Prior Authorization denials and other issues lawmakers are taking up with MCOs

A series of issues related to managed care have drawn the attention of federal lawmakers, who are questioning the payers’ policies on prior authorization, Medicare Advantage, artificial intelligence, and drug coverage.

Prior authorization denials

A report by the HHS Office of Inspector General (OIG) found that the seven largest Medicaid managed care organizations (MCOs) deny about 12% of prior authorization requests, with some MCOs having denial rates above 25%. The report, published in July, prompted Sen. Ron Wyden and Rep. Frank Pallone, the chairs of the Senate Finance Committee and the House Energy and Commerce Committee, respectively, to launch an investigation into the denial rates. They sent letters to the seven MCOs, asking them to provide data on their appeals and denials, as well as any use of artificial intelligence (AI) algorithms in the prior authorization process.

Medicare Advantage overpayments

In July, a group of lawmakers urged the Biden administration and CMS to crack down on overpayments to Medicare Advantage (MA) insurers, which they claim are costing taxpayers billions of dollars. They also criticized MA insurers for misleading marketing and excessive prior authorization denials. Sen. Elizabeth Warren, a vocal opponent of MA, said that strengthening traditional Medicare would save money and expand benefits for beneficiaries. The lawmakers also requested more information from the largest MA insurers on how they decide to approve or deny claims, and whether they use AI in the process.

Prior authorization reform

Prior authorization is a top concern for policymakers, who want to streamline the process and reduce the burden on providers and patients. In June, more than 230 representatives and 61 senators asked HHS and CMS leaders to improve a proposed rule that aims to standardize prior authorization requirements across payers. They suggested adding provisions that would allow real-time prior authorization for routine matters, a 24-hour deadline for urgent care requests, and more transparency metrics. CMS is expected to finalize the rule by December 2025.

AI’s role in healthcare

AI’s role in prior authorization and other healthcare decisions is also under scrutiny by lawmakers, who worry about the potential for abuse and bias. In a June hearing, Sen. Ron Wyden expressed his concern about the use of big data and algorithms in healthcare and called for more oversight and accountability.

Medicare drug coverage

Medicare recently approved Leqembi, a new drug for Alzheimer’s disease, but its high price tag has raised questions among lawmakers. Sen. Bernie Sanders called Leqembi’s $26,500 annual cost “outrageously high” and asked HHS Secretary Xavier Becerra to negotiate a lower price with the drug maker. He also urged CMS to conduct an independent review of Leqembi’s effectiveness and safety.