Retirees may face this hassle with Medicare Advantage, survey finds

Seniors who opted for private Medicare insurance plans should not be shy about pushing back on denials for pre-authorizations, according to a new study.

Of the 35 million requests by Medicare Advantage enrollees seeking prior authorization for healthcare services or medications in 2021, two million of those requests were fully or partially denied, according to a new analysis from the Kaiser Family Foundation (KFF), a nonprofit organization.

But of the 11% of cases that were contested, insurers overturned more than 4 in 5 (82%) of their initial decisions, according to the report.

The results raise flags that the approval process may create unnecessary obstacles for patients to receive medical care and underscored that seniors may want to spend more time shopping around for these popular plans to avoid these hassles.

“The high frequency of favorable outcomes upon appeal raises questions about whether a larger share of initial determinations should have been approved,” Jeannie Fuglesten Biniek, KFF’s associate director, program on Medicare Policy and Nolan Sroczynski, a KFF data analyst, wrote.

“It could reflect initial requests that failed to provide necessary documentation. In either case, medical care that was ordered by a healthcare provider and ultimately deemed necessary was potentially delayed because of the additional step of appealing the initial prior authorization decision, which may have negative effects on beneficiaries’ health,” the authors concluded.

Senior tired business woman overworking in front of laptop, touching her eyes, free space

(Photo: Getty Creative)

Don’t take no for an answer

The pre-authorization hoop primarily impacts people enrolled in Medicare Advantage plans, a privatized, managed-care version of the traditional Medicare program.

In 2022, virtually all Medicare Advantage enrollees (99%) were enrolled in a plan that required prior authorization for some services. Most commonly, higher cost services, such as chemotherapy or skilled nursing facility stays, require prior authorization, according to KFF’s study, which reviewed data from 515 Medicare Advantage contracts, representing 23 million Medicare Advantage enrollees.

Prior authorization for insurance coverage has been around for a long time. It’s a way insurers rein in their costs by screening to purportedly check that people aren’t being prescribed procedures and services that are not medically necessary.

“Insurers differ on how they use pre-authorization,” Biniek told Yahoo Finance. “I was surprised at how much variation there was across plans or across insurers.”

Smiling older woman patient and young nurse doctor holding papers reading health life insurance medical service contract agreement look at test results during homecare visit at home hospital concept

In 2022, virtually all Medicare Advantage enrollees (99%) were enrolled in a plan that required prior authorization for some services. (Getty Creative)

For instance, the denial rate ranged from 3% for Anthem and Humana to 12% for CVS (Aetna) and Kaiser Permanente, the researchers found. The share of denials that were appealed was almost twice as high for CVS (20%) and Cigna (19%) than average (11%). While a substantially lower share (1%) of Kaiser Permanente denials were appealed.

To be clear, a fraction (380,000) of those procedures and services that were greenlighted when patients pushed back were only partially covered. A prior authorization request, for instance, may have included 10 therapy sessions, but only five were approved, the researchers found.

Still, “people who go through that appeals process are often successful,” Biniek said. “We don’t know if that’s because the people who choose to appeal have the best case to make, but there may be more opportunity there for people to have some of these requests ultimately approved.”

Medicare Advantage vs traditional Medicare

While traditional Medicare rarely requires prior authorization for healthcare services or medicine, the big lure of Medicare Advantage plans is that they usually provide some coverage for benefits not included in traditional Medicare, such as eyeglasses, dental coverage and fitness classes.

About one in four (24%) Medicare beneficiaries enrolled in a Medicare Advantage plan cited its additional benefits for choosing their plan, according to The Commonwealth Fund’s 2022 Biennial Health Insurance Survey of 1,605 adults enrolled in Medicare. One in five (20%) also pointed to a limit on out-of-pocket spending as the main reason for their choice.

Smiling senior athletes doing kettlebell squats during fitness class

Medicare Advantage plans typically offer extra coverages such as fitness classes (Getty Creative)

“This is one of the big trade-offs that people make when choosing Medicare Advantage,” Biniek said.

But many do. Last year, nearly half of (48%) eligible Medicare beneficiaries, or 28.4 million people out of 58.6 million Medicare beneficiaries overall, were enrolled in Medicare Advantage plans.

Medicare Advantage shoppers need to ask about pre-authorization policy

So, one way to help prevent the bother of appealing denied pre-authorizations is to research those requirements among different Medicare Advantage plans when seniors are looking to sign up, Biniek said.

As part of its oversight of Medicare Advantage plans, the Centers for Medicare and Medicaid Services (CMS) requires these insurers to submit data for each Medicare Advantage contract that includes the number of prior authorization determinations made during a year, and whether the request was approved. Insurers are additionally required to indicate the number of initial decisions that were appealed and the outcome of that process.

“The Kaiser report does not include reasons for denials, but other studies have shown that missing paperwork and errors in medical coding are common,” Philip Moeller, a Medicare and Social Security expert and principal author of the “Get What’s Yours” series of books about Social Security, Medicare, and health care, told Yahoo Finance.

The reason the report does not cover details on denials: Medicare Advantage insurers are not required to indicate the reason a denial was issued in the reporting to the CMS, such as whether the service was not deemed medically necessary, insufficient documentation was provided, or other requirements for coverage were not met, according to the researchers.

Medicare Health Insurance Card in medical office with Xray and hand

Medicare Health Insurance Card in medical office with Xray and hand (Getty Creative)

“When it’s denied, they do have to tell the patient the reason,” Biniek said. “If they’re denied, it’s worth talking to their provider and following up with the insurer to make sure they understand why.”

The good news is that the Biden Administration has recommended changes to the approval process. In December, the CMS published two rules to require Medicare Advantage plans to revamp the electronic process they use to approve medical services and prescriptions.

The provisions in the first proposed rule are aimed at improving the use of electronic prior authorization processes, as well as the promptness and transparency of decisions, and apply to Medicare Advantage and certain other insurers. The second proposed rule clarifies the criteria that may be used by Medicare Advantage plans in setting-up prior authorization policies and the time period a prior authorization is valid.

“Looking ahead, Medicare Advantage insurers have been put on notice by CMS and Congress to greatly improve their prior authorization process,” Moeller said. “Things thus are likely to get better, but of course that’s little comfort to people unfairly denied care. The message here is that appeals work, and that people should push back more often against unfavorable rulings.”

Kerry is a Senior Reporter and Columnist at Yahoo Finance. Follow her on Twitter @kerryhannon.

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