Medicaid Managed Care Groups Under Congressional Investigation

Lawmakers question Medicaid MCOs over their high rates of prior authorization denials.

doctor in hospital
(Image credit: Getty Images)

Two U.S. lawmakers with jurisdiction over the Medicaid program are seeking answers from seven of the nation’s largest Medicaid Managed Care Organizations (MCOs) about the MCO's high rates of prior authorization denials for patients.

House Energy and Commerce Committee Ranking Member Frank Pallone (D-NJ) and Senate Finance Committee Chair Ron Wyden (D-OR) sent letters to the MCOs after an “alarming” report by the Department of Health and Human Services (HHS) Inspector General found that numerous MCOs had “staggeringly high rates of denial of health services for patients.”

The letters, which request more information including explanations of how certain benefits are categorized, were sent to the chief executives of: CVS Health’s Aetna, AmeriHealth Caritas, CareSource, Centene, Elevance, Molina Healthcare and United Healthcare Community & State. Responses are due by October 31.

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Medicaid, which is funded jointly by states and the federal government, is one of the country's largest healthcare providers. It provides health insurance to millions of people including low-income adults, children, pregnant women, elderly adults and people with disabilities, according to the HHS website.

More than 70 million low-income Americans are enrolled in Medicaid MCOs, which are responsible for ensuring that they can access the necessary care that they are legally entitled to, Pallone and Wyden said in a statement.

“While plans may use prior authorization as a means to manage care, this (HHS) report raises serious questions about whether plans are improperly using prior authorization to deny care,” they said.

Denial rates more than double Medicare Advantage rate

The report found that MCOs denied an average of one out of every eight (12.5%) prior authorization requests for service, which is more than double the Medicare Advantage denial rate. In 2019, according to the report, Medicare Advantage health care plans denied only 5.7% of prior authorization requests.

Among the 115 MCOs that the Inspector General reviewed, 12 had prior authorization denial rates greater than 25%, which is twice the overall rate.

“Although any individual prior authorization denial may be appropriate, it is unclear why some MCOs had rates of prior authorization denials that were so much higher than their peers,” according to the HHS report.

The report’s findings “raise serious concerns that Medicaid MCOs are systematically and improperly denying necessary care, which they are required by law to provide,” Pallone and Wyden said. “Low-income children and families, seniors, and people with disabilities rely on these plans for access to critical health care services, and prior authorization denials prevent them from receiving these services, which can lead to worse health outcomes.”

States pay MCOs a specified amount per member per month, which is meant to cover the expected costs of care for each enrolled beneficiary, they said, adding that the concern is about whether this may be creating financial incentives for the MCOs to increase profits by denying requests for care.

To find out more about the Medicaid program, including features such as inpatient and outpatient hospital services, as well as physician and home health services, visit the website

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Joey Solitro

Joey Solitro is a freelance financial journalist at Kiplinger with more than a decade of experience. A longtime equity analyst, Joey has covered a range of industries for media outlets including The Motley Fool, Seeking Alpha, Market Realist, and TipRanks. Joey holds a bachelor's degree in business administration.