Wyden, Pallone Launch Investigation into Medicaid Managed Care Plan Prior Authorization Practices
Congressional Health Leaders Demand Answers to Determine if MCOs are Improperly Using Prior Authorization to Deny Care
“MCOs should not be prioritizing corporate or shareholder profits ahead of the health and well-being of American families.”
Washington, D.C. – Senate Finance Committee Chair Ron Wyden (D-OR) and House Energy and Commerce Committee Ranking Member Frank Pallone, Jr. (D-NJ) today sent a series of letters to the largest Medicaid Managed Care Organizations (MCOs) across the country as part of a new investigation seeking answers following reports of high rates of prior authorization denials for patients.
An alarming report by the Department of Health and Human Services (HHS) Inspector General found that numerous Medicaid MCOs had staggeringly high rates of denial of health services for patients. Over 70 million low-income Americans are enrolled in Medicaid MCOs, which are responsible for ensuring that people struggling to make ends meet can access the critical treatment and care they need and to which they are legally entitled.
“While plans may use prior authorization as a means to manage care, this report raises serious questions about whether plans are improperly using prior authorization to deny care,” Wyden and Pallone wrote. “This alarming trend cuts across a range of parent companies and makes clear that this is a system-wide problem in need of attention. Building on this report, we are writing to request additional information regarding your use of prior authorization in Medicaid managed care.”
The HHS Inspector General report found that MCOs denied, on average, one out of every eight prior authorization requests for service—a denial rate of 12.5 percent, which is more than double the denial rate in Medicare Advantage.
“These findings raise serious concerns that Medicaid MCOs are systematically and improperly denying necessary care which they are required by law to provide,” Wyden and Pallone continued. “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.”
Over three-quarters of Medicaid beneficiaries are enrolled in a comprehensive managed care plan operated by an MCO. States pay MCOs a specified amount per member per month that is designed to cover the expected costs of care for each enrolled beneficiary. Wyden and Pallone voice concern about whether this may be creating a financial incentive for MCOs to increase profits by denying requests for care.
“Under this arrangement, however, it is critical that MCOs are not improperly denying access to care in an effort to maximize profits given that they are obligated by statute, regulation, and contracts with states to pay network providers for furnishing covered services to enrollees,” Wyden and Pallone continued. “MCOs should not be prioritizing corporate or shareholder profits ahead of the health and well-being of American families.”
As the Democratic leaders of the Committees with jurisdiction over the Medicaid program, Wyden and Pallone requested documentation and answers to a series of questions, including:
- Does a company require prior authorization for Early and Periodic Screening, Diagnostic and Treatment (EPSDT) services across any of its subsidiary health plans?
- A description of all algorithms, including machine learning and artificial intelligence algorithms, that a company used in prior authorization decisions separated by approvals, partial denials, and full denials for 2018-2022 for any and all MCOs that a company operated within that time frame.
- Information on the rate of appeals by level of appeal and the outcome for Medicaid MCOs and for its Medicare Advantage products.
Letters were sent to the following companies:
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Press Contact: Taylor Harvey
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