
- In 2022, insurers fully or partially denied 3.4 million (7.4%) prior authorization requests. Though insurers approved most prior authorization requests, the share of requests that were denied jumped between 2021 and 2022. The share of all prior authorization requests that were denied increased from 5.7% in 2019, 5.6% in 2020 and 5.8% in 2021 to 7.4% in 2022.
- Just one in ten (9.9%) prior authorization requests that were denied were appealed in 2022. That represents an increase since 2019, when 7.5% of denied prior authorization requests were appealed. The low rate of appeals may be attributed to enrollees not knowing that they can appeal a denial or finding the appeal process intimidating. A prior KFF survey found that many people who experience denials, including those with Medicare, are confused by their coverage and don’t know how to file an appeal with their plan.
- The vast majority of appeals (83.2%) resulted in overturning the initial prior authorization denial. Though a small share of prior authorization denials were appealed, more than 80% of appeals resulted in partially or fully overturning the initial decision in 2022, and in each year between 2019 and 2021. These requests represent medical care that was ordered by a health care provider and ultimately deemed necessary but was potentially delayed because of the additional step of appealing the initial prior authorization decision. Such delays may have negative effects on a person’s health.
- Medicare Advantage insurers vary in their use of prior authorization. In 2022, the volume of prior authorization determinations varied across Medicare Advantage insurers, as did the share of requests that were denied, the share of denials that were appealed, and the share of decisions that were overturned upon appeal, meaning people may have different experiences depending on the Medicare Advantage plan in which they enroll.
Use of Prior Authorization in Medicare Advantage
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 (reconsiderations) and the outcome of that process. These data are useful for assessing overall and insurer level trends, but do not contain the information necessary to understand how the use of prior authorization varies by type of service or type of plan.