March 3, 2024

Health Insurance Denies Poor People Medical Care at High Rates, Report Says

Private health insurance companies that paid for Medicaid denied millions of applications for care to low-income Americans with little oversight from federal and state authorities, according to a new report by US investigators published Wednesday.

Medicaid, the federal-state health insurance program for the poor that covers almost 87 million people, contracts with companies to reimburse hospitals and doctors for treatment and to manage an individual’s medical care. About three-quarters of people enrolled in Medicaid get health services through private companies, which are usually paid a fixed amount per patient rather than for each procedure or visit.

The IS report at the US Department of Health and Human Services inspector general’s office details how often private insurance plans have refused to approve treatment and how states have dealt with the denials.

Doctors and hospitals have complained more about what they say is endless paperwork and unjustified denials of care by insurers when they fail to authorize expensive procedures or medications. The companies that require prior authorization for certain types of medical services say that these tools are aimed at unnecessary or unproven treatments, but doctors demand it often interferes with ensuring that patients get the services they need.

The investigators also raised concerns about the payment structure that provides lump sums per patient. They worried that it would encourage some insurers to maximize their profits by denying medical care and access to services for the poor.

The report emphasized the critical role that state and federal officials should play in ensuring that the denials were justified. “People of color and people of lower income are at increased risk of receiving low-quality health care and experiencing poor health outcomes, making access to care critical for the Medicaid population,” the investigators said.

The for-profit insurance companies, including Aetna, Elevance Health, Molina Healthcare and UnitedHealthcare, operated several Medicaid plans that denied medical care under prior authorization requests for services at rates that were higher than 25 percent in 2019, the report found. About 2.7 million people were enrolled in these plans at the time. Another 8.4 million were enrolled in plans with above-average denial rates of 15 to 25 percent.

Molina, based in Long Beach, California, operated seven plans with denial rates of more than 25 percent, according to the report. His Illinois plan denied 41 percent of requests.

Kristine Grow, a spokeswoman for AHIP, (formerly America’s Health Insurance Plans), an industry trade group, said in a statement that insurers are “accountable through extensive oversight” by the federal and state governments.

The companies named in the inspector general’s report did not immediately respond to requests for comment.

Doctors agree that Medicaid patients cannot wait for the insurer to approve the care, let alone reverse its decision. “You don’t always have the opportunity to see a patient, send in a prior authorization request and schedule them back in,” said Dr. Matthew Stinson, who works at Jordan Valley Community Health Center in Springfield, Mo., which sees a large number of Medicaid patients. “It’s an access problem.”

Some of the clinic’s patients will not care, he said. When an insurer refuses an ultrasound for a pregnant woman, the center may decide to do the test anyway because she cannot return. “We don’t necessarily get paid for that ultrasound,” said Dr. Stinson.

The concern about improper denials is not limited to Medicaid. Last year, the same investigators examined denials among private Medicare Advantage plans and found that some of the denied care may, in fact, have been medically necessary. Although the current report did not look at whether the Medicaid denials were valid, the investigators emphasized that insurers were much more aggressive in refusing to authorize care under Medicaid than under Medicare, the federal program for the elderly and disabled.

The companies denied one in eight applications in 2019, about twice the rate under Medicare Advantage, they said. Unlike Medicare, if an insurer refuses to authorize treatment, patients are not automatically given an outside medical opinion as part of their appeal. They are entitled to a state hearing.

“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,” the investigators said.

Patients also complain that it is difficult to get care under these plans. Bri Moss, 34, of Dubuque, Iowa, has been diagnosed with diabetes since she was 12, but has struggled to get her Medicaid plan to approve a new insulin pump recommended by her doctor to control her blood sugar.

“It could be a game changer for me,” said Ms. Moss, who initially told him his insurer wouldn’t cover him. Working with People’s Action, a national advocacy network, and a fellow organization, Iowa Citizens for Community Improvement, where she is a member, Ms. Moss eventually won an appeal to cover the device.

​​​​The investigators also found that state oversight of coverage denials was lacking. Many states do not routinely examine insurer denials and do not collect information on how many times a plan denies a prior authorization request. They do not ensure that people can get a second medical opinion if they want to appeal. The lack of review makes it challenging for federal and state officials to determine whether insurers are “keeping up with their promises to ensure medically necessary health care coverage,” according to the report.

“In the absence of federal requirements, we see these three tools being used inconsistently,” said Rosemary Bartholomew, who helped lead the team that developed the report.

The States are directly responsible for overseeing insurance providers covered by Medicaid. But investigators at the federal Centers for Medicare and Medicaid Services urged more oversight.

In the report, federal officials did not say whether they agreed with the investigators’ recommendations, and CMS said it planned to review the report’s findings to determine any next steps.

Denial rates recorded by the investigators varied widely by insurer and state. The investigators looked at 115 managed care organizations in 37 states operated by the seven multistate insurers with the highest Medicaid enrollment, representing about 30 million people in 2019. They requested information on denials from the insurers and surveyed the states about their oversight role.

Elevance, the nonprofit insurer formerly known as Anthem, had plans with denial rates ranging from 6 to 34 percent, while UnitedHealthcare had plans with rates ranging from 7 to 27 percent.

“While individual prior authorization denials may be appropriate, it is unclear why prior authorization denial rates were significantly higher than their peers,” said the investigators, at some MCOs, or managed care organizations.

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