Medicare (Dis)Advantage: 35 Million Prior Authorizations

Payers & Payment Models, Business & Financial Planning

Prior authorizations are a constant source of irritation across the continuum of healthcare delivery, and the issue is particularly acute for patients covered by Medicare Advantage (MA).

According to KFF, 99% of MA enrollees “are in plans that require prior authorization for some services, which is generally not used in traditional Medicare.” We added the emphasis because it’s especially important. Traditional Medicare requires prior authorizations for just 52 services – mostly things like rhinoplasty or vein ablation that are often cosmetic in nature. You want to bill Medicare for a nose job on a 75-year-old? It’s not unreasonable to clear that in advance.

But Medicare Advantage plans take the prior authorization requirement far beyond any reasonable expectation. Take Cigna, for example. By my count, as of July 31, 2023, Cigna listed 3,688 services and therapies requiring prior authorization for Medicare Advantage customers. I can’t imagine patients are lining up for a frivolous kidney biopsy or cardiac valve repair, but Cigna has decided such procedures cannot go ahead without a review.

I’m not picking on Cigna, but the company caught my attention when it issued a press release on Aug. 24 announcing it had cut some 600 services from its commercial policy prior authorization list and promising to cut about 500 services from its MA prior authorization list by the end of the year. That follows similar announcements by other MA giants, including Aetna and UnitedHealthcare.

The changes can’t come fast enough for healthcare providers, which were forced to submit more than 35 million prior authorization requests to MA plans in 2021 alone.

All of those requests mean delayed treatment for patients: When the American Medical Association asked doctors to think about their experience with prior authorization over the previous seven days, 64% said they waited at least a day for approval, while 30% waited at least three days. In terms of clinical outcomes, 61% said prior authorizations had a “significant” negative outcome.

The sheer volume of paperwork also represents a huge cost for hospitals. Even after cuts take effect, Cigna’s prior authorization list will include about 3,200 items while UnitedHealthcare will have about 2,000, by our calculation. The Blues are notoriously opaque with their prior authorization lists, but Blue Cross Blue Shield Minnesota has about 1,800 treatment codes (plus roughly 750 more for durable medical equipment).

The prior authorization lists are not only large, but constantly changing. Humana this year removed 100 services from its list but added 109 new ones. Since the start of 2023, Cigna added 114 services requiring prior authorization, then removed 23 of them just a few months later. In addition, dozens of prior authorization categories were “delegated to eviCore,” a benefits manager with entirely different processes and requirements – even though it’s 100% owned by Cigna.

Other payers have similar subcontracting relationships and rules that change willy-nilly, making it hard for providers to keep up.

Even without a single denial, the MA prior authorization process adds enormous administrative costs for healthcare providers. According to the American Medical Association, it can take two days of staff time every week to manage prior authorization requests for a single physician.

In essence, private insurers operating under the Medicare brand are saddling providers with massive regulatory costs that CMS – an actual regulator – does not.

Medicare Advantage Prior Authorization: Changes Coming?

On April 5, 2023, CMS issued a final rule that aims to better align prior authorization policies in traditional Medicare and Medicare Advantage. The rule addresses issues like coverage determinations and continuity of care, but there is no explicit mandate to reduce the volume of prior authorizations.

Even without federal regulations, some MA plans have shown a willingness to lighten up selectively on prior authorizations. When New York City was shopping for MA coverage for retired public employees, Aetna closed the deal by agreeing to cut its prior authorization list by about 80%. No single hospital has the bargaining clout of New York City, but it does go to show that MA plans may be ready to bargain on prior authorizations, if pushed.

Meanwhile, UnitedHealthcare will roll out a nationwide Gold Card program in 2024, exempting providers from most prior authorization requirements if they meet certain quality standards. Some states, including Texas and Michigan, have already mandated such programs, and federal gold card legislation was introduced in the House in July 2023.

Insurers are likely to kill any such bill in the Senate, but many states are considering similar laws. Given the momentum, it might make sense for individual hospitals and health systems to start making their own case based on a handful of datapoints:

• How many MA prior authorization requests did you submit last year?
• How much did you spend on the process?
• How many were denied, even after appeal?

If your approval rate is 90% or better – the typical “gold card” standard – you can argue convincingly that there’s little financial risk to the insurance company in waiving or reducing your prior authorization requirements.

This is Part 2 in our series on Medicare (Dis)Advantage. Please click below to read additional installments:

• Medicare (Dis)Advantage: Hospitals Count the Cost
• Medicare (Dis)Advantage: DRG Downgrades
• Medicare (Dis)Advantage: Observation Downgrades