Medicare Advantage Denials Increase

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If you use Medicare Advantage, chances are increasing that you may be denied permission to obtain some medical care, according to a recent analysis of Medicare data. While 99% of Medicare Advantage enrollees must obtain prior authorization for certain services, prior authorizations are more frequently denied, according to an analysis by KFF, a nonprofit health policy research, polling and news organization.

Medicare Advantage denials

Medicare Advantage plans, which are private insurance plans that contract with Medicare, denied 3.4 million prior authorization requests for health care services in whole or in part in 2022, or 7.4% of the 46.2 million requests submitted on behalf of enrollees that year, according to the KFF analysis. That was a higher share of denials than in recent years. The share of all prior authorization requests denied by Medicare Advantage plans reflected an increase from 5.7% in 2019, 5.6% in 2020 and 5.8% in 2021.

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This year, KFF found that more than half — 54% — of Medicare enrollees chose Medicare Advantage plans, rather than traditional Medicare, which the government provides. The analysis also found that the share of beneficiaries in Medicare Advantage plans differs from state to state, ranging from 2% in Alaska to 63% in Alabama, Connecticut and Michigan. Medicare Advantage enrollment is concentrated among a small number of firms, with UnitedHealthcare and Humana accounting for 47% of all Medicare Advantage enrollment nationwide.

Prior authorizations are commonly required by these private Medicare plans for things like inpatient hospital stays, skilled nursing facility stays and chemotherapy. In contrast, traditional Medicare requires prior authorization in only limited circumstances.

Appeals

The KFF analysis also found just 9.9% of denied prior authorization requests were appealed in 2022. That represents an increase since 2019, when 7.5% of denied prior authorization requests were appealed. That’s in spite of the fact that a whopping 83.2% of appeals succeeded.

Efforts to lower the rate of denials

Some advocates, including members of Congress, have expressed concerns that prior authorization requirements and processes, including the use of artificial intelligence, are preventing beneficiaries from getting the care they need.

Recently, a coalition of 47 members of the House of Representatives and five senators urged the Centers for Medicare and Medicaid Services to increase oversight of artificial intelligence and algorithmic software tools used to guide coverage decisions in the plans.

“Plans continue to use AI tools to erroneously deny care and contradict provider assessment findings,” wrote the primarily Democratic lawmakers in a letter to the agency. “Last year, a class action lawsuit was filed alleging that UnitedHealth Group unlawfully used an AI algorithm, nH Predict, to deny rehabilitative care to sick Medicare Advantage patients. The lawsuit cites an investigation suggesting that UnitedHealth Group pressured employees to use the algorithm to issue payment denials to Medicare Advantage beneficiaries and set a goal for employees to keep patient rehabilitation stays within 1% of the length of stay predicted by nH Predict.”

The group included Democratic senators Elizabeth Warren, Sherrod Brown and Tina Smith, independent Bernie Sanders, Republican Senator Mike Braun, and Democratic House members including Katie Porter, Jerrold Nadler, Cori Bush, Pramila Jayapal and Alexandria Ocasio-Cortez.

In response to some of these concerns, the Centers for Medicare and Medicaid Services recently finalized rules to clarify the criteria that may be used by Medicare Advantage plans to establish prior authorization policies.

But Naddler suggested changes thus far may not be adequate. He noted that CMS has required Medicare Advantage plans to make medical necessity determinations in prior authorization based on the circumstances of the specific individual as opposed to using an algorithm or software that doesn’t account for an individual’s circumstances. “While this was a positive step, it is unclear how CMS plans to enforce this guidance to ensure that plans do not inappropriately create barriers to care,” he said in a statement.

Note: A version of this item first appeared in Kiplinger Retirement Report, our popular monthly periodical that covers key concerns of affluent older Americans who are retired or preparing for retirement. Subscribe for retirement advice that’s right on the money.

Elaine Silvestrini has worked for Kiplinger since 2021, serving as senior retirement editor since 2022. Before that, she had an extensive career as a newspaper and online journalist, primarily covering legal issues at the Tampa Tribune and the Asbury Park Press in New Jersey. In more recent years, she's written for several marketing, legal and financial websites, including Annuity.org and LegalExaminer.com, and the newsletters Auto Insurance Report and Property Insurance Report.