More than 86.7 million low-income Americans rely on Medicaid for their health care, but private insurance companies are denying millions of requests for services through the federal-state program with little oversight, according to a report by U.S. investigators released Wednesday, and Long Beach-based Molina Healthcare is at the top of the report’s list.
Molina, for its part, said in a statement that the report did not include the full context of its denials, but the company is still “continuously working to improve our processes.”
The vast majority of Medicaid recipients are insured by for-profit companies, which contract with states to provide services to low-income people. Doctors make care recommendations, which must then be approved by these Medicaid managed care organizations, or MCOs. That approval is known in the industry as the “prior authorization of services,” which is required for a health care provider to treat a patient.
After looking into 115 MCOs nationwide, the report from the inspector general’s office of the U.S. Department of Health and Human Services found that, in 2019, one out of every eight requests for the prior authorization of services were denied. Investigators also learned that, despite the high number of denials, states did not routinely review their appropriateness.
“The absence of robust oversight of MCO decisions on prior authorization requests presents a limitation that can allow inappropriate denials to go undetected,” investigators noted in the report, adding that the appeals process intended to remedy this is deeply flawed and seldom used.
The report notes concerns about the payment model for Medicaid, under which MCOs receive a fixed amount of money per enrollee regardless of the number of services provided to them. Investigators said the model could incentivize some insurers to deny care, especially to cancer and cardiac patients, seniors and people with disabilities who need in-home care and medical devices, to increase profits.
Half of Medicaid enrollees are people of color, according to the report.
“People of color and people with lower incomes are at increased risk of receiving low-quality health care and experiencing poor health outcomes, which makes ensuring access to care particularly critical for the Medicaid population,” the report states.
Investigators identified the seven MCO parent companies with the largest number of enrollees—Aetna Inc., AmeriHealth Caritas, Anthem Inc. (now Elevance Health), CareSource, Centene Corporation, Molina and UnitedHealthcare. These companies operated 115 MCOs in 37 states with a total of 29.8 million people enrolled in 2019.
The report shows that Molina had the highest overall denial rate at 17.7%, followed by CareSource (15.4%), UnitedHealthcare (13.6%), Anthem (12.9%), Centene (12.2%), Aetna (12.1%) and AmeriHealth (6.1%).
Seven of Molina’s 12 MCOs, representing 1.2 million enrollees, had denial rates greater than 25%, according to the report. Combined, Aetna, Anthem and UnitedHealthcare only had five MCOs with denial rates higher than 25%. The other three companies had none.
At 41.4%, Molina’s Illinois plan had, by far, the single-highest denial rate on the list. Molina’s Texas plan had the second highest rate at 34.2%, followed by Anthem’s Georgia plan at 33.7%.
In Molina’s statement, the company said it is held accountable for patient satisfaction, services, health outcomes and other metrics through “extensive oversight” by federal and state governments.
“The 2019 data on MCO treatment denial rates cited in … [the] report was inclusive of simple procedural denials in which there is a request for additional information that is promptly resolved within applicable deadlines,” the emailed statement said. “Regardless, Molina is continuously working to improve our processes and create the best possible experience for members and providers.”
The Medicaid denial rate is roughly double the rate under Medicare Advantage, which is a similar program reserved for people over 65 years old, according to the report. Medicare enrollees also have access to automatic external reviews of denials to appeal the decision, investigators noted.
“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,” investigators said.
The report states more action is needed to improve patient protections and state oversight of denials “to help ensure that enrollees have access to all medically necessary and covered services.” The report recommends the U.S. Centers for Medicare & Medicaid Services (CMS):
- Require states to regularly review a sample of prior authorization denials;
- Require states to collect data on MCO prior authorization decisions;
- Issue guidance to states on the use of said data;
- Require states to implement automatic external medical reviews regarding prior authorizations denials; and
- Work with states on actions to identify and address MCOs that may be issuing inappropriate denials.
In its response to the report, CMS indicated it concurred with the fifth recommendation but did not indicate whether or not it agreed with the first four, the report states. In a May 2 letter to the inspector general’s office, CMS did, however, state it was committed to partnering with states to strengthen oversight of the program.
CMS noted it would consider the findings and recommendations, noting that “the increased prevalence of the use of managed care delivery systems over the past several years underscores the continued need for strong federal and state oversight of Medicaid managed care.”