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Medicare Advantage Organizations' Denials of Some Prior Authorization Requests Raise Concerns

In the Office of the Inspector General's latest report released in April of 2022, the denials of some prior authorization requests by Medicare Advantage Organizations (MAOs) raise concerns about beneficiary access to medically necessary care. This analysis explains the significance of the report's findings for the industry and outlines proactive actions MAOs can take now to get ahead of this issue.

Background of the Office of the Inspector General April 2022 Report 

The Office of the Inspector General (OIG) released a report in April of 2022 on a long-debated topic related to whether denials of prior authorization and payment requests in a capitated environment can lead to diminished access to medically necessary care. 

The report builds on past OIG work from September of 2018 which identified that MAOs overturned denials of prior authorization and payment requests about 75% of the time if a member or provider appealed.  

OIG Report Methodology

In the current report, OIG used a stratified random sample of 250 denied prior authorization requests and 250 denied payment requests issued within a week in June of 2019 by 15 of the largest MAOs. The final total sample size was 430 cases due to some cases being ineligible for the review scope. 

The requests were reviewed by medical coding professionals and if medical necessity was at issue, the cases were reviewed by physicians. 

CMS Requirements    

MAOs are required to follow Medicare coverage rules when processing requests for prior authorization and as such may not impose clinical criteria that are more restrictive or that contradict the coverage rules that the Centers for Medicare and Medicaid Services (CMS) has in place

In terms of payment requests, MAOs can develop their own billing and payment guidelines as long as providers are paid in a timely and accurate manner and have audit trails

OIG Findings and Recommendations

OIG found that for prior authorization requests MAOs denied requests that met CMS coverage rules such as National Coverage Determinations (NCDs), Local Coverage Determinations (LCDs), and other guidance about 13% of the time. This means that if these requests were submitted under the original or fee-for-service Medicare, they would have been approved. 

Two common causes were found in the 13% of prior authorization denials: 1) The use of clinical criteria not present in CMS coverage rules; 2) Some MAO prior authorization denials stated that insufficient information was provided to support the request when OIG reviewers found that the information was present in the case file. The implications are that even though most of the cases were overturned by MAOs at the appeal level, a question around the soundness of the initial denial decision could be raised. OIG states that the finding also can have an impact of avoidable and unnecessary delays in care.

With regard to payment denials, OIG found that 18% of the time, MAOs denied payment requests that met CMS coverage rules and MAO billing rules. Two common causes cited were: 1) human error in manual claims processing (e.g. missing a document during review); 2) the claims system not being programmed or updated correctly. Since these payment requests were for services already rendered, the impact is potential payment issues and member and provider abrasion.

In terms of the types of prior authorization and payment denials three areas of coverage were noted as examples: 1) denials of imaging tests (e.g. an MRI); 2) denials of stays in post-acute facilities (e.g. rehabilitation facilitates) and 3) denials of pain management type injections.

  • OIG found that CMS’ guidance for MAOs on how to apply their own clinical criteria in absence of or in a manner that is not contradictory to CMS coverage rules was not articulated in sufficient detail. Therefore, OIG recommended that CMS issue additional guidance for MAOs to utilize when making prior authorization decisions. CMS concurred with the recommendation and will issue clarifying guidance on the use of clinical criteria for medical necessity determinations.
  • OIG also found that CMS’ Program Audit Protocol should be updated to pinpoint issues found around the use of MAO clinical criteria and some of the case examples and service types in the OIG report. CMS concurred with the recommendation and will update its audit protocol if necessary to align with the forthcoming clarifying guidance.
  • OIG recommended that CMS direct MAOs to review systems and processes that are vulnerable to the types of findings in the OIG report. CMS concurred with the recommendation and will direct MAOs to do so in their clarifying guidance.

What You Can Do Now:

  • Review your clinical hierarchy and prior authorization decision-making policies and procedures to make sure that they are not more restrictive or contradictory to CMS coverage policies. This review should also include any business rules for utilization management systems and be performed at the First Tier, Downstream, and Related (FDR) entity level as plans may delegate prior authorizations of imaging tests and other services to FDRs.
  • Carefully review services that are often performed by FDRs (e.g. prior authorizations for diagnostic testing). Begin by examining your population of denials and appeal overturns for certain types of services using keywords, ICD-9/10, and CPT codes to narrow the population.
  • Perform a data analysis-driven review of your denial rationales in your population by using fields from your utilization management and claims systems that go beyond sometimes truncated CMS Program Audit universe text. Use keywords to identify the types of case examples in this report as well as commonly cited medical necessity denial language from the publicly available CMS Independent Review Entity data.
  • Once the entirety of the population of denials is reviewed using data analytics, case file sample testing should be performed prior to CMS audit by appropriately qualified professionals.
  • Be sure to perform pre-and post-claims system change testing and develop and review reports that show any claims system changes and/or updates to gauge their impact.
  • Perform operations walk-throughs and begin to segment manual from automated claims review processes to look for root causes of denials.


The OIG report provides important findings, case examples, and recommendations. CMS has concurred with OIG’s findings and has promised to clarify guidance around the use of MAO-developed clinical criteria in medical necessity determinations. The industry can expect to see further audit scrutiny as CMS Program Audits continue. The good news is that there are key things MAOs can do now to get ahead of this issue and be in a good position to receive the impending CMS guidance.

© Copyright 2022. The views expressed herein are those of the author(s) and not necessarily the views of Ankura Consulting Group, LLC., its management, its subsidiaries, its affiliates, or its other professionals. Ankura is not a law firm and cannot provide legal advice.


compliance, disputes, healthcare & life sciences, article, f-risk, mondaq

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