Medicaid managed care organizations (MCOs) deliver health care to more than two-thirds of all Medicaid enrollees nationally, yet the Office of Inspector General (OIG) recently raised deep concerns about inappropriate denials and delays for thousands of people. 

MCOs’ high denial rates of prior authorizations, limited state oversight, and limited access to medical reviews too often prevent Medicaid enrollees from getting necessary care and services. These patients are among the nation’s most vulnerable, including people who need treatment for cancer and cardiac conditions, elderly patients, and patients with disabilities needing in-home care and medical devices.  

The inspector’s office, a division of the U.S. Department of Health and Human Services, found that MCOs had an overall prior authorization denial rate of 12.5% — more than twice the Medicare Advantage rate.  In fact, several had denial rates in excess of 25%, which is 4X that of Medicare Advantage denial rates. 

While prior authorization is intended to ensure medical necessity, when used excessively or inappropriately, it can create barriers to beneficiaries receiving the timely and medically necessary care they are intended to receive. 

State Medicaid agency oversight is also under scrutiny. Inadequate oversight of prior authorization denials enables MCOs to continue practicing inappropriate denials and delays relatively unchecked and contributes to inconsistencies, disparities, and barriers in access to care.  Limited access to external medical reviews exacerbates this problem. 

The OIG report underscores the need to assure more equitable access to care for Medicaid managed care beneficiaries. It recommends requiring states to implement more robust oversight and external review measures, issuing guidance on data analysis, working with states to identify and address MCOs engaging in inappropriate denials. While prior authorizations can help manage health care utilization, denials can create barriers to receiving care, cause delays, affect patient health, and may exacerbate disparities in access to health care. 

Read the full report here.