Prior Authorization On the Rise in Medicare Advantage Plans

The rising number of prior authorization requests in Medicare Advantage plans has captured the attention of policymakers and healthcare providers. Recent analysis by the Kaiser Family Foundation indicates that these requests increased from 46.2 million in 2022 to 49.8 million in 2023. Fewer than one in five denied requests were appealed, yet over 80% of those appealed were overturned, suggesting potential inconsistencies in the decision-making process.

Medicare Advantage plans use prior authorization requirements — which make it necessary to obtain pre-approval of services before the services will be covered — and other administrative processes to balance managing costs with providing necessary medical care. Unlike traditional Medicare, which applies prior authorization to a limited set of services, such as outpatient procedures, non-emergency ambulance transport, and durable medical equipment, nearly all Medicare Advantage enrollees face prior authorization requirements for a broader range of services, including inpatient hospital stays, diagnostic procedures, prescription drugs, and psychiatric services. Medicare Advantage insurers processed nearly 50 million prior authorization requests in 2023, compared to fewer than 400,000 in traditional Medicare, even though the programs had similar numbers of enrollees.

In Arkansas, the proportion of beneficiaries enrolled in Medicare Advantage plans has more than doubled in the span of a decade, from 18% in 2013 to 43% in 2023. Patients are attracted to Medicare Advantage plans because they offer potentially lower cost sharing than traditional Medicare, care coordination, and additional benefits such as dental, vision, and hearing coverage. However, Medicare Advantage plans typically have more restrictive networks than traditional Medicare and more burdensome administrative processes, including prior authorization.

The surge in prior authorization requests in Medicare Advantage plans has heightened concerns about delays in critical care and increased administrative burdens. Recent regulations by the Centers for Medicare and Medicaid Services aim to streamline these processes by implementing electronic data exchanges and enhancing decision transparency. Legislative efforts such as the proposed Improving Seniors’ Timely Access to Care Act of 2024 seek to codify these exchanges, protect new enrollees, and ensure transparent communication regarding denials and appeals.

As Medicare Advantage evolves, it is important to monitor the impact of these authorization processes on healthcare access and health outcomes. Calls for more detailed reporting and proposed reforms such as the “gold card” approach, which has been implemented in Arkansas, highlight the need for ongoing discussions about prioritizing patient care. Under the gold card approach, a physician is exempted from prior authorization requirements if a review of the physician’s requests during a set period shows that at least 90% were approved.

For more detailed insights into how these issues affect Arkansans, see our explainer on Medicare Advantage in Arkansas.