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THE EXTENT AND GROWTH OF PRIOR AUTHORIZATION IN MEDICARE ADVANTAGE

March 7, 2024
Hannah T. Neprash, PhD
John F. Mulcahy, MSPH
 * Ezra Golberstein, PhD


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Article
The American Journal of Managed CareMarch 2024
Volume 30
Issue 3
Pages: e85-e92



Prior authorization is a common utilization-management tool among Medicare
Advantage plans. However, service-, area-, and carrier-level patterns suggest
variation in how plans use prior authorization.

ABSTRACT

Objectives: To assess trends in the use of prior authorization requirements
among Medicare Advantage (MA) plans.

Study Design: Descriptive quantitative analysis.

Methods: Data were from the CMS MA benefit and enrollment files for 2009-2019,
supplemented with area-level data on demographic and provider market
characteristics. For each service category, we calculated the annual share of MA
enrollees in plans requiring at least some prior authorization and plotted
trends over time. We mapped the county-level share of MA enrollees exposed to
prior authorization in 2009 vs 2019. We quantified the association between local
share of MA enrollees exposed to prior authorization and characteristics of that
county in the same year. Finally, we plotted the share of MA enrollees exposed
to prior authorization requirements over time for the 6 largest MA carriers.

Results: From 2009 to 2019, the share of MA enrollees in plans requiring prior
authorization for any service remained stable. By service category, the share of
MA enrollees exposed to prior authorization ranged from 30.7% (physician
specialist services) to 72.2% (durable medical equipment) in 2019, with most
service categories requiring prior authorization more often over time. Several
area-level demographic and provider market characteristics were associated with
prior authorization requirements, but these associations weakened over time. The
use of prior authorization varied widely across plans.

Conclusions: In 2019, roughly 3 in 4 MA enrollees were in a plan requiring prior
authorization. Service-level, area-level, and carrier-level patterns suggest a
wide range of approaches to prior authorization requirements.

Am J Manag Care. 2024;30(3):e85-e92. https://doi.org/10.37765/ajmc.2024.89519

_____

Takeaway Points

Prior authorization is a common utilization-management tool among Medicare
Advantage (MA) plans. However, service-level, area-level, and carrier-level
patterns suggest variation in how plans use prior authorization.

 * Roughly 3 in 4 MA enrollees are in a plan requiring prior authorization for
   some services.
 * Across all plans, the use of prior authorization requirements increased from
   2009 to 2019 for the majority of service categories.
 * The use of prior authorization varies geographically, with a growing number
   of counties exceeding 90% exposure to prior authorization from 2009 to 2019.
 * Whereas some MA carriers impose prior authorization requirements across
   nearly all service categories, others use it more sparingly.
 * Opportunities exist to improve and expand data collection on the use of prior
   authorization by MA carriers.



_____



One of the most notable trends in the Medicare program is the increasing use of
private managed care plans to deliver benefits to Medicare beneficiaries. The
percentage of Medicare beneficiaries enrolled in a Medicare Advantage (MA) plan
rose from 24% in 2009 to 50% in 2023.1 MA plans rely on a wide range of managed
care techniques to contain spending and to encourage high-value health care
service use. These techniques include closed panels of providers that are
covered by an MA plan, care management activities, and the use of prior
authorization for medical services.

Prior authorization is the process through which a clinician must obtain
approval from an insurer before a particular service will be covered by the
insurer. Prior authorization practices may have benefits along with costs, which
may not be borne equitably across patients and providers—and as such are
controversial and polarizing.2 Significant majorities of commercial health
insurers that responded to a 2022 survey by AHIP reported that prior
authorization had a positive impact on quality, affordability, and safety of
health care.3 In contrast, physician groups have voiced significant concerns
with prior authorization. For instance, among practicing physicians who
responded to the 2022 American Medical Association prior authorization physician
survey and reported doing any prior authorization requests in a typical week,
significant concerns were noted about prior authorization leading to care
delays, at least some serious adverse events for patients, and overall worse
clinical outcomes.4 Furthermore, physician respondents to that survey frequently
indicated that prior authorization requirements are administrative burdens that
raise the costs of medical practice.

In the context of concerns about negative consequences of prior authorization
for patient care,5,6 a range of public policies have been proposed to regulate
prior authorization practices. For example, state lawmakers have pursued
legislation that requires prior authorization decisions within a certain amount
of time7 or requires that insurers grant “gold cards” that exempt clinicians
from prior authorization if they meet a threshold for prior authorization
approvals.8 Federal policy makers have also considered prior authorization
legislation. Specific to MA plans, during the 117th Congress (2021-2022), the US
House of Representatives passed and the US Senate introduced the bipartisan
Improving Seniors’ Timely Access to Care Act, which would require that MA plans
adopt electronic prior authorization, deliver real-time decisions for certain
services, and adhere to transparency and reporting standards around prior
authorization practices.9

Despite the increasing policy attention to controversial prior authorization
practices, there are limited systematic and nationally representative data on
how prior authorization is used and how it has changed over time.10-12 Much of
the existing literature focuses on prior authorization for prescription drugs,13
although these practices are used much more widely by health insurers. In this
article, we focus on prior authorization within MA plans. Some information on
prior authorization practices is available from KFF reports, but those reports
do not quantify trends over time and focus on very high-level measures of prior
authorization use. In this descriptive article, we use the only multiyear source
of data across all MA insurers to document how the use of prior authorization by
MA plans has changed over time and across major service categories, how the use
of prior authorization varies by geography, and variations in how large MA
carriers impose prior authorization requirements. Our objective is to help
inform policy discussions by establishing basic facts about how MA plans use
prior authorization and how that has evolved over recent years. Our findings
should be interpreted as an imprecise estimate on the use of prior authorization
in MA for 2 reasons. First, our data source requires plans to merely report
whether they impose prior authorization for any enrollees (rather than how
prevalent its use is). Second, we document some inconsistencies in the data
reported by plans to CMS and consumer-facing prior authorization information
available online. For these reasons, we hope that our findings inform policy
discussions not only about regulating the use of prior authorization in MA but
also about improving data collection.

METHODS

Data

This analysis relied primarily on data from the CMS MA benefit and enrollment
files for 2009 through 2019. The benefit files contain information submitted
annually by MA plans to CMS as part of the annual bidding process.14 Relevant to
this analysis, the benefit files include information on whether each plan
imposes prior authorization requirements for particular service categories. Each
binary variable must equal 1 if the plan imposes prior authorization
requirements for in-network care, defined as “a process requiring the physician
or other health care provider to obtain advance approval from the plan that
payment will be made for a service or item furnished to an enrollee.”15 The
enrollment files contain annual counts of Medicare beneficiaries enrolled in
each MA plan–county combination. Similar to past analyses of these data,16 we
excluded cost plans, Programs of All-inclusive Care for the Elderly plans,
health care prepayment plans, and Medicare-Medicaid plans from our sample
because their enrollment requirements and payment regulations may not be
comparable to other MA plans (see eAppendix Table 1 [eAppendix available at
ajmc.com] for sample sizes before and after exclusion). We also excluded
employer plans, as the benefit data may not be complete in recent years. We used
only data through 2019 because in 2020 there appeared to be a discrete—but
significant—increase in the use of prior authorization by the largest MA
insurer, UnitedHealthcare. Through discussions with UnitedHealthcare, we learned
that this increase in reported prior authorization represented a change in how
they reported to CMS’ Health Plan Management System, which was prompted by a
review of CMS’ direction on how to report prior authorization rather than any
change in their underlying processes or practices.

This analysis also included demographic and provider market characteristics at
the area level. Demographic characteristics were obtained from the IPUMS
National Historical Geographic Information System and included county-level
share of the population identifying as Black, Indigenous, and People of Color
(BIPOC) and the share of the population 65 years and older living below the
federal poverty line. To classify the rurality of each county, we used the most
recent version available at the time (2013) of the Rural-Urban Continuum Codes
from the US Department of Agriculture Economic Research Service. Finally, we
relied on American Hospital Association Annual Survey data to construct a
Herfindahl-Hirschman Index measuring hospital market concentration at the
core-based statistical area level (a geographic unit larger than county, which
likely better approximates the size of a hospital market), with number of beds
as the market share variable.

Analysis

For each service category, we calculated the annual share of MA enrollees in an
MA plan requiring prior authorization and plotted trends over time. To formally
test for changes over time, we regressed the share of MA enrollees exposed to
prior authorization on year. We present results overall and by service category,
focusing on the 15 categories that were present in every year of our study
period (2009-2019). We do not present the share of enrollees exposed to prior
authorization for supplemental benefits categories because these numbers would
be more difficult to interpret and the denominator would change by service
category.

To visualize changes over time and understand geographic variation in prior
authorization requirements, we plotted the county-level share of MA enrollees
exposed to prior authorization in 2009 vs 2019. Because plotting this by service
category would generate 30 plots, we focused on 4 sentinel service categories
(see eAppendix for rationale): inpatient acute hospital services, psychiatric
services, diagnostic procedures/labs/tests, and Part B drugs. We include a
tabular presentation of this material for all service categories in the
eAppendix.

We also tested for an association between the share of MA enrollees in a county
covered by prior authorization for a particular service and characteristics of
that county in the same year, repeating this analysis in 2009 and 2019. Finally,
we plotted the share of MA enrollees exposed to prior authorization requirements
over time by carrier for the 6 largest carriers: UnitedHealthcare, Humana, CVS
(formerly Aetna), Kaiser Permanente, Anthem (formerly Wellpoint and now Elevance
Health), and Cigna.

RESULTS

In 2019, 72.6% of MA enrollees were in a plan requiring prior authorization for
at least 1 category of health care services compared with 71.3% in 2009 (Figure
1). Service categories most frequently requiring prior authorization included
durable medical equipment (72.2% of MA enrollees in 2019; 62.1% in 2009),
Medicare Part B drugs (72.0% in 2019; 60.9% in 2009), and skilled nursing
facility care (71.9% in 2019; 60.7% in 2009). Conversely, nondiscretionary
service categories least frequently requiring prior authorization included
physician specialist services (30.7% of MA enrollees in 2019; 29.1% in 2009),
dialysis services (45.0% in 2019; 36.7% in 2009), and diabetic supplies/services
(60.3% in 2019; 42.3% in 2009). Service categories that experienced the greatest
increase from 2009 to 2019 in the share of MA enrollees exposed to prior
authorization requirements included diagnostic procedures, labs, and tests
(63.7% of MA enrollees in 2019; 45.7% in 2009); diabetic supplies/services
(60.3% in 2019; 42.3% in 2009); and psychiatric services (57.0% in 2019; 42.7%
in 2009). eAppendix Table 2 formally tests for an annual time trend from 2009 to
2019, showing a statistically significant (P < .05) increase in the use of prior
authorization for 12 of 15 services.

Figure 2 displays significant geographic variation in the share of MA enrollees
exposed to prior authorization requirements. In 2009, of the nearly 3000
counties in the US and Puerto Rico with available information on MA prior
authorization requirements, 234 had greater than 90% exposure to prior
authorization requirements for inpatient services (ie, > 90% of MA enrollees
were in a plan requiring prior authorization for inpatient care), whereas 1062
had less than 10% exposure. By 2019, 637 had greater than 90% exposure to prior
authorization requirements for inpatient services, and 226 had less than 10%
exposure. Psychiatric services, diagnostic procedures/labs/tests, and Part B
drugs showed similar increases. eAppendix Table 3 presents similar information
for all remaining service categories.

Several county-level characteristics were associated with the share of MA
enrollees exposed to prior authorization requirements in that county, but the
strength of these associations attenuated over time. The Table presents raw
associations and associations standardized to the change in going from the 25th
to 75th percentile county (ie, the interquartile difference) for each
independent variable. In 2009, an interquartile increase in the percentage of a
county’s residents identifying as BIPOC was associated with an increase of 5.59
to 10.82 percentage points in the share of MA enrollees whose plan required
prior authorization, depending on the service category. The strength of this
association shrank by 2019, with a similar interquartile increase associated
with a change of –4.25 to 1.18 percentage points in the share of MA enrollees in
that county exposed to prior authorization requirements. Depending on the year
and the service category, the percentage of older adults in poverty was either
positively or statistically insignificantly associated with the share of MA
enrollees in that county who were exposed to prior authorization requirements.
Rurality was strongly negatively associated with the county-level share of MA
enrollees exposed to prior authorization requirements in 2009, with much weaker
associations observed in 2019. Hospital market concentration (quantified at the
core-based statistical area level rather than county to better approximate the
large size of hospital markets) was negatively associated with prior
authorization requirements in 2009, with an interquartile increase in
county-level hospital Herfindahl-Hirschman Index associated with a change of
–27.35 to –23.33 percentage points in the share of MA enrollees in that county
exposed to prior authorization requirements. The strength of this association
shrank by 2019, with a similar interquartile increase associated with a change
of –5.51 to 2.64 percentage points in the share of MA enrollees in that county
exposed to prior authorization requirements.

Examining prior authorization requirements by carrier and service type revealed
different patterns (Figure 3). Across all 4 sentinel services, prior
authorization requirements affected fewer than 20% of UnitedHealthcare (the
largest MA insurer) enrollees in every year of our study period. Conversely,
Humana, Anthem, CVS (Aetna), and Cigna increased prior authorization
requirements during the early and middle years of the study period, such that
nearly all MA enrollees were exposed to prior authorization requirements for all
4 sentinel services by 2019. Kaiser Permanente maintained inpatient acute
hospital services and Part B drug prior authorization requirements for nearly
all MA enrollees but decreased its prior authorization requirements for
psychiatric services and diagnostic procedures/labs/tests. Carrier-specific
analyses revealed considerable differences across and within plans over time.
Although many differences likely reflect meaningful changes in benefit
structure, they may also reflect changes in reporting accuracy. eAppendix Table
4 compares information available on prior authorization from the CMS MA benefit
files with information available in consumer-facing documents published by
carriers. Although the majority of carrier-service-year information matches
across both sources of information, there are some examples of discordance.

DISCUSSION

As policy attention to prior authorization practices increases in MA, it is
important to document trends and patterns in the use of prior authorization. We
found that most MA enrollees were already in plans that used prior authorization
in 2009, and the proportion with any prior authorization was essentially
unchanged by 2019. However, there was considerable growth in the use of prior
authorization across a breadth of service types along with variation in use of
prior authorization across service types. For instance, in 2009, fewer than half
of MA enrollees were exposed to prior authorization for diagnostic procedures,
labs, and tests; psychiatric services; and diabetic supplies and services, but
these 3 service categories saw the greatest growth in exposure to prior
authorization by 2019. In contrast, the use of prior authorization for physician
specialist services is notable both for its relatively low level of usage and
for its lack of growth from 2009 to 2019.

Across the 4 sentinel services that we examined in detail, the association
between prior authorization requirements and area-level characteristics varied
over time. In 2009, exposure to prior authorization for all 4 measures was
significantly higher in counties that had a greater share of BIPOC residents. By
2019, however, there was little association between a county’s proportion of
BIPOC residents and exposure to prior authorization. In other recent survey
research focusing on the population younger than 65 years, there was no
significant correlation between racial and ethnic group and the likelihood of
reporting any administrative health care or insurance tasks, which included
prior authorization.17 Nevertheless, even if there is greater racial/ethnic
equity in exposure to prior authorization in MA plans, it does not automatically
indicate that prior authorization practices are implemented in equitable ways
across racial and ethnic groups. The relationship between county-level poverty
and exposure to prior authorization differed across the 4 sentinel services. In
2009, counties with greater poverty rates had higher levels of prior
authorization for inpatient hospital services and for Part B drugs than areas
with less poverty, whereas there were no statistically significant associations
with prior authorization for psychiatric services and diagnostics. By 2019, the
relationship between county-level poverty and prior authorization was
insignificant for inpatient hospital services, diagnostics, and Part B drugs,
whereas it became positive for psychiatric services but with a modest magnitude.
However, all 4 sentinel services had much lower levels of prior authorization in
2009 in rural areas compared with urban areas and in more-concentrated hospital
markets, with these associations becoming much weaker by 2019. In fact, by 2019,
more-rural areas were more likely to have prior authorization for psychiatric
services and for diagnostic procedures, labs, and tests. Similarly, the strong
negative association between hospital market concentration and exposure to prior
authorization in 2009 had attenuated (or even reversed, in the case of
diagnostic procedures, labs, and tests) by 2019.

A notable result of our analysis is that levels and trends in the use of prior
authorization vary substantially across MA insurers. Overall trends in prior
authorization in MA plans may appear relatively smooth but reflect a series of
discrete changes in prior authorization practices by specific insurers. As
different insurers operate in different geographic regions, the differences in
prior authorization use by insurers likely explain a meaningful share of the
geographic variation in prior authorization use described in Figure 2. Another
more concerning implication of the variation in prior authorization requirements
across MA insurers (and within insurers, over time) is the accuracy and/or
consistency of the data reported by insurers to CMS. The inconsistencies we note
in data reported to CMS and information available online suggest room for
improvement in the only known source of nationwide data on this policy-relevant
topic.

Limitations

Our analyses have several limitations. First, we are able to assess only whether
plans report the use of any prior authorization within service categories. We
are unable to speak to the frequency with which prior authorization is used or
for which specific services within a category among plans that report using it
at all. Understanding variation in the frequency of use of prior authorization
is a key priority for future research. Second, our analyses are entirely
descriptive and do not represent causal relationships. Third, our analyses focus
on the use of prior authorization of MA services that are covered by Part A and
Part B, but our analyses do not include Part D prescription drug benefits, in
which prior authorization is common. Fourth, as noted previously, our analyses
only go through 2019 because of a significant change in 2020 in how information
was reported from the largest MA insurer, so we cannot speak to the most recent
data on prior authorization. We are also not making normative claims about
whether levels and changes in prior authorization are, on net, good or bad.
Despite well-known concerns about prior authorization practices, MA
beneficiaries are choosing plans with these features and might be willing to
trade off exposure to prior authorization for some combination of lower premiums
and coverage of additional services.

Several facets of prior authorization in MA warrant additional research
attention. As federal policy makers consider and implement regulations on the
use of prior authorization, such as mandated maximum turnaround times and
electronic prior authorization, it will be important to assess the effects on
the overall use of prior authorization in MA and on access to care. Research is
also needed to evaluate the extent to which the burdens of prior authorization
are being distributed equitably across MA enrollees, as prior research on the
population younger than 65 years suggests that administrative burdens in health
care are inequitably distributed across racial and ethnic groups. Finally, a
significant open question is to what extent MA plans use prior authorization in
sufficiently well-targeted ways to optimize clinical value of services vs using
prior authorization more indiscriminately in a way that introduces “sludge” into
health care delivery and consequently reduces service use regardless of clinical
value. These future research questions may be helpfully informed by better
availability of more-detailed prior authorization data in coming years, in
accordance with CMS’ proposed rules for MA insurers.18

CONCLUSIONS

From 2009 to 2019, the share of MA enrollees in a plan requiring prior
authorization for any service remained stable. However, most service categories
saw an increase in prior authorization over this time period. Several area-level
demographic and provider market characteristics were associated with prior
authorization requirements, but these associations weakened over time.
Carrier-level analyses showed wide variation in the use of prior authorization
across plans.

Author Affiliations: Division of Health Policy and Management, School of Public
Health, University of Minnesota (HTN, JFM, EG), Minneapolis, MN.

Source of Funding: None.

Author Disclosures: The authors report no relationship or financial interest
with any entity that would pose a conflict of interest with the subject matter
of this article.

Authorship Information: Concept and design (HTN, EG); acquisition of data (HTN,
JFM, EG); analysis and interpretation of data (HTN, JFM, EG); drafting of the
manuscript (HTN, JFM, EG); critical revision of the manuscript for important
intellectual content (HTN, JFM, EG); statistical analysis (HTN, JFM, EG); and
supervision (HTN).

Address Correspondence to: Hannah T. Neprash, PhD, Division of Health Policy and
Management, School of Public Health, University of Minnesota, 420 Delaware St
SE, MMC 729, Minneapolis, MN 55455. Email: hneprash@umn.edu.

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https://www.congress.gov/bill/117th-congress/house-bill/3173

10. Schwartz AL, Brennan TA, Verbrugge DJ, Newhouse JP. Measuring the scope of
prior authorization policies: applying private insurer rules to Medicare Part B.
JAMA Health Forum. 2021;2(5):e210859. doi:10.1001/jamahealthforum.2021.0859

11. Anderson KE, Alexander GC, Ma C, Dy SM, Sen AP. Medicare Advantage coverage
restrictions for the costliest physician-administered drugs. Am J Manag Care.
2022;28(7):e255-e262. doi:10.37765/ajmc.2022.89184

12. LaPensee KT. Analysis of a prescription drug prior authorization program in
a Medicaid health maintenance organization. J Manag Care Pharm. 2003;9(1):36-44.
doi:10.18553/jmcp.2003.9.1.36

13. Brot-Goldberg ZC, Burn S, Layton TJ, Vabson B. Rational medicine through
bureaucracy: authorization restrictions in Medicare. National Bureau of Economic
Research working paper 30878. January 2023. Accessed June 5, 2023.
https://www.nber.org/system/files/working_papers/w30878/w30878.pdf

14. Benefits data. CMS. Updated September 6, 2023. Accessed June 5, 2023.
https://www.cms.gov/data-research/statistics-trends-and-reports/medicare-advantagepart-d-contract-and-enrollment-data/benefits-data

15. Health Plan Management System (HPMS). CMS. Updated September 6, 2023.
Accessed June 5, 2023. https://www.cms.gov/about-cms/information-systems/hpms

16. Freed M, Biniek JF, Damico A, Neuman T. Medicare Advantage in 2022:
premiums, out-of-pocket limits, cost sharing, supplemental benefits, prior
authorization, and star ratings.Kaiser Family Foundation. August 25, 2022.
Accessed June 5, 2023.
https://web.archive.org/web/20221230155208/https://www.kff.org/medicare/issue-brief/medicare-advantage-in-2022-premiums-out-of-pocket-limits-cost-sharing-supplemental-benefits-prior-authorization-and-star-ratings/

17. Kyle MA, Frakt AB. Patient administrative burden in the US health care
system. Health Serv Res. 2021;56(5):755-765. doi:10.1111/1475-6773.13861

18. Medicare and Medicaid programs; Patient Protection and Affordable Care Act;
advancing interoperability and improving prior authorization processes for
Medicare Advantage organizations, Medicaid managed care plans, state Medicaid
agencies, Children’s Health Insurance Program (CHIP) agencies and CHIP managed
care entities, issuers of qualified health plans on the federally-facilitated
exchanges, Merit-based Incentive Payment System (MIPS) eligible clinicians, and
eligible hospitals and critical access hospitals in the Medicare Promoting
Interoperability Program. Fed Regist. 2022;87(238):76238-76371.


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Articles in this issue

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Improving Glycemic Control in Diabetes Through Virtual Interdisciplinary Rounds

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Foundational

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