Golden Fleece Award

HHS Inspector General reports show MA plans are misusing prior authorization, a practice used to pre-approve expensive care before it is provided, at the expense of seniors. In one study, 18% of denied claims were for services that already met coverage rules or had been previously approved. The yearly cost of insurance paperwork to the U.S. economy totals $31 billion, a portion of which comes from prior authorization filings and appeals for improper denials. CMS could reduce that amount and save taxpayers' money by fixing its prior authorization oversight.

Rep. Hill said, "CMS failing to efficiently or appropriately use prior authorization is unacceptable. Medicare is one of our largest federal health care expenditures and increasingly strains our already difficult fiscal situation. Every dollar matters. So when the HHS IG finds that 18% of denied claims were improper, CMS deserves to be called out. Medicare exists to protect our seniors, and they are the ones who suffer most when the system fails. CMS needs to fix this now. Our seniors are counting on it."

In his letter to CMS Administrator Dr. Mehmet Oz, Rep. Hill writes:

Dear Administrator Oz,

I write today to inform you that the Centers for Medicare and Medicaid Services (CMS) is this month’s recipient of my Golden Fleece Award. I am awarding this to CMS because of its failure to properly oversee Medicare Advantage (MA) plans prior authorization practices.

CMS is responsible for ensuring federal health care programs, including Medicare, operate smoothly. This duty is made even more important as seniors are increasingly choosing to enroll in privately managed MA plans.  These plans can improve care coordination, reduce costs, and maintain or improve care.

MA plans often use prior authorization, the practice of pre-approving certain complicated or expensive care before services are provided, to contain costs and cut down on fraud and abuse. However, I am concerned that some MA plans are misusing prior authorization in a way that harms Medicare and our seniors.

Specifically, I am concerned about reports from the Department of Health and Human Services Inspector General (HHS OIG) showing that MA plans are failing to efficiently or appropriately use prior authorization. In one study, the HHS OIG found that 18% of denied claims were for services that met MA plan coverage rules or had already been approved through prior authorization. The report also identified multiple instances where MA plans claimed that records were lost, not properly linked, or software failed. I hope you agree with me that basic record-keeping failures should not be common, and that CMS has a duty to ensure plans prevent these kinds of issues.

Prior authorization failures can delay care for seniors and create unnecessary burdens for health care providers. This should not be tolerated when taxpayer dollars are funding the MA plans responsible. Estimates suggest that prior authorization abuse or errors consume physician time, lead to adverse outcomes, and can even reduce productivity due to missed work.

More importantly, the impact on patients is severe. According to studies, prior authorization can lead to worse health outcomes for children and adults, including for behavioral care like opioid use disorder and even cancer treatments.  In addition, delays, including time spent appealing denials, lead to worse health outcomes now and more expensive care later.

The economic cost of prior authorization is also striking. Research suggests that the yearly cost of insurance paperwork to physicians is $68,274, with a total cost to the U.S. economy of $31 billion. It is important to note that most of those costs fall on small, independent practices. Further, some portion of that $31 billion is spent on filing prior authorizations and appeals for improper denials.  That money could be spent on better, or more care, but instead is essentially wasted. This kind of failure, which demonstrably harms patients Medicare is designed to protect, can be avoided.

CMS must address the problem of inefficient or harmful prior authorization practices in Medicare. Should you require additional authority from Congress to conduct oversight of MA plans, I ask that you notify me. I look forward to working with you in the near future.

Sincerely,

French Hill
Member of Congress

CC: Inspector General March Bell, Department of Health and Human Services.