Medicare Advantage Prior Authorizations Surge Amid New CMS Rules and Legislative Reforms

Virtually all Medicare Advantage enrollees (99%) are subject to prior authorization for certain services, especially higher-cost ones like inpatient hospital stays, skilled nursing, and chemotherapy. In contrast, traditional Medicare mandates prior authorization for only a few services. Prior authorization confirms the medical necessity of services before coverage is granted. Medicare Advantage insurers employ prior authorization and other tools like provider networks to manage care utilization and reduce costs. This approach allows them to offer additional benefits and lower cost-sharing, often with no extra premium, while maintaining robust financial performance. 

However, concerns have been raised by lawmakers and others that prior authorization, including AI-assisted reviews, can create barriers and delays in accessing necessary care. In response, the Centers for Medicare and Medicaid Services (CMS) recently introduced three rules to address these concerns. The rules clarify criteria for prior authorization policies, streamline the process for Medicare Advantage and other insurers, and require plans to assess the impact of these policies on individuals with certain social risk factors. Additionally, several bills have been introduced in Congress aiming to reform various aspects of prior authorization (see Box 1). 

This analysis uses data from Medicare Advantage insurers submitted to CMS to examine trends in prior authorization requests, denials, and appeals from 2019 to 2022, highlighting variations across insurers in 2022. 

Key Findings: 

• Over 46 million prior authorization requests were submitted to Medicare Advantage insurers in 2022, up from 37 million in 2019. 

• There were 1.7 prior authorization requests per enrollee in 2022, a figure consistent with 2019 levels. The rise in total requests corresponds with the increase in Medicare Advantage enrollment, translating to a similar number of requests per enrollee. 

• Insurers denied 3.4 million (7.4%) prior authorization requests in 2022. Though most requests were approved, the denial rate increased from 5.7% in 2019 to 7.4% in 2022. 

• Only 9.9% of denied requests were appealed in 2022, up from 7.5% in 2019. The low appeal rate may be due to enrollees’ lack of awareness or the intimidating nature of the appeal process. A prior KFF survey revealed that many people, including Medicare enrollees, are confused by their coverage and don’t know how to file an appeal. 

• Most appeals (83.2%) resulted in overturned denials, similar to previous years. This suggests that initial requests might have been unjustly denied, leading to potential delays in care that could negatively impact health outcomes. 

• Variations exist across Medicare Advantage insurers in prior authorization practices. In 2022, insurers differed in the volume of requests, denial rates, and appeal outcomes, leading to varied experiences for enrollees depending on their chosen plan. 

Use of Prior Authorization in Medicare Advantage 

CMS mandates Medicare Advantage insurers to report prior authorization data, including requests, approvals, denials, and appeals. This data helps assess trends but lacks details on variations by service type or plan. 

In 2022, prior authorization requests exceeded 46 million. Following a decline in 2020 due to the COVID-19 pandemic and temporary pauses in authorization requirements, requests rose steadily, paralleling the growth in Medicare Advantage enrollment, which increased from 22 million in 2019 to 28 million in 2022. The number of requests per enrollee remained at 1.7 in 2022, consistent with pre-pandemic levels. 

Medicare Advantage insurers denied 3.4 million (7.4%) requests in 2022. Of the total 46.2 million determinations, over 90% (42.7 million) were fully approved. The denial rate, which was below 6% from 2019 to 2021, rose to 7.4% in 2022, with most denials being full denials rather than partial approvals. 

Only 9.9% of denials were appealed in 2022, a rate consistent with previous years. From 2019 to 2022, over 80% of appealed denials were overturned, raising questions about the initial denial’s validity and the potential for delays in necessary care. 

Variation in Prior Authorization Use Across Insurers in 2022 

While all Medicare Advantage insurers require prior authorization for some services, the specifics vary. Insurers can waive these requirements for certain providers, such as through “gold carding” programs that exempt providers with a history of compliance. 

Humana plans had the highest number of requests per enrollee, with 2.9, compared to a low of 0.5 in Kaiser Permanente plans. Differences likely reflect variations in the services subject to prior authorization, the exemption frequency for contracted providers, the burden of the prior authorization process, and enrollees’ health needs. 

CVS had the highest denial rate (13.0%) among insurers, while Anthem had the lowest (4.2%). Most insurers with high request volumes had lower-than-average denial rates, with Centene and Cigna being exceptions. Centene had both high request volumes (2.2 per enrollee) and above-average denial rates (9.5%), while Cigna had low request volumes (0.9) and below-average denial rates (5.8%). 

Cigna had an unusually high appeal rate, with 50.4% of denials appealed, compared to 3.5% for Kaiser Permanente and 15.2% for BCBS Anthem. This variation could reflect differences in the request and appeal processes or data reporting interpretations. Across all firms, most appeals were successful, with CVS overturning 90.8% and Centene 95.3% of denials. 

This analysis uses CMS data from 2019 to 2022, reflecting organization determinations and reconsiderations under Medicare Advantage contracts. Enrollment data are from CMS’s Medicare Advantage enrollment file for March of each year. Contract-plan-county combinations with fewer than 11 enrollees are excluded.