The report helps quantify the challenges hospital and health system leaders face in securing reimbursement from Medicare Advantage plans. Earlier this year, about half of 135 respondents in a survey of health system CFOs said they were considering dropping Medicare Advantage plans due to "onerous" authorization requirements and high denial rates. More than a dozen have already done so, as followed and reported by Becker's since 2023.
Prior authorization is one tool MA insurers typically use to manage utilization and lower costs. This may contribute to their ability to offer extra benefits and reduced cost sharing, typically for no additional premium, while maintaining strong financial performance. While MA enrollment increased from 2019 to 2022, the timespan of KFF's report, profitability did not follow: Insurers' MA earnings were slightly lower in 2022 than in 2019.
Recently, lawmakers have focused on reforming the Medicare Advantage prior authorization process. Proposed legislation has garnered support from 389 national and state organizations, including the American Hospital Association and Humana.
Here are eight findings from the KFF report, which can be read in full here, with 19 key numbers highlighted for reference.
1. The number of prior authorization requests submitted to Medicare Advantage insurers for their enrollees increased by about 25% from 37 million in 2019 to 46 million in 2022, according to KFF.
2. MA insurers fully or partially denied 3.4 million prior authorization requests in 2022, which represented 7.4% of all requests. That is an increase from 5.7% denied in 2019 and 5.8% denied in 2021.
3. Of the prior authorization requests that MA insurers denied, 10% were appealed in 2022. While only a small fraction of denials were contested, the appeals were largely successful: 83.2% of them resulted in overturning the initial denial.
4. One insurer that is an exception to the low denial activity: Cigna. Across most Medicare Advantage insurers, a small share of denied prior authorization requests were appealed, resulting in the average of 10%. For Cigna, however, 50.4% of all denials were appealed.
5. The number of prior authorization requests per Medicare Advantage enrollee held steady from 2019 to 2022 at 1.7, suggesting a correspondence to increasing enrollment in Medicare Advantage. Medicare enrollment increased by about 30% from 2019 to 2022.
6. The number of prior authorization requests per enrollee in 2022 varied among insurers, from 0.5 requests per enrollee in Kaiser Permanente plans to 2.9 requests per enrollee in Humana plans, according to KFF.
"Differences across Medicare Advantage insurers in the number of prior authorization requests per enrollee likely reflect some combination of differences in the services subject to prior authorization requirements, the frequency with which contracted providers are exempted from those requirements, how onerous the prior authorization process is for a particular insurer relative to others, and differences in enrollees' health conditions and the health care services they use," KFF notes in its report.
7. Denial rates vary by insurer too, ranging from 4.2% of prior authorization requests for Anthem plans to 13% of prior authorization requests for CVS plans. This counts both full and partial denial of requests.
8. Two insurers reversed over 90% of their appealed denials: CVS at 90.8% and Centene at 95.3%. Humana had the lowest reversal rate, with 68.4% of appeals resulting in favorable decisions.