OIG: More oversight needed of Medicaid managed care

WASHINGTON – Some people enrolled in Medicaid managed care may not be receiving all of their medically necessary health care services, according to a new study from the Office of Inspector General. 

There are three key factors causing concern, the OIG says: the high number and rates of denied prior authorization requests; the limited oversight of prior authorization denials in most states; and the limited access to external medical reviews. 

What the OIG found 

Overall, the MCOs in OIG’s review denied one out of every eight requests for the prior authorization of services in 2019. Among the 115 MCOs, 12 had prior authorization denial rates greater than 25%, or twice the overall rate. Despite the high number of denials, most state Medicaid agencies reported that they did not routinely review the appropriateness of a sample of MCO denials of prior authorization requests, and many did not collect and monitor data on these decisions.  

Its review 

The OIG identified and selected seven parent companies of managed care organizations with the largest number of people enrolled in comprehensive, risk-based plans across all states. These companies operated 115 MCOs in 37 states, which enrolled a total of 29.8 million people in 2019. The agency collected data from the selected companies about prior authorization denials and related appeals for each MCO they operated. The OIG also surveyed state Medicaid agency officials from the 37 states to examine selected aspects of state oversight of MCO prior authorization denials and appeals, along with state processes for external medical reviews and fair hearings. 

The OIG noted that CMS's oversight of denials by private health plans is more robust. For example, each year CMS reviews the appropriateness of a sample of prior authorization denials and requires health plans to report data on denials and appeals. Further, Medicare Advantage enrollees have access to automatic, external medical reviews of denials that plans uphold at the first level of appeal. These differences in oversight and access to external medical reviews between the two programs raise concerns about health equity and access to care for Medicaid managed care enrollees. 

Its recommendations 

The OIG recommends that CMS: require states to review the appropriateness of a sample of MCO prior authorization denials regularly; require states to collect data on MCO prior authorization decisions; issue guidance to states on the use of MCO prior authorization data for oversight; require states to implement automatic external medical reviews of upheld MCO prior authorization denials; and work with states on actions to identify and address MCOs that may be issuing inappropriate prior authorization denials. CMS did not indicate whether it concurred with the first four recommendations, but it concurred with the fifth recommendation.