Department of Health and Human Services 
Office of Inspector General 
High Rates of Prior 
Authorization Denials by 
Some Plans and Limited State 
Oversight Raise Concerns 
About Access to Care in 
Medicaid Managed Care 
 
Christi A. Grimm 
Inspector General 
July 2023, OEI-09-19-00350  Department of Health and Human Services 
 
Office of Inspector General 
Report in Brief 
July 2023, OEI-09-19-00350 
Why OIG Did This Review  High Rates of Prior Authorization Denials by 
As Medicaid managed care enrollment 
Some Plans and Limited State Oversight 
continues to grow, Medicaid managed 
care organizations (MCOs) play an  Raise Concerns About Access to Care in 
increasingly important role in ensuring 
Medicaid Managed Care 
that people with Medicaid have access 
to medically necessary, covered services.  
In recent years, allegations have  What OIG Found 
Key Takeaway 
surfaced that some MCOs  Overall, the MCOs included in our 
inappropriately delayed or denied care  Three factors raise concerns  review denied one out of every eight 
for thousands of people enrolled in  that some people enrolled in  requests for the prior authorization 
Medicaid, including patients who  Medicaid managed care may  of services in 2019.  Among the  
needed treatment for cancer and  not be receiving all medically  115 MCOs in our review, 12 had 
cardiac conditions, elderly patients, and  necessary health care services  prior authorization denial rates 
patients with disabilities who needed  intended to be covered: (1) the  greater than 25 percenttwice the 
in-home care and medical devices.   high number and rates of  overall rate.  Despite the high 
Ensuring access to appropriate care for  denied prior authorization  number of denials, most State 
people in Medicaid managed care is a  requests by some MCOs, (2)  Medicaid agencies reported that 
priority for OIG.  In addition, OIG  the limited oversight of prior  they did not routinely review the 
received a congressional request to  authorization denials in most  appropriateness of a sample of MCO 
evaluate whether MCOs are providing  States, and (3) the limited  denials of prior authorization 
medically necessary health care services  access to external medical  requests, and many did not collect 
to their enrollees.    reviews.  and monitor data on these 
decisions.  The absence of robust 
How OIG Did This Review 
oversight of MCO decisions on prior authorization requests presents a 
We identified and selected the seven  limitation that can allow inappropriate denials to go undetected in 
MCO parent companies with the largest  Medicaid managed care. 
number of people enrolled in 
Although the appeals process is intended to act as a potential remedy to 
comprehensive, risk-based MCOs across 
correct inappropriate denials, several factors may inhibit its usefulness for 
all States.  These 7 parent companies 
this purpose in Medicaid managed care.  Most State Medicaid agencies 
operated 115 MCOs in 37 States, which 
reported that they do not have a mechanism for patients and providers 
enrolled a total of 29.8 million people in 
to submit a prior authorization denial to an external medical reviewer 
2019.  We collected data from the 
independent of the MCO.  Although all State Medicaid agencies are 
selected parent companies about prior 
required to offer State fair hearings as an appeal option, these 
authorization denials and related 
administrative hearings may be difficult to navigate and burdensome on 
appeals for each MCO they operated.  
Medicaid patients.  We found that Medicaid enrollees appealed only a 
We also surveyed State Medicaid 
small portion of prior authorization denials to either their MCOs or to 
agency officials from the 37 States to 
State fair hearings. 
examine selected aspects of State 
oversight of MCO prior authorization  In contrast to State oversight of prior authorization denials in Medicaid 
denials and appeals, along with State  managed care, in Medicare managed care (called Medicare Advantage) 
processes for external medical reviews  CMSs oversight of denials by private health plans is more robust.  For 
and State fair hearings.    example, each year CMS reviews the appropriateness of a sample of prior 
authorization denials and requires health plans to report standardized 
   
data on denials and appeals.  Further, Medicare Advantage enrollees 
have access to automatic, external medical reviews of denials that plans 
uphold at the first level of appeal.  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. 
What OIG Recommends 
More action is needed to improve enrollee protections and State 
oversight of prior authorization denials in Medicaid managed care to 
help ensure that enrollees have access to all medically necessary and 
covered services.  Therefore, we recommend that CMS:  
(1) require States to review the appropriateness of a sample of MCO prior 
authorization denials regularly, (2) require States to collect data on MCO 
prior authorization decisions, (3) issue guidance to States on the use of 
MCO prior authorization data for oversight, (4) require States to 
implement automatic external medical reviews of upheld MCO prior 
authorization denials, and (5) work with States on actions to identify and 
address MCOs that may be issuing inappropriate prior authorization 
denials. 
In its response, CMS did not indicate whether it concurred with the first 
four recommendations; CMS concurred with the fifth recommendation.   
   
   
TABLE OF CONTENTS 
 
 
BACKGROUND ................................................................................................................................................ 1 
FINDINGS ......................................................................................................................................................... 7 
Overall, MCOs denied one in eight requests for the prior authorization of services, and some  
MCOs had much higher denial rates ................................................................................................................................. 7 
Most State Medicaid agencies oversight of MCO prior authorization denials was limited ........................ 9 
The absence of external medical reviews in many States, as well as other limitations, may  
inhibit the Medicaid managed care appeals process from remedying inappropriate prior  
authorization denials ............................................................................................................................................................. 11 
CONCLUSION AND RECOMMENDATIONS ........................................................................................... 17 
Require States to review the appropriateness of a sample of MCO prior authorization denials  
regularly ...................................................................................................................................................................................... 18 
Require States to collect data on MCO prior authorization decisions ............................................................... 18 
Issue guidance to States on the use of MCO prior authorization data for oversight ................................... 18 
Require States to implement automatic external medical reviews of upheld MCO prior  
authorization denials ............................................................................................................................................................. 19 
Work with States on actions to identify and address MCOs that may be issuing inappropriate  
prior authorization denials .................................................................................................................................................. 19 
AGENCY COMMENTS AND OIG RESPONSE ......................................................................................... 21 
DETAILED METHODOLOGY ...................................................................................................................... 23 
APPENDICES .................................................................................................................................................. 27 
Appendix A: Characteristics of MCO Parent Companies Included in This Study, 2019 ................................ 27 
Appendix B: Characteristics of MCOs Included in This Study, 2019 .................................................................... 28 
Appendix C: Numbers and Rates of Denials, Appeals, and  Reviews for the MCOs Included in  
This Study, 2019....................................................................................................................................................................... 34 
Appendix D: Characteristics of States Included in This Study ................................................................................ 37 
Appendix E: Agency Comments ........................................................................................................................................ 39 
ACKNOWLEDGMENTS AND CONTACT ................................................................................................ 45 
Acknowledgments .................................................................................................................................................................. 45 
Contact ........................................................................................................................................................................................ 45 
   
 
ABOUT THE OFFICE OF INSPECTOR GENERAL .................................................................................... 46 
ENDNOTES  .................................................................................................................................................. 47 
   
BACKGROUND 
OBJECTIVES 
1.  To determine the extent to which selected Medicaid managed care 
organizations (MCOs) denied requests for the prior authorization of services, 
and the extent to which those denials were upheld or overturned on appeal. 
2.  To examine selected aspects of State oversight of MCOs denial and appeals 
processes. 
3.  To examine appeal processes for Medicaid managed care, including the 
extent to which States offered external medical reviews as an option. 
 
Under Medicaid managed care, States contract with insurance companies (referred to 
in this report as parent companies) to deliver all or a portion of covered services to 
people enrolled in Medicaid through MCO health plans.1  State Medicaid agencies 
(States) pay a set amount per person enrolled in the MCO, and MCOs are expected to 
provide coverage for efficient, high-quality care while also managing program costs.  
MCOs make decisions each year about whether to approve millions of requests for 
coverage of specific services for individual enrollees according to medical necessity 
and relevant coverage requirements (this process is referred to as prior 
authorization).  Federal regulations stipulate that MCOs may not arbitrarily deny or 
reduce a required service because of a patients diagnosis, type of illness, or 
condition.2  In capitated payment models, such as the model used in Medicaid 
managed care, insurance companies receive a fixed amount of money per enrollee 
regardless of the number of services provided to the enrollee.3   
Thus, a concern about capitated payment models is the potential incentive for 
insurers to inappropriately deny access to covered services and payments to increase 
profits.  For example, media reports have detailed concerning allegations that MCOs 
in several States inappropriately delayed or denied care for thousands of people 
enrolled in Medicaid, including patients who needed treatment for cancer and cardiac 
difficulties, elderly patients, and patients with disabilities who needed in-home care 
and medical devices.4  These allegations were particularly concerning because many 
Medicaid managed care enrollees are people of color (50 percent of enrollees)5 and 
have low incomes.6  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.7   
 
   
 
High Rates of Prior Authorization Denials by Some Plans and Limited State Oversight Raise Concerns  
About Access to Care in Medicaid Managed Care 
OEI-09-19-00350   Background | 1    
In response to the allegations, the Office of Inspector General (OIG) received a 
congressional request to examine whether MCOs meet their obligations to serve 
people enrolled in Medicaid.  
Similar program incentives exist in the capitated payment model used in Medicare 
Advantage (Medicares managed care program), which makes the Centers for 
Medicare & Medicaid Services (CMSs) oversight of Medicare Advantage a useful 
comparison to State oversight of Medicaid managed care.8  As such, this evaluation 
includes an examination of the extent to which three key tools from the Medicare 
Advantage program were used in Medicaid managed care: (1) appropriateness 
reviews of health plan denials of care, (2) denials data collection and monitoring, and 
(3) external medical necessity reviews. 
Background 
As of May 2022, approximately 82 million people were enrolled in Medicaida 
52-percent increase compared to enrollment in June 2012.9  Approximately 72 percent 
of Medicaid enrollees received their health care coverage through comprehensive, 
risk-based MCOs in July 2020.10, 11  Medicaid paid MCOs approximately $377 billion in 
fiscal year 2021more than half of total Medicaid spending for the year.12, 13   
MCO Prior Authorization Decisions and Appeals 
Under Federal regulations, States must allow MCOs to use prior authorization for 
certain items, services, and prescription drugs before a health care provider delivers 
the requested care.14  Prior authorization can be used to manage costs by denying 
services that the MCO judges to be inappropriate or not medically necessary.  
However, Federal regulations stipulate that prior authorization may not be used to 
arbitrarily restrict access to medically necessary services covered by the MCOs 
contract.  That is, States must ensure that MCOs cover services in at least the same 
amount, duration, and scope that would be covered under Medicaid 
Fee-for-Service.15  In December 2022, CMS proposed a rule (which had not been 
finalized as of June 2023) that would implement an electronic prior authorization 
process, shorten the time frames for MCOs to process prior authorization requests, 
and establish policies to make the prior authorization process more efficient and 
transparent.16 
As shown in exhibit 1 on page 3, the process for prior authorization requests, MCO 
decisions, and appeals involves several potential steps.17   
Prior Authorization Requests.  When a provider requests prior authorization for a 
service, the MCO decides whether to approve, partially approve, or deny the 
request.18   
 
High Rates of Prior Authorization Denials by Some Plans and Limited State Oversight Raise Concerns  
About Access to Care in Medicaid Managed Care 
OEI-09-19-00350   Background | 2    
Appeals.  Enrollees or providers who disagree with the MCOs decision have a right to 
appeal to the MCO for reconsideration.19  Enrollees who exhaust the MCO appeals 
process have the right to request a State fair hearing.20, 21  Beyond these required 
processes, States have the option to add a process for external medical review by an 
independent third party of prior authorization denials that are upheld by MCOs upon 
appeal. 
Exhibit 1: Federally required steps for the Medicaid managed care prior 
authorization request, decision, and appeals process  
 
Source: OIG analysis of the Medicaid managed care prior authorization denials and appeals process, 2023. 
State Oversight of Denials and Appeals in Medicaid Managed 
Care 
Each State must establish procedures for monitoring the operations and performance 
of its MCOs.  For example, as part of this monitoring, States are required to collect 
and review data on appeals to MCOs and State fair hearings, and report it to CMS 
annually.22, 23  States also contract with an independent organization (known as an 
external quality review organization) to conduct an annual review of each MCO.24  
These reviews include, among other things, an assessment of whether MCOs are 
meeting timeliness requirements for prior authorization decisions and an evaluation 
of notices to enrollees about MCO decisions.25  States may also conduct additional 
 
High Rates of Prior Authorization Denials by Some Plans and Limited State Oversight Raise Concerns  
About Access to Care in Medicaid Managed Care 
OEI-09-19-00350   Background | 3    
oversight activities at their discretion, such as routinely monitoring prior authorization 
denials data and reviewing individual denial cases for appropriateness. 
Prior OIG Work 
OIG issued three reports between 2018 and 2022 related to denials of care in 
managed care programs.  Some of the Medicare Advantage and Medicaid managed 
care plans analyzed for prior reports were owned by the same parent companies 
examined in this report.   
In a 2018 report on Medicare Advantage, OIG found that, when enrollees and 
providers appealed denied requests between 2014 and 2016, Medicare Advantage 
plans overturned about 75 percent of their own prior authorization and payment 
denials.26  This suggests that at least some of these denials could have been avoided, 
given that ultimately the plans agreed to authorize the services and make the 
payments.  OIG also found that CMS cited more than half of audited Medicare 
Advantage contracts in 2015 for inappropriately denying prior authorization and 
payment requests. 
In a 2022 report on Medicare Advantage, OIG physician reviewers found that, among 
the prior authorization requests that Medicare Advantage plans denied, 13 percent 
met Medicare coverage rules.27  In other words, these services likely would have been 
approved if the patients had been enrolled in Medicare Fee-for-Service rather than in 
Medicare Advantage.  Denying requests that meet Medicare coverage rules may 
prevent or delay enrollees from receiving medically necessary care and can burden 
providers.   
In a 2022 report on Medicaid managed care, OIG found that an MCO in Pennsylvania 
sometimes inappropriately denied overnight care for pediatric skilled nursing service 
requests.28  In addition, OIG found that the denial notice template provided by 
Pennsylvanias Medicaid agency did not inform enrollees of their right to request a 
State fair hearing after exhausting the MCOs appeal process, which is a Federal 
requirement.  Denying care that should be approved can put the health of enrollees at 
risk, and not informing them of their full appeal options means that they may not 
have the information needed to mount a successful appeal. 
Methodology 
MCO Parent Company and State Selection   
We selected seven parent companies with at least one million people enrolled in 
comprehensive, risk-based MCOs in 2019 across any States in which the parent 
company operated.29  These 7 parent companies operated 115 MCOs with at least 
10,000 enrollees (see Appendix A).  The 115 MCOs were located in 37 States and 
covered 29.8 million people, representing approximately 57 percent of the total 
enrollment in comprehensive, risk-based MCOs in the States included in the review. 
 
High Rates of Prior Authorization Denials by Some Plans and Limited State Oversight Raise Concerns  
About Access to Care in Medicaid Managed Care 
OEI-09-19-00350   Background | 4    
Determining the Numbers and Rates of MCO Denials, Appeals, and Appeal 
Outcomes 
We collected MCO-level data on denials, appeals, and appeal outcomes for 2019 from 
the seven selected parent companies.  Using the MCO-level data for the 115 MCOs, 
we calculated the number and rates at which: (1) MCOs denied prior authorization 
requests in 2019 (see Appendix B), (2) enrollees or their providers appealed those 
denials, and (3) MCOs upheld those denials upon appeal (see Appendix C).  We also 
examined the extent to which MCOs reported that enrollees in their plans requested 
external medical reviews (where available) and State fair hearings, along with the 
outcomes of those reviews. 
Examining State Oversight of Medicaid Managed Care Denials and Appeals   
We surveyed State Medicaid officials from all 37 States in which at least 1 MCO from 
the selected parent companies operated.  We analyzed the State survey and followup 
responses to determine the extent to which State Medicaid agencies regularly 
reviewed a sample of MCO denials for clinical appropriateness.  We also determined 
how many State Medicaid agencies collected data on MCO denials of prior 
authorization requests and used it for oversight (see Appendix D).  Additionally, we 
gathered information about the results of State oversight activities, including annual 
reviews by independent entities, and examined the extent to which States reported 
identifying instances of MCOs inappropriately denying prior authorization requests or 
found other administrative problems with MCO prior authorization and/or appeals 
processes from 2017 to 2019.   
Finally, we determined the number of States that offered external medical reviews as 
an option for enrollees when MCOs upheld prior authorization denials that were 
appealed.   
For added context, we compared requirements for State oversight of denials in 
Medicaid managed care to CMSs oversight of denials in the Medicare Advantage 
program, and we compared relevant denial and appeal outcome rates between the 
two programs.   
See the Detailed Methodology on page 23 for further information. 
Limitations 
We did not independently verify the survey responses from State Medicaid agencies 
or the self-reported data from MCO parent companies.  However, we did review the 
data for inconsistencies, discrepancies, or missing data and, where appropriate, 
followed up with parent companies and States to clarify their responses. 
 
High Rates of Prior Authorization Denials by Some Plans and Limited State Oversight Raise Concerns  
About Access to Care in Medicaid Managed Care 
OEI-09-19-00350   Background | 5    
Standards 
We conducted this study in accordance with the Quality Standards for Inspection and 
Evaluation issued by the Council of the Inspectors General on Integrity and 
Efficiency.30 
 
High Rates of Prior Authorization Denials by Some Plans and Limited State Oversight Raise Concerns  
About Access to Care in Medicaid Managed Care 
OEI-09-19-00350   Background | 6    
FINDINGS 
Overall, MCOs denied one in eight requests for the prior 
authorization of services, and some MCOs had much higher 
denial rates 
Overall, the MCOs included in our review fully or partially denied approximately  
2.2 million requests for the prior authorization of services in 2019, which is 1 out of 
every 8 requests (12.5 percent).  By comparison, the overall denial rate for prior 
authorization requests was much lower in Medicare Advantage.  Medicare Advantage 
health care plans denied only 5.7 percent of prior authorization requests in 2019.   
Some MCOs had very high rates of prior authorization denials.  Among the 115 MCOs 
in our review, 12 had prior authorization denial rates greater than 25 percenttwice 
the overall rate (see Appendix B for a list of MCOs and their prior authorization denial 
rates in 2019).  Exhibit 2 shows the distribution of people enrolled in the 115 MCOs in 
our review by prior authorization denial rate, including the number of people enrolled 
in MCOs with denial rates greater than 25 percent.  Although any individual prior 
authorization denial may be appropriate, it is unclear why some MCOs had rates of 
prior authorization denials that were so much higher than their peers. 
Exhibit 2: In 2019, approximately 2.7 million people were enrolled in MCOs with 
prior authorization denial rates greater than 25 percent 
Source: OIG analysis of 2019 MCO prior authorization denial data and enrollment data, 2023. 
 
High Rates of Prior Authorization Denials by Some Plans and Limited State Oversight Raise Concerns  
About Access to Care in Medicaid Managed Care   
OEI-09-19-00350   Findings | 7    
 
We examined MCO denial rates to determine whether there were differences 
associated with two factors: the State in which the MCO was operating and the MCOs 
parent company.  We found that within States, MCOs often had very different denial 
rates, implying that State oversight and program characteristics alone did not drive 
the differences in rates.  For example, California, Georgia, and Michigan each had at 
least one MCO with a prior authorization denial rate less than 10 percent and at least 
one MCO with a denial rate greater than 25 percent.31   
However, we found that one of the seven parent companies we examined had a high 
concentration of MCOs with high prior authorization denial rates.  Seven of Molina 
Healthcare Inc.s 12 MCOs had prior authorization denial rates greater than 
25 percent; these 7 MCOs had more than 1.2 million enrollees.  Molina also denied a 
relatively high proportion of prior authorization requests in Medicare Advantage in 
2019the plans that it operated denied 19.5 percent of prior authorization requests, 
more than three times the overall denial rate of 5.7 percent in Medicare Advantage 
that year.  As shown in Exhibit 3, Anthem Inc., Aetna Inc., and UnitedHealthcare also 
each operated at least one MCO with a prior authorization denial rate greater than 
25 percent.  Although data analysis alone is not sufficient to determine the reasons for 
denial rate variation among MCOs or parent companies, high denial rates may 
indicate differences in policies or performance.  The wide variation in denial rates 
emphasizes the need for targeted State oversight of prior authorization denials to 
ensure that enrollees are not being inappropriately denied care.   
Exhibit 3: In 2019, the seven parent companies operated MCOs with a wide range of denial 
rates, from as low as 2 percent to as high as 41 percent 
Lowest  Highest 
Overall   Number of  Number of 
Parent company  MCO   MCO  
denial rate  MCOs  MCOs >25% 
denial rate  denial rate 
Aetna Inc.  5%  29%  12.1%  14  1 
AmeriHealth Caritas  2%  20%  6.1%  11   
Anthem Inc.  6%  34%  12.9%  19  3 
CareSource  8%  16%  15.4%  3   
Centene Corporation  3%  23%  12.2%  33   
Molina Healthcare Inc.  7%  41%  17.7%  12  7 
UnitedHealthcare  7%  27%  13.6%  23  1 
Source: OIG analysis of 2019 MCO parent company prior authorization denial data and operations data, 2023. 
 
High Rates of Prior Authorization Denials by Some Plans and Limited State Oversight Raise Concerns  
About Access to Care in Medicaid Managed Care   
OEI-09-19-00350   Findings | 8    
Most State Medicaid agencies oversight of MCO prior 
authorization denials was limited  
Most States did not use two key toolsappropriateness reviews for a sample of 
denials, and monitoring MCO denial datafor the monitoring and oversight of prior 
authorization denials.  In contrast, in Medicare Advantage, CMS has implemented 
both tools in its oversight.  CMS reviews the appropriateness of a sample of prior 
authorization denials in Medicare Advantage each year as part of its program audits 
and collects denials and appeals data for each Medicare Advantage plan every year.  
States that do not use these tools may not have the means to detect instances of 
inappropriate denials that can delay or deny needed health care to Medicaid 
enrollees.   
Only one-third of States reported regularly reviewing the 
appropriateness of samples of MCO prior authorization denials  
Although Federal rules do not require that States review a sample of MCO denials for 
The audit found the  clinical appropriateness, 13 of 37 States reported conducting such reviews regularly 
[MCO] denied prior  (see Appendix D).  States conducted these reviews through a variety of oversight 
authorizations for 
mechanisms, such as State audits and reviews by their external quality review 
medically necessary 
organizations.  Among States that did check a sample of denials for appropriateness, 
services.  Unqualified 
several found that MCOs sometimes inappropriately denied prior authorization 
individuals made a 
requests between 2017 and 2019.  For example, States found inappropriate denials for 
final denial 
medically necessary drug therapy, health screening services for children, and inpatient 
determination 
hospital services.  This demonstrates that regular reviews of denial appropriateness 
without ... Medical 
can give States opportunities to address MCOs that are denying medically necessary, 
Director review. 
covered services to patients.   
 
- State Official  Most States (22) reported that they did not conduct denial appropriateness reviews 
on a regular basis, although some conducted such reviews on an ad hoc basis.  
Among the 22 States, 13 did not conduct any appropriateness reviews, and 9 reported 
that, although they do not conduct such reviews on a regular basis, they sometimes 
review prior authorization denials in response to specific disputes, provider 
complaints, or identified problems that may necessitate such a review.  Two States did 
not respond to requests about whether their oversight included the use of 
appropriateness reviews (see exhibit 4 on page 10).   
 
High Rates of Prior Authorization Denials by Some Plans and Limited State Oversight Raise Concerns  
About Access to Care in Medicaid Managed Care   
OEI-09-19-00350   Findings | 9    
Exhibit 4: Only 13 States regularly conducted appropriateness reviews of 
prior authorization denials 
Source: OIG analysis of surveys of State Medicaid officials, 2023. 
Across all 37 States that we surveyed, some identified systemic problems with certain 
MCO prior authorization processes that could lead to inappropriate denials.  These 
problems included MCOs allowing inappropriate staff or inadequately trained staff to 
make decisions about whether to approve prior authorization requests, using 
incorrect criteria to determine whether to approve requests, and failure to request 
additional information before issuing decisions.  Problems with MCO prior 
authorization practices are especially concerning if State oversight does not review 
denials for appropriateness. 
Fifty-nine percent of States reported collecting and monitoring 
data on MCO prior authorization denials  
Although CMS does not require States to collect data on MCO denials, 22 of the  
37 States (59 percent) that we surveyed reported collecting MCO denials data and 
using it as part of their oversight (see Appendix D).  For example, some States 
reported monitoring:   
  Denials by service type.  Some States collected service-type data for all denials, 
The data is compiled,  while other States focused on selected service types of concern for monitoring, 
analyzed, and  such as behavioral health, home health, and/or pharmacy services.   
trended monthly, 
  Denials by enrollee category.  Some States monitored denials for people who may 
which allows the 
be particularly at risk of adverse consequences if their care is disrupted by denied 
Agency to track and 
compare plan denials  benefits, such as those receiving behavioral health care or long-term services and 
and intervene as  supports.   
necessary.    Broader trends and rates.  Some States reported using denials data for broader 
 
oversight activities, including analyzing trends, assessing the timeliness of MCO 
- State Official 
decisions, and monitoring rates of MCO denial overturns.  States could then 
investigate any outliers and take appropriate action.   
The 15 States that reported that they did not conduct any of these oversight efforts 
may not have been aware of MCOs that were outliers in their State.  For example, 7 of 
these 15 States had at least 1 MCO with a prior authorization denial rate greater than 
 
High Rates of Prior Authorization Denials by Some Plans and Limited State Oversight Raise Concerns  
About Access to Care in Medicaid Managed Care   
OEI-09-19-00350   Findings | 10    
25 percent (see exhibit 5).  Most of these seven States also did not regularly review 
the appropriateness of samples of MCO prior authorization denials.   
Exhibit 5: Seven States that did not use denials data for oversight may have 
been unaware that some MCOs in their States had high denial rates 
State regularly 
MCO 
Highest MCO   State used denials data  reviewed a sample 
parent 
denial rate  for oversight  of denials for 
company 
appropriateness 
Georgia  34%  No response 
 
Michigan  32%  Ad hoc review 
 
California  29%     
Mississippi  27% 
   
New Jersey  27% 
   
Virginia  26% 
   
Wisconsin  25% 
   
 
Source: OIG analysis of 2019 MCO prior authorization denial data data, 2023; OIG analysis of surveys of State Medicaid 
officials, 2023. 
The absence of external medical reviews in many States, as well 
as other limitations, may inhibit the Medicaid managed care 
appeals process from remedying inappropriate prior 
authorization denials 
Given the high number of prior authorization denials and limited State oversight in 
Medicaid managed care, a robust system for enrollees to appeal denials could act as 
an important safeguard to help ensure that patients receive needed services.  
However, as shown in exhibit 6 on page 12, Medicaid managed care has fewer appeal 
levels than Medicare Advantage.  In both programs, the first step for enrollees who 
are not satisfied with a denial of a prior authorization request is to appeal to the 
managed care plan itself for reconsideration.  In Medicare Advantage, if the health 
plan upholds its original denial, the case is automatically forwarded to the 
Independent Review Entity.32  If the Independent Review Entity overturns the denial, 
the managed care plan must authorize the needed care for the patient.  If the 
Independent Review Entity upholds the denial, two additional levels of appeal are 
available to the enrollee.  In contrast, there is no automatic external medical review of 
 
High Rates of Prior Authorization Denials by Some Plans and Limited State Oversight Raise Concerns  
About Access to Care in Medicaid Managed Care   
OEI-09-19-00350   Findings | 11    
upheld denials in Medicaid managed care at any level, and patients are guaranteed 
access to only one level of appeal outside the MCO (a State fair hearing).   
Exhibit 6: People enrolled in Medicaid managed care are guaranteed access 
to only two levels of appeal, compared to four levels of appeal guaranteed 
in Medicare Advantage 
 
 
Note: MAO stands for Medicare Advantage Organization, which is an insurance company that offers health plans for 
Medicare enrollees.  In Medicare Advantage, denials upheld by the Medicare Appeals Council can be challenged in 
Federal District Court.  In Medicaid managed care, some States allow people to request a rehearing or judicial review 
of State fair hearing decisions. 
Source: OIG analysis of the Medicaid managed care and Medicare Advantage appeals processes, 2023. 
The automatic nature of the independent review step in Medicare Advantage may 
create a sentinel effect that ensures due diligence by health plans at the first level of 
appeal.  Medicare Advantage organizations fully or partially overturned 82 percent of 
appealed denials in favor of enrollees in 2019.33  By comparison, MCOs overturned 
only 36 percent of appealed denials (see Appendix C for a breakout of fully and 
partially overturned prior authorization denials).  This suggests that the presence of 
automatic, independent review could be incentivizing Medicare Advantage 
organizations to closely scrutinize their denials at the first level of appeal.  This extra 
scrutiny may be one reason that the Medicare Advantage Independent Review Entity 
only needed to overturn 9 percent of denials that were automatically forwarded to the 
second level of appeal.34 
 
High Rates of Prior Authorization Denials by Some Plans and Limited State Oversight Raise Concerns  
About Access to Care in Medicaid Managed Care   
OEI-09-19-00350   Findings | 12    
Only 14 of the 37 States in our review offered an external medical 
review option in Medicaid managed care  
Although not required by Federal regulations, 14 of the States in our review offered 
external medical reviews as an option for Medicaid managed care enrollees  
in 2019.35, 36  In these States, external medical reviews allowed enrollees to submit a 
prior authorization denial that their MCO upheld upon appeal to an entity 
independent of the State and MCO.  According to States, external medical reviews are 
conducted by medical professionals who have expertise related to the denied service.   
States that offered external medical reviews reported benefits from these reviews, 
[External medical  including improving the prior authorization decision process and providing an 
review] offers  independent check on MCO decisions.  For example, one State reported that external 
another level of  medical reviews improved MCOs' decision-making processes by allowing the State to 
review and  address MCO clinical criteria that often resulted in overturns.  States also reported 
determination on a  that, because State fair hearing officers are not medical professionals, external 
case to ensure  medical reviews aided the State fair hearing process by providing an independent 
fairness and that ...  clinical assessment.  Further, States reported that external medical reviews provided 
program policies are  an independent mechanism to check MCO denials for care that should have been 
being applied fairly  approved.   
and correctly. 
  Among prior authorization denials that were submitted to external medical reviews, 
- State Official  independent reviewers fully or partially overturned 46 percent in favor of the enrollee 
(see Appendix C).  In other words, in nearly half of cases submitted to external 
medical reviewers, these independent reviewers enabled enrollees to receive 
authorization for necessary medical care that initially had been denied by their MCOs.   
Although external medical reviews have the potential to protect enrollees from 
inappropriate denials, the review process was not used often.  Among the MCOs that 
operated in the 14 States that offered external medical reviews, only 5 percent of 
upheld denials were appealed to external medical review.  The limited use of external 
medical reviews, even where available, raises concerns that either enrollees or their 
providers may have been unaware of this option or unsure of how to navigate the 
process. 
As shown in exhibit 7 on page 14, 23 States (covering 22.9 million people) reported 
that they did not offer external medical reviews as an option when MCOs upheld prior 
authorization denials at the first level of appeal in 2019.37  Among these 23 States,  
1 reported being in the process of implementing external medical reviews, and  
3 reported actively considering adding external medical reviews.  The most common 
reasons that States cited for not offering external medical reviews were resource 
limitations and a belief that the existing MCO appeals process was adequate.  
 
High Rates of Prior Authorization Denials by Some Plans and Limited State Oversight Raise Concerns  
About Access to Care in Medicaid Managed Care   
OEI-09-19-00350   Findings | 13    
Exhibit 7: Most States with comprehensive, risk-based MCOs in 2019 did not 
offer external medical reviews 
Source: OIG analysis of surveys of State Medicaid officials and analysis of Kaiser Family Foundation, Medicaid 
Enrollment in Managed Care by Plan Type for 2019, 2023.38   
When enrollees appealed, MCOs usually upheld their own 
denials, and enrollees rarely escalated those appeals to State fair 
hearings 
Overall, enrollees appealed 11 percent of MCO prior authorization denials.39  For  
64 percent of these appealed denials, MCOs fully upheld their original denial decision, 
meaning that patients: (1) did not receive the care requested by their health care 
providers, (2) paid for the service out of pocket, or (3) elevated their appeals.  For the 
remaining appealed prior authorization denials (36 percent), the MCOs fully or 
partially reversed the original denial, indicating that the MCO agreed with enrollees 
and health care providers that the requested services were medically necessary and 
should be covered.   
 
High Rates of Prior Authorization Denials by Some Plans and Limited State Oversight Raise Concerns  
About Access to Care in Medicaid Managed Care   
OEI-09-19-00350   Findings | 14    
Further, enrollees rarely appealed upheld denials to State fair hearings.  For all States, 
including the 23 States that did not offer external medical reviews, people enrolled in 
Medicaid managed care have the right to appeal denials to a State fair hearing, as 
required by Federal regulations.  Of the prior authorization denials in our review that 
MCOs upheld, only 2 percent were appealed to a State fair hearing in 2019.  The low 
rate of State fair hearing requests raises concerns about the potential burden for 
enrollees (see exhibit 8).  However, when State fair hearings occurred, they fully or 
partially overturned 38 percent of prior authorization denials in favor of the patient 
(see Appendix C).   
 
Exhibit 8: State fair hearings involve multiple steps that may be too burdensome 
for some enrollees 
 
State fair hearings are a level of appeal in which a hearing officer, such as an 
Administrative Law Judge, reviews an MCOs decision to reduce or deny health care 
services. 
To appeal an MCOs upheld denial to a State fair hearing, enrollees or their 
providers must: 
-  know about the option for a State fair hearing; 
-  submit a request within a required timeframe after the MCOs appeal 
decision;  
-  cooperate with any State-required prehearing dispute processes, such as 
mediation or prehearing conferences; 
-  compile records and evidence to support their appeal; 
-  present their case to a hearing officer; and 
-  wait up to 90 days from the day of their request to receive a decision. 
State fair hearings do not occur automatically; rather, they must be requested. 
State fair hearings do not have to involve review by an independent medical 
expert.  
Source: OIG analysis of State fair hearing process and requirements, 2023. 
State oversight identified problems with the timeliness of MCO 
decisions and notices to enrollees 
Among the 37 States that we surveyed, 30 reported finding administrative problems 
with MCO prior authorization decisions and/or appeals processes from 2017 to 2019.  
Frequently identified problems were related to MCOs not meeting required 
timeframes for initial prior authorization decisions and appeal decisions, and 
problems with the content of notices to enrollees about these decisions.   
States found that some MCOs were not meeting their States required timeframes for 
making prior authorization decisions and informing enrollees about the outcomes of 
 
High Rates of Prior Authorization Denials by Some Plans and Limited State Oversight Raise Concerns  
About Access to Care in Medicaid Managed Care   
OEI-09-19-00350   Findings | 15    
those decisions.  For example, one MCO allowed itself 24 hours to review requests for 
post-emergency hospital admissions instead of 30 minutes, as required.  Another 
MCOs expedited appeal resolution did not meet the 72-hour required timeframe 
and there was no evidence the MCO made reasonable effort to provide oral notice of 
resolution.  This MCO also failed to meet the States required 14-calendar-day 
timeframe for standard appeals.  When MCOs do not make timely decisions, it may 
delay enrollees from initiating the appeal or external review process, and ultimately 
may cause harmful delays in needed care.40   
[Appeal resolution  State oversight efforts also identified several types of problems with the content of 
notices] were not 
some MCO prior authorization and appeal decision notices.  States reported finding 
clear and concise, 
notices that were not written in clear, easy-to-understand language and notices that 
contained 
were missing key information, such as the reason for a denial or how to appeal.  In 
inaccuracies, and 
other cases, MCO appeal decision notices did not include correct information about 
did not explain why 
the enrollees right to appeal to a State fair hearing, including one State that found its 
a case did not meet 
MCOs did not provide the deadline to request a hearing.   
medical necessity. 
 
When MCOs fail to issue clear information about how and when to request an appeal 
- State Official 
or a State fair hearing, people enrolled in Medicaid managed care and their providers 
may miss the opportunity to exercise their right to additional review of their case.  
Although denial notices are not the only way enrollees may be made aware of their 
right to appeal, insufficient notices to enrollees and health care providers may be one 
reason why appeals of prior authorization denials were relatively low among the 
selected MCOs (11 percent).41   
 
High Rates of Prior Authorization Denials by Some Plans and Limited State Oversight Raise Concerns  
About Access to Care in Medicaid Managed Care   
OEI-09-19-00350   Findings | 16    
CONCLUSION AND RECOMMENDATIONS 
As Medicaid managed care enrollment continues to grow, MCOs play an increasingly 
critical role in ensuring that people with Medicaid have access to high-quality health 
care.  In 2020, approximately 58.5 million people relied on Medicaid MCOs to meet 
their health care needs.  MCOs are expected to ensure access to needed care, 
implement critical program controls, and avoid unnecessary costs.  However, 
capitated payment models, such as the model used in Medicaid managed care, can 
create an incentive for insurance companies to deny the authorization of services to 
increase profits.   
Despite the risk of inappropriate prior authorization denials in Medicaid managed 
care, States are not required to conduct targeted oversight of denials.  CMS does not 
require States to review the appropriateness of a sample of denials or to collect and 
monitor data from MCOs about the extent to which they deny requests for health care 
services, even though CMS uses these oversight tools in Medicare Advantage.  The 
lack of targeted oversight is concerning because of the high number of prior 
authorization denials in the program overall and the high denial rates among some 
MCOs.  Further, unlike in Medicare Advantage, most States do not guarantee 
Medicaid enrollees access to external medical reviews.   
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.  Medicaid managed care enrollees are more likely than 
Medicare Advantage enrollees to be people of color (50 percent versus 32 percent)42 
and are more likely to have lower incomes.43  Other research has shown that people of 
color and people with lower incomes are at increased risk of receiving low-quality 
health care and experiencing poor health outcomes.44  This makes oversight efforts 
and enrollee protections particularly critical for the Medicaid population. 
Given these findings, more action is needed to improve the oversight of denials in 
Medicaid managed care and to ensure that enrollees have access to all medically 
necessary and covered services.  While CMS works toward long-term programmatic 
improvements, it should also take more immediate action to work with States to 
address the concerns raised in this report.  
 
High Rates of Prior Authorization Denials by Some Plans and Limited State Oversight Raise Concerns  
About Access to Care in Medicaid Managed Care 
OEI-09-19-00350   Conclusion and Recommendations | 17    
Therefore, we recommend that CMS:   
Require States to review the appropriateness of a sample of 
MCO prior authorization denials regularly   
CMS should require States to review the appropriateness of a sample of MCO prior 
authorization denials regularly through some mechanism, such as internal audits by 
the State or reviews by their external quality review organizations.  CMS also should 
provide guidance to States on how to conduct these reviews.  For example, 
appropriateness reviews should include reviewing both whether the request met 
Medicaid coverage and administrative rules, and whether the request met the 
applicable medical necessity criteria.  
In developing its requirements and guidance, CMS could gather information from 
States that already use this oversight tool to identify key elements that enable their 
reviews.  CMS could also refer to the current Medicare Advantage audit process that 
examines denial appropriateness.  Such reviews have been effective in identifying 
inappropriately denied prior authorization requests in both programs and can help 
States and MCOs to identify and correct the underlying causes of inappropriate 
denials. 
Require States to collect data on MCO prior authorization 
decisions
 
CMS should require States to collect prior authorization data from MCOs on an 
annual basis in accordance with CMS guidance.  CMS should require States to collect, 
at a minimum, the number of prior authorization decisions that each MCO issued that 
were favorable, partially adverse, and adverse to the enrollee.  Such data would 
support more effective State oversight of MCOs.  CMS has already taken some 
important steps toward this goal.  In December 2022, CMS proposed a rule that would 
require MCOs to publicly report data on prior authorizations, including the 
percentage of prior authorization requests that were denied and the percentage of 
denied requests that were overturned upon appeal.45 
Issue guidance to States on the use of MCO prior authorization 
data for oversight 
Once CMS implements the recommendation to require States to collect prior 
authorization data, CMS should issue guidance to States on how to use prior 
authorization denials and appeals data for oversight of MCOs.  Although Federal 
regulations already contain a broad requirement that States must use data collected 
from its monitoring activities to improve the performance of its managed care 
 
High Rates of Prior Authorization Denials by Some Plans and Limited State Oversight Raise Concerns  
About Access to Care in Medicaid Managed Care 
OEI-09-19-00350   Conclusion and Recommendations | 18    
program,46 prior authorization processes are such a critical component of enrollee 
access to care that CMS should issue specific guidance on the use of prior 
authorization denials and appeals data for State oversight.  
CMSs guidance could include, for example: (1) how to analyze the data to look for 
trends that may indicate performance issues, such as abrupt increases in denials or 
changes in appeal outcomes; (2) potential focused oversight steps States can take if 
they identify concerning data trends, such as targeted audits; and (3) appropriate 
corrective actions States can consider if their focused oversight confirms performance 
problems.   
Require States to implement automatic external medical reviews 
of upheld MCO prior authorization denials 
As described previously, appeal avenues for people enrolled in Medicaid managed 
care vary by State, and enrollees in most States do not have access to external 
medical reviews.  CMS should require all States to implement automatic external 
medical reviews of MCO prior authorization denials that are upheld by MCOs at the 
first level of appeal.  These reviews should not be part of the MCO appeal or State fair 
hearing processes, but rather should be a separate, independent process.  The reviews 
should be conducted by a clinician with expertise related to the enrollees case, and 
the reviewers decision to approve or deny the request should be binding on the MCO 
(but should not preclude an enrollee from requesting a State fair hearing).  Even 
where available, we found that enrollees rarely used the optional external medical 
review process.  Implementing external medical reviews as an automatic process 
could help ensure that enrollees are not inappropriately denied access to medically 
necessary care.  This change would also further align the appeals processes in 
Medicaid managed care and Medicare Advantage, which was a stated goal in CMSs 
2016 Medicaid and CHIP Managed Care Final Rule.47  According to CMS, aligning the 
appeal processes in the two programs would reduce confusion for enrollees who are 
transitioning between Medicare Advantage and Medicaid managed care, and would 
allow health insurers to adopt more consistent protocols across product lines.  In 
considering how to implement this recommendation, CMS could gather information 
from States that have already implemented an external medical review process to 
identify best practices and lessons learned. 
Work with States on actions to identify and address MCOs that 
may be issuing inappropriate prior authorization denials  
While it is working toward implementing the program-level recommendations listed 
previously, CMS should also take more immediate action to work with States to 
identify and address MCOs that may be issuing inappropriate prior authorization 
denials.  To do this, CMS and States could use our analysis of 2019 data, which OIG 
will provide, as a starting point and combine it with more recent data.  For example, 
 
High Rates of Prior Authorization Denials by Some Plans and Limited State Oversight Raise Concerns  
About Access to Care in Medicaid Managed Care 
OEI-09-19-00350   Conclusion and Recommendations | 19    
for States that already collect data on MCO prior authorization denials, CMS could 
work with those States to analyze the data and identify MCOs with high denial rates.  
CMS could also work with States to identify other data sources (such as grievances, 
complaints, and audit findings) that could indicate problems with MCO denials.  After 
analyzing data to identify MCOs that warrant follow up, CMS should encourage States 
to perform targeted oversight of these MCOs (such as through audits or desk reviews) 
and determine whether technical assistance or corrective action is warranted.
 
High Rates of Prior Authorization Denials by Some Plans and Limited State Oversight Raise Concerns  
About Access to Care in Medicaid Managed Care 
OEI-09-19-00350   Conclusion and Recommendations | 20    
AGENCY COMMENTS AND OIG RESPONSE  
 
In its response, CMS did not indicate whether it concurred with the first four 
recommendations; CMS concurred with the fifth recommendation.  CMS also stated 
that it is committed to partnering with States to strengthen the monitoring and 
oversight of Medicaid managed care programs.  As CMS considers the reports 
findings and develops it Final Management Decision, OIG encourages CMS to indicate 
whether it concurs with each recommendation and to detail the actions it will take to 
address them.   
CMS did not indicate whether it concurred with the recommendation to require States 
to review the appropriateness of a sample of MCO prior authorization denials 
regularly.  CMS stated that it will consider additional information to determine 
whether it agrees that there is a need to require such reviews and noted that 
regulatory rulemaking likely would be needed to implement the recommendation.  
Appropriateness reviews are integral to CMSs oversight of managed care companies 
in Medicare Advantage; yet, despite high prior authorization denial rates in Medicaid 
managed care, many State Medicaid agencies do not use such reviews for oversight 
of MCOs.  Absent regular appropriateness reviews, States and CMS do not have 
adequate visibility into whether MCOs are living up to their commitments to ensure 
coverage of medically necessary health care.  In its Final Management Decision, CMS 
should detail the steps it will take to ensure that all MCOs are held accountable by 
States through this important oversight mechanism.   
CMS did not indicate whether it concurred with the recommendation to require States 
to collect data on MCO prior authorization decisions.  CMS stated that its December 
2022 proposed rule, if finalized, would require MCOs to publicly report some prior 
authorization data, such as the percentage of requests that were approved and 
denied.  OIG agrees that the proposed rule appears to identify relevant data elements 
regarding prior authorization decisions.  However, although public reporting would 
improve transparency of MCO decisions, the proposed rule does not require that 
State Medicaid agencies collect this data.  In its Final Management Decision, CMS 
should detail the steps it will take to require State Medicaid agencies to collect the 
new publicly reported data to support more effective State oversight of MCOs.   
CMS did not indicate whether it concurred with the recommendation for CMS to issue 
guidance to States on the use of prior authorization data for oversight.  However, 
CMS stated that it will consider issuing such guidance if its December 2022 proposed 
rule is finalized.  In its Final Management Decision, CMS should detail the steps it will 
take to provide guidance to States regarding the use of prior authorization data for 
oversight.   
 
High Rates of Prior Authorization Denials by Some Plans and Limited State Oversight Raise Concerns  
About Access to Care in Medicaid Managed Care 
OEI-09-19-00350   Agency Comments and OIG Response | 21    
 
CMS did not indicate whether it concurred with the recommendation to require States 
to implement automatic external medical reviews of upheld MCO prior authorization 
denials.  CMS stated that it will consider additional information to determine whether 
it agrees that there is a need to require automatic external medical reviews and noted 
that regulatory rulemaking would likely be needed to implement the 
recommendation.  Automatic review of prior authorization denials by Independent 
Review Entities is an integral level of appeal for Medicare Advantage enrollees; yet, 
despite high prior authorization denial rates in Medicaid managed care, some State 
Medicaid agencies do not offer external medical reviews.  Absent external reviews, 
MCO enrollees and their health care providers do not have the opportunity to have 
medical experts, independent of the MCO and State, assess the appropriateness of 
MCO decisions to uphold denials.  In its Final Management Decision, CMS should 
detail the steps it will take to ensure that Medicaid enrollees in all States benefit from 
this important level of review.   
CMS concurred with the recommendation to work with States to identify and address 
MCOs that may be issuing inappropriate prior authorization denials.  CMS stated that 
it will issue guidance and provide technical assistance to States on ways in which prior 
authorization data could be used for oversight by States.  OIG looks forward to details 
from CMS in its Final Management Decision about its plans to supplement its existing 
efforts with guidance and technical assistance specific to the oversight of MCO prior 
authorization denials.   
For the full text of CMSs comments, see Appendix E. 
 
 
 
 
High Rates of Prior Authorization Denials by Some Plans and Limited State Oversight Raise Concerns  
About Access to Care in Medicaid Managed Care 
OEI-09-19-00350   Agency Comments and OIG Response | 22    
DETAILED METHODOLOGY 
MCO Parent Company and State Selection 
We identified and selected the largest MCO parent companies by summing their 
enrollment across all the MCOs that they operated in any State.  We selected the 
seven parent companies with at least one million people enrolled in comprehensive, 
risk-based MCOs in 2019.  These 7 parent companies operated 115 MCOs with at 
least 10,000 enrollees (see Appendix A).  The 115 MCOs were located in 37 States and 
covered 29.8 million people, representing approximately 57 percent of the total 
enrollment of comprehensive, risk-based MCOs in the States in our review.   
Determining the Numbers and Rates of MCO Denials, Appeals, 
and Appeal Outcomes 
Data Collection 
We collected MCO-level data on denials, appeals, and appeal outcomes from the 
seven selected parent companies for 2019.  For each of the 115 MCOs that the parent 
companies operated, we received: (1) enrollment numbers for March and September 
2019; (2) the number of prior authorization decisions issued in 2019; (3) the number of 
requests that were denied, partially denied, or approved; (4) the number of appeals to 
the MCO, requests for external medical review, and State fair hearings that were 
adjudicated in 2019; and (5) the outcomes of those appeals and reviews (denials 
upheld, partially overturned, or fully overturned).  In total, MCOs reported 17.4 million 
prior authorization requests in 2019.  Where appropriate, we followed up with parent 
companies to confirm and/or provide context about submitted data.   
Analysis 
Prior Authorization Denials.  Using the MCO-level data, we calculated the number and 
rate at which MCOs denied prior authorization requests in 2019 (see Appendices B 
and C).  First, we summed all prior authorization denials (adverse or partially adverse 
decisions) issued across the 115 selected MCOs.  To calculate the overall prior 
authorization denial rate, we divided the total number of denials by the total number 
of prior authorization decisions that MCOs issued in 2019.48  We also calculated prior 
authorization denial rates by MCO to examine the distribution of rates across MCOs 
and to identify MCOs with particularly high rates.  Finally, we examined whether MCO 
denial rates varied according to State or parent company (i.e., whether high or low 
MCO denial rates seemed to cluster among certain States or parent companies) and 
how many MCOs with denial rates greater than 25 percent operated in States that did 
not use denial appropriateness reviews or monitoring of denials data as part of their 
oversight.   
 
High Rates of Prior Authorization Denials by Some Plans and Limited State Oversight Raise Concerns  
About Access to Care in Medicaid Managed Care 
OEI-09-19-00350   Detailed Methodology | 23    
Prior Authorization Appeals.  Using the MCO-level data that the selected parent 
companies reported, we calculated the numbers and rates of prior authorization 
appeals and the rates at which appeals were successful (i.e., the denial was fully or 
partially overturned in favor of the enrollee) or unsuccessful (i.e., the denial was 
upheld) in 2019 (see Appendix C).   
  To calculate the total number of external medical reviews, we summed the 
number of external medical review decisions issued for enrollees in all selected 
MCOs.  To calculate the appeal rate to external medical review, we divided the 
total number of reviews by the total number of upheld prior authorization 
denials issued in States with an external medical review option.  We also 
calculated the rate at which external medical review decisions were favorable 
to the enrollee (i.e., the MCOs denial was fully or partially overturned).  
  To calculate the total number of State fair hearings, we summed the number 
of State fair hearing decisions issued for enrollees in all selected MCOs.  To 
calculate the appeal rate to State fair hearings, we divided the total number of 
hearings by the total number of upheld prior authorization denials issued by 
all MCOs.  We also calculated the rate at which State fair hearing decisions 
were favorable to the enrollee (i.e., the MCOs denial was fully or partially 
overturned). 
  To calculate the total number of appeals to MCOs, we summed the number of 
MCO appeal decisions issued across all selected MCOs that were able to 
provide reliable appeals data.49  To calculate the appeal rate to MCOs, we 
divided the total number of appeals by the total number of denials (adverse or 
partially adverse decisions) issued across all MCOs.  To calculate the denial 
uphold rate at the first level of appeal, we summed the total number of fully 
adverse appeal decisions and divided by the total number of appeal decisions 
issued across all MCOs. 
Comparison of Medicaid Managed Care Denial and Appeal Rates to Medicare 
Advantage 
For added context, we compared the overall Medicaid managed care prior 
authorization denial rate and overall MCO appeal uphold rate to the corresponding 
rates in the Medicare Advantage program in 2019.  To calculate the Medicare 
Advantage rates, we used data from CMS available at: 
https://www.cms.gov/Medicare/Health-
Plans/HealthPlansGenInfo/ReportingRequirements. 
Examining State Oversight of Medicaid Managed Care Denials 
and Appeals 
To examine State oversight of MCO prior authorization denials and appeals processes, 
we surveyed State Medicaid officials from all 37 States in which at least 1 MCO from 
 
High Rates of Prior Authorization Denials by Some Plans and Limited State Oversight Raise Concerns  
About Access to Care in Medicaid Managed Care 
OEI-09-19-00350   Detailed Methodology | 24    
our selected parent companies operated.  We received initial responses from all  
37 States.  We then followed up by email to determine the extent to which State 
Medicaid agencies conducted reviews of denials for appropriateness.  We received 
responses to our followup questions from 35 States.  Where appropriate, we followed 
up with State officials for clarification about any survey responses that were 
incomplete or needed further context for our analysis.   
Denial Appropriateness Reviews 
We analyzed the State survey responses and followup email responses to determine 
the extent to which State Medicaid agencies regularly reviewed a sample of MCO 
denials for clinical appropriateness (see Appendix D).  We conducted qualitative 
analysis to code State responses into one of three categories: (1) the State reported 
conducting such reviews on a regular basis; (2) the State reported it sometimes 
conducted such reviews in response to specific problems or complaints, but not on a 
regular basis; or (3) the State reported that it did not conduct such reviews.  We also 
identified the number of States that reported identifying instances of MCOs 
inappropriately denying prior authorization requests as a part of their oversight from 
2017 to 2019.  
Denials Data Collection and Analysis 
We analyzed the State survey responses to determine how many State Medicaid 
agencies collected data on MCO denials of prior authorization requests and used it for 
oversight (see Appendix D).  For those States that did collect the data, we examined 
how they used it for oversight and identified the most common types of analysis that 
States performed (e.g., analyzing the data by service type, enrollee category, and/or 
looking at broader trends and rates in the data). 
State-Identified Problems With MCO Appeals Processes 
We analyzed the State survey responses to identify common administrative problems 
that States reported finding with MCO prior authorization and/or appeals processes 
from 2017 to 2019 through any oversight mechanism (including through their external 
quality review organization or direct State oversight).50  We reviewed their responses 
to identify the most common types of problems that States identified. 
Comparison of Oversight Requirements in Medicaid Managed Care to Medicare 
Advantage 
For added context, we compared requirements for State oversight of denials in 
Medicaid managed care to CMSs oversight of denials in the Medicare Advantage 
program.  To do this comparison, we reviewed CMSs requirements for Medicare 
Advantage Organizations to report annual performance data, including data on 
denials and appeals,51 and information about the annual program audits that CMS 
conducts of Medicare Advantage Organizations.52 
 
High Rates of Prior Authorization Denials by Some Plans and Limited State Oversight Raise Concerns  
About Access to Care in Medicaid Managed Care 
OEI-09-19-00350   Detailed Methodology | 25    
Examining State Requirements for External Medical Reviews 
We analyzed the State survey responses to determine the number of States that 
reported offering external medical reviews as an option for enrollees when MCOs 
upheld prior authorization denials at the first level of appeal (see Appendix D).  We 
also identified States that reported being in the process of implementing external 
medical reviews and States that reported considering adding such reviews.  We 
reviewed and identified the key benefits that States reported from having external 
medical reviews and the reasons that States reported for not offering such reviews.  
Finally, we compared the appeals processes available to people enrolled in Medicaid 
managed care to the processes available to people enrolled in Medicare Advantage. 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
High Rates of Prior Authorization Denials by Some Plans and Limited State Oversight Raise Concerns  
About Access to Care in Medicaid Managed Care 
OEI-09-19-00350   Detailed Methodology | 26    
APPENDICES 
Appendix A: Characteristics of MCO Parent Companies Included 
in This Study, 2019 
Number of States in 
which the parent   
MCO parent company  Enrollment  MCOs  company operated  
 
Aetna Inc.  1,766,252  14  13 
 
AmeriHealth Caritas  1,827,402  11  7 
 
  Anthem Inc.  6,119,212  19  18 
  CareSource  1,535,600  3  3 
  Centene Corporation  10,844,182  33  27 
  Molina Healthcare Inc.  2,459,253  12  12 
  UnitedHealthcare  5,279,616  23  23 
 
Total  29.8 million  115  37* 
 
Source: OIG analysis of 2019 parent company enrollment and operations data, 2023. 
 
  *Note: Column sums to more than 37 States because multiple parent companies often operate in a single State. 
 
 
 
 
High Rates of Prior Authorization Denials by Some Plans and Limited State Oversight Raise Concerns  
About Access to Care in Medicaid Managed Care 
OEI-09-19-00350   Appendix A | 27    
Appendix B: Characteristics of MCOs Included in This Study, 
2019 
 
2019 prior 
Parent  2019 average 
MCO name  State  authorization 
company   enrollment 
denial Rate 
Aetna  Mercy Care Plan  AZ  412,479  10.9% 
Aetna  Aetna Better Health of California  CA  16,388  29.4% 
Aetna  Aetna Better Health of Florida  FL  85,411  10.1% 
Aetna  Aetna Better Health of Kansas  KS  91,839  4.7% 
Aetna  Aetna Better Health of Kentucky  KY  215,353  17.9% 
Aetna  Aetna Better Health of Louisiana  LA  127,995  13.3% 
Aetna  Aetna Better Health of Maryland  MD  23,290  17.7% 
Aetna  Aetna Better Health of Michigan  MI  38,141  20.0% 
Aetna  Aetna Better Health of New Jersey  NJ  60,716  13.7% 
Aetna  Aetna Better Health of Pennsylvania  PA  198,217  14.6% 
Aetna  Aetna Better Health of Texas  TX  75,617  10.0% 
Aetna  Parkland Community Health Plan, Inc.  TX  154,219  6.4% 
Aetna  Aetna Better Health of Virginia  VA  139,229  8.7% 
Aetna  Aetna Better Health of West Virginia  WV  127,361  13.7% 
AmeriHealth  AmeriHealth Caritas District of 
DC  124,022  20.0% 
Caritas  Columbia 
AmeriHealth  AmeriHealth Caritas Delaware - 
DE  58,785  13.5% 
Caritas  Diamond State Health Plan 
AmeriHealth 
Prestige Health Choice  FL  77,182  10.4% 
Caritas 
AmeriHealth  9.1% 
AmeriHealth Caritas of Louisiana  LA  213,540 
Caritas   
   
High Rates of Prior Authorization Denials by Some Plans and Limited State Oversight Raise Concerns  
About Access to Care in Medicaid Managed Care   
OEI-09-19-00350     Appendix B | 28    
2019 prior 
Parent  2019 average 
MCO name  State  authorization 
company   enrollment 
denial Rate 
AmeriHealth 
Blue Cross Complete of Michigan  MI  207,979  16.0% 
Caritas 
AmeriHealth 
AmeriHealth Caritas Northeast  PA  90,114  11.9% 
Caritas 
AmeriHealth 
AmeriHealth Caritas Pennsylvania  PA  190,740  11.1% 
Caritas 
AmeriHealth  AmeriHealth Caritas Pennsylvania 
PA  15,102  1.9% 
Caritas  Community HealthChoices 
AmeriHealth  Keystone First Community 
PA  74,043  2.2% 
Caritas  HealthChoices 
AmeriHealth 
Keystone First Health Plan  PA  420,761  8.7% 
Caritas 
AmeriHealth  First Choice by Select Health of South 
SC  348,280  6.3% 
Caritas  Carolina 
Anthem  Blue Cross of California & Delegates  CA  1,194,381  7.8% 
Anthem  Amerigroup District of Columbia, Inc.   DC  42,994  14.1% 
Anthem  Simply HealthCare Plans, Inc.  FL  457,851  10.5% 
AMGP Georgia Managed Care 
Anthem  GA  381,831  33.7% 
Company, Inc. 
Anthem  Amerigroup Iowa, Inc.  IA  266,142  6.2% 
Anthem  Anthem Insurance Companies, Inc.  IN  453,865  12.7% 
Anthem Kentucky Managed Care 
Anthem  KY  133,859  11.7% 
Plan, Inc.  
Community Care Health Plan of 
Anthem  LA  258,971  12.5% 
Louisiana, Inc.  
Anthem  Amerigroup Maryland, Inc.  MD  233,424  26.8% 
Anthem  Amerigroup New Jersey, Inc.  NJ  175,998  9.8% 
Community Care Health Plan of 
Anthem  NV  176,122  13.1% 
Nevada, Inc. 
Anthem  HealthPlus HP, LLC  NY  383,975  6.1% 
Anthem  AMERIGROUP Tennessee, Inc.  TN  407,131  7.0% 
 
High Rates of Prior Authorization Denials by Some Plans and Limited State Oversight Raise Concerns  
About Access to Care in Medicaid Managed Care 
OEI-09-19-00350   Appendix B | 29    
2019 prior 
Parent  2019 average 
MCO name  State  authorization 
company   enrollment 
denial Rate 
Anthem  Amerigroup Insurance Company  TX  150,159  14.6% 
Anthem  AMERIGROUP Texas, Inc.  TX  593,798  17.0% 
Anthem  HealthKeepers, Inc.  VA  384,282  25.6% 
Anthem  AMERIGROUP Washington, Inc.  WA  185,714  14.0% 
Compcare Health Services Insurance 
Anthem  WI  93,798  11.0% 
Corporation 
Unicare Health Plan of West Virginia, 
Anthem  WV  144,924  17.0% 
Inc. 
CareSource  CareSource  GA  237,254  8.4% 
CareSource  CareSource  IN  90,020  14.9% 
CareSource  CareSource  OH  1,208,326  16.3% 
Centene  Arkansas Total Care  AR  10,974  5.9% 
Centene  Care 1st Health Plan of Arizona, Inc.  AZ  175,427  10.2% 
Health Net Access, Inc dba Arizona 
Centene  AZ  238,014  16.2% 
Complete Health 
Centene  California Health & Wellness  CA  196,107  19.4% 
Centene  Health Net Community Solutions, Inc.  CA  1,737,879  18.6% 
Centene  Sunshine State Health Plan  FL  533,398  13.6% 
Centene  Wellcare of Florida, Inc.  FL  764,156  9.3% 
Centene  Peach State Health Plan  GA  327,263  14.7% 
Centene  WellCare of Georgia, Inc.  GA  438,074  16.8% 
Centene  Ohana Health Plan, Inc.  HI  40,105  6.7% 
Centene  Iowa Total Care  IA  120,029  2.9% 
 
High Rates of Prior Authorization Denials by Some Plans and Limited State Oversight Raise Concerns  
About Access to Care in Medicaid Managed Care 
OEI-09-19-00350   Appendix B | 30    
2019 prior 
Parent  2019 average 
MCO name  State  authorization 
company   enrollment 
denial Rate 
Centene  Meridian Health Plan of Illinois, Inc.  IL  795,186  15.1% 
Coordinated Care Corporation d/b/a 
Centene  IN  233,061  13.9% 
Managed Health Services 
Centene  Sunflower State Health Plan, Inc  KS  123,112  6.1% 
WellCare Health Insurance Company 
Centene  KY  263,958  15.7% 
of Kentucky, Inc 
Louisiana Healthcare Connections, 
Centene  LA  475,752  9.1% 
Inc. 
Centene  Meridian Health Plan of Michigan, Inc  MI  490,380  9.3% 
Centene  Home State Health Plan, Inc  MO  204,882  8.5% 
Centene  Magnolia Health Plan, Inc.  MS  202,191  13.2% 
Centene  Nebraska Total Care, Inc  NE  72,330  9.4% 
Granite State Health Plan dba New 
Centene  NH  81,029  11.2% 
Hampshire Healthy Families 
Centene  WellCare of New Jersey, Inc.  NJ  68,346  23.2% 
Centene  Western Sky Community Care, Inc  NM  59,463  14.8% 
Centene  SilverSummit Healthplan, Inc  NV  40,502  19.6% 
New York Quality Healthcare 
Centene  NY  1,269,740  9.5% 
Corporation d/b/a Fidelis 
Centene  WellCare of New York, Inc.  NY  146,525  16.0% 
Centene  Buckeye Community Health Plan  OH  328,841  20.4% 
Centene  Trillium Community Health Plan, Inc  OR  90,847  11.2% 
Centene  Absolute Total Care  SC  121,618  11.8% 
Centene  WellCare of South Carolina, Inc.  SC  81,518  15.4% 
Centene  Superior HealthPlan, Inc.  TX  838,407  13.0% 
 
High Rates of Prior Authorization Denials by Some Plans and Limited State Oversight Raise Concerns  
About Access to Care in Medicaid Managed Care 
OEI-09-19-00350   Appendix B | 31    
2019 prior 
Parent  2019 average 
MCO name  State  authorization 
company   enrollment 
denial Rate 
Centene  Coordinated Care of Washington, Inc  WA  195,863  8.4% 
Managed Health Services Insurance 
Centene  WI  79,214  13.3% 
Corp 
Molina  Molina Healthcare of California Inc.   CA  422,873  7.3% 
Molina  Molina Healthcare of Florida Inc.   FL  95,207  16.6% 
Molina  Molina Healthcare of Illinois Inc.   IL  212,446  41.4% 
Molina  Molina Healthcare of Michigan Inc.   MI  336,185  32.1% 
Molina  Molina Healthcare of Mississippi Inc.   MS  57,313  27.4% 
Molina  Molina Healthcare of New York Inc.   NY  29,449  19.5% 
Molina  Molina Healthcare of Ohio Inc.   OH  277,250  28.5% 
Molina Healthcare of South Carolina 
Molina  SC  126,186  32.5% 
Inc.  
Molina  Molina Healthcare of Texas Inc.    TX  178,509  34.2% 
Molina  Molina Healthcare of Utah Inc.   UT  56,162  24.6% 
Molina  Molina Healthcare of Washington Inc.   WA  609,920  19.3% 
Molina  Molina Healthcare of Wisconsin Inc.    WI  57,757  25.1% 
United 
UHC Community Plan of AZ  AZ  393,463  14.3% 
Healthcare 
United 
Rocky Mountain Health Plan  CO  36,436  7.1% 
Healthcare 
United 
UHC Community Plan of FL  FL  238,926  21.9% 
Healthcare 
United 
UHC Community Plan of HI  HI  47,677  11.8% 
Healthcare 
United 
UHC Community Plan of IA  IA  190,490  9.5% 
Healthcare 
United 
UHC Community Plan of KS  KS  125,283  8.2% 
Healthcare 
 
High Rates of Prior Authorization Denials by Some Plans and Limited State Oversight Raise Concerns  
About Access to Care in Medicaid Managed Care 
OEI-09-19-00350   Appendix B | 32    
2019 prior 
Parent  2019 average 
MCO name  State  authorization 
company   enrollment 
denial Rate 
United 
UHC Community Plan of LA  LA  440,891  8.4% 
Healthcare 
United 
UHC Community Plan of MD  MD  145,875  12.7% 
Healthcare 
United 
UHC Community Plan of MI  MI  248,892  10.7% 
Healthcare 
United 
UHC Community Plan of MO  MO  148,021  13.9% 
Healthcare 
United 
UHC Community Plan of MS  MS  173,565  12.2% 
Healthcare 
United 
UHC Community Plan of NE  NE  69,600  10.8% 
Healthcare 
United 
UHC Community Plan of NJ  NJ  428,820  27.0% 
Healthcare 
United 
Health Plan of Nevada Medicaid  NV  232,066  9.6% 
Healthcare 
United 
UHC Community Plan of NY  NY  562,832  9.3% 
Healthcare 
United 
UHC Community Plan of OH  OH  304,969  17.1% 
Healthcare 
United 
UHC Community Plan of PA  PA  220,342  17.0% 
Healthcare 
United 
UHC Community Plan of RI  RI  87,488  13.9% 
Healthcare 
United 
UHC Community Plan of TN  TN  421,131  8.8% 
Healthcare 
United 
UHC Community Plan of TX  TX  296,898  10.9% 
Healthcare 
United 
UHC Community Plan of VA  VA  117,388  11.8% 
Healthcare 
United 
UHC Community Plan of WA  WA  175,153  11.5% 
Healthcare 
United 
UHC Community Plan of WI  WI  165,930  12.5% 
Healthcare 
 
 
 
 
High Rates of Prior Authorization Denials by Some Plans and Limited State Oversight Raise Concerns  
About Access to Care in Medicaid Managed Care 
OEI-09-19-00350   Appendix B | 33    
Appendix C: Numbers and Rates of Denials, Appeals, and  
Reviews for the MCOs Included in This Study, 2019 
Prior authorization requests and outcomes  N=115 MCOs 
Total number of prior authorization requests  17,400,540 
Number of fully adverse prior authorization  1,628,648 
decisions  
Number of partially adverse prior authorization  541,797 
decisions 
Number of fully favorable prior authorization  15,230,095 
decisions 
Overall prior authorization denial rate  12.5% 
(fully adverse + partially adverse prior authorization decisions / fully     
adverse + partially adverse + fully favorable prior authorization 
decisions) 
Prior authorization appeal and review rates     
Rate of prior authorization appeals to MCOs  N=103* MCOs  11.2% 
(total number of MCO prior authorization appeal decisions / number 
fully adverse + partially adverse prior authorization decisions) 
Rate of prior authorization requests for external  N=41** MCOs  4.9% 
medical reviews 
(total number of external medical review decisions / number of fully 
adverse + partially adverse MCO appeal decisions) 
Rate of prior authorization requests for State  N=103* MCOs  2.1% 
fair hearings 
(total number of State fair hearing decisions / number of fully adverse 
+ partially adverse MCO appeal decisions) 
* We were unable to include appeals data from one parent company (12 MCOs) in our analysis of appeal rates and MCO appeal 
outcomes because the parent company was unable to report the number of unique appeal cases to their MCOs.   
** Calculation of the appeal rate to external medical reviews includes only MCOs that were able to report complete appeals data 
and that operated in States where external medical reviews were offered as an option.  
 
 
 
 
   
 
High Rates of Prior Authorization Denials by Some Plans and Limited State Oversight Raise Concerns  
About Access to Care in Medicaid Managed Care 
OEI-09-19-00350   Appendix C | 34    
Prior authorization appeals to MCOs  N=103* MCOs 
Total number of prior authorization appeals  229,520 
Number of prior authorization denials upheld   147,428 
(fully adverse appeal decisions)  
Number of prior authorization denials partially  4,487 
overturned 
(partially adverse appeal decisions) 
Number of prior authorization denials fully  77,605 
overturned 
(fully favorable appeal decisions) 
Rate of denials fully or partially overturned by  35.8% 
MCOs 
(fully overturned + partially overturned appeal decisions / total 
number of appeal decisions) 
Rate of prior authorization denials upheld by    64.2% 
MCOs 
(fully adverse appeal decisions/ fully adverse + partially adverse + fully 
favorable appeal decisions) 
* We were unable to include appeals data from one parent company (12 MCOs) in our analysis of appeal rates and MCO appeal 
outcomes because the parent company was unable to report the number of unique appeal cases to their MCOs.   
 
Outcomes of external medical reviews of prior 
authorization denials  N=49* MCOs 
Total number of external medical review requests  3,645 
Number of denials upheld by external medical reviewers   1,958 
Number of denials partially overturned by external medical  176 
reviewers 
Number of denials fully overturned by external medical  1,511 
reviewers 
Rate of denials fully or partially overturned by external  46.3% 
medical review 
(fully overturned + partially overturned external medical review decisions / total 
number of external medical review decisions) 
*Includes only MCOs that operated in States that offered external medical review as an option. 
 
 
High Rates of Prior Authorization Denials by Some Plans and Limited State Oversight Raise Concerns  
About Access to Care in Medicaid Managed Care 
OEI-09-19-00350   Appendix C | 35    
Outcomes of State fair hearings of prior authorization 
denials  N=115 MCOs 
Total number of State fair hearing requests  3,547 
Number of prior authorization denials upheld by State fair  2,189 
hearings  
Number of prior authorization denials partially overturned by  76 
State fair hearings 
Number of prior authorization denials fully overturned by  1,282 
State fair hearings 
Rate of denials fully or partially overturned by State fair  38.3% 
hearings 
(fully overturned + partially overturned State fair hearing decisions / total number of 
State fair hearing decisions) 
 
Source: OIG analysis of 2019 MCO prior authorization and appeals data, 2023. 
 
 
 
 
High Rates of Prior Authorization Denials by Some Plans and Limited State Oversight Raise Concerns  
About Access to Care in Medicaid Managed Care 
OEI-09-19-00350   Appendix C | 36    
Appendix D: Characteristics of States Included in This Study 
Percentage of 
State regularly  State  States Medicaid 
reviewed prior  used  State offered  People  managed care 
authorization  denials  external  enrolled in  enrollees 
denials for  data for  medical  MCOs  MCOs in study  covered by 
State  appropriateness  oversight  reviews  in study  (2019)  MCOs in study 
AR  Ad hoc        1  10,974  24% 
AZ         4  1,219,382  77% 
CA         5  3,567,627  34% 
CO          1  36,436  31% 
DC  Ad hoc        2  167,016  86% 
DE  Ad hoc       1  58,785  29% 
FL         7  2,252,129  76% 
GA  No response        4  1,384,422  98% 
HI         2  87,782  27% 
IA          3  576,661  96% 
IL         2  1,007,632  47% 
IN  Ad hoc      3  776,945  72% 
KS  Ad hoc       3  340,233  100% 
KY  Ad hoc      3  613,169  50% 
LA  No response      5  1,517,149  100% 
MD         3  402,588  34% 
MI  Ad hoc       5  1,321,576  54% 
MO          2  352,902  59% 
MS          3  433,068  99% 
NE          2  141,930  57% 
 
High Rates of Prior Authorization Denials by Some Plans and Limited State Oversight Raise Concerns  
About Access to Care in Medicaid Managed Care 
OEI-09-19-00350   Appendix D | 37    
Percentage of 
State regularly  State  States Medicaid 
reviewed prior  used  State offered  People  managed care 
authorization  denials  external  enrolled in  enrollees 
denials for  data for  medical  MCOs  MCOs in study  covered by 
State  appropriateness  oversight  reviews  in study  (2019)  MCOs in study 
NH          1  81,029  47% 
NJ          4  733,879  49% 
NM          1  59,463  9% 
NV          3  448,689  90% 
NY         5  2,392,520  54% 
OH         4  2,119,385  89% 
OR         1  90,847  10% 
PA         7  1,209,317  50% 
RI  Ad hoc      1  87,488  34% 
SC         4  677,601  85% 
TN          2  828,262  58% 
TX         7  2,287,604  64% 
UT          1  56,162  26% 
VA           3  640,898  50% 
WA        4  1,166,649  77% 
WI          4  396,699  52% 
WV  Ad hoc      2  272,285  70% 
Regular - 13 
Total  22  14  115  29,817,183  57% 
Ad hoc - 9 
Source: OIG analysis of 2019 MCO enrollment data, 2019 State enrollment data, and survey responses from State officials, 2023.
 
High Rates of Prior Authorization Denials by Some Plans and Limited State Oversight Raise Concerns  
About Access to Care in Medicaid Managed Care 
OEI-09-19-00350   Appendix D | 38   Appendix E: Agency Comments 
Following this page are the official comments from CMS. 
High Rates of Prior Authorization Denials by Some Plans and Limited State Oversight Raise Concerns 
About Access to Care in Medicaid Managed Care 
OEI-09-19-00350   Appendix E | 39  DATE:  May 02, 2023 
TO:   Juliet T. Hodgkins 
Principal Deputy Inspector General 
FROM:  Chiquita Brooks-LaSure 
Administrator 
Centers for Medicare & Medicaid Services 
SUBJECT:  Office of Inspector General (OIG) Draft Report: CMS Should Strengthen State Oversight 
Requirements and Expand Enrollee Appeal Options for Prior Authorization Denials in 
Medicaid Managed Care (OEI-09-19-00350) 
The Centers for Medicare & Medicaid Services (CMS) appreciates the opportunity to review and 
comment on the Office of Inspector Generals (OIG) draft report. CMS is committed to partnering with 
states to help strengthen the monitoring and oversight of Medicaid managed care programs. 
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. CMS 
has taken a number of steps to support states, including developing a series of technical assistance tools 
and toolkits that states are encouraged to use to improve the monitoring and oversight of their managed 
care programs. For example, CMS has created a Managed Long-Term Services and Supports Access 
Monitoring Toolkit,1 Behavioral Health Provider Network Adequacy Toolkit,2 Managed Care Quality 
Strategy Toolkit,3 and a toolkit for Ensuring Provider Network Adequacy and Service Availability.4 As 
required by the 2016 Managed Care Final Rule, states are required to submit to CMS several reports on 
their managed care programs and operations.5 CMS has developed reporting templates that states must 
use when submitting the Managed Care Program Annual Report (MCPAR) required in 42 CFR  
1 CMS, Promoting Access in Medicaid and CHIP Managed Care: Managed Long-Term Services and Supports Access 
Monitoring Toolkit. 2022. Accessed at: https://www.medicaid.gov/medicaid/managed-care/downloads/mltss-access-
toolkit.pdf 
2 CMS, Promoting Access in Medicaid and CHIP Managed Care: Behavioral Health Provider Network Adequacy Toolkit. 
2021. Accessed at: https://www.medicaid.gov/medicaid/downloads/behavior-health-provider-network-adequacy-toolkit.pdf 
3 CMS, Medicaid and Childrens Health Insurance Program (CHIP) Managed Care Quality Strategy Toolkit. 2021. Accessed 
at: https://www.medicaid.gov/medicaid/downloads/managed-care-quality-strategy-toolkit.pdf 
4 CMS, Promoting Access in Medicaid and CHIP Managed Care: A Toolkit for Ensuring Provider Network Adequacy and 
Service Availability. 2017. Accessed at: https://www.medicaid.gov/medicaid/downloads/adequacy-and-access-toolkit.pdf 
5 Federal Register: Medicaid and Children's Health Insurance Program (CHIP) Programs; Medicaid Managed Care, CHIP 
Delivered in Managed Care, and Revisions Related to Third Party Liability; Final Rule (81 FR 27497) (May 6, 2016). 
High Rates of Prior Authorization Denials by Some Plans and Limited State Oversight Raise Concerns 
About Access to Care in Medicaid Managed Care  Appendix E | 40
OEI-09-19-00350  438.66(e),6 the Medical Loss Ratio (MLR) Summary Report required in 42 CFR  438.74(a),7 and the 
Network Adequacy and Access Assurance Report (NAAAR) required in 42 CFR  438.207(d) and (e).8 
CMS is also creating a web-based reporting portal for states to use when submitting these reports, 
thereby creating a single submission process and repository for all state reporting requirements related to 
managed care.  
As part of the Managed Care Program Annual Report required in 42 CFR  438.66(e), states report to 
CMS on several appeals, grievances, and state fair hearings data elements, including the number of 
appeals resolved at the plan level, state fair hearing requests, and external Medicaid reviews by decision 
type. States began submitting these reports to CMS in December 2022, and as of March 2023, CMS has 
received reports for 41 managed care programs from a total of 24 states, with data included for 232 
managed care plans. CMS expects to receive more than 75 additional MCPAR reports by June 30, 2023. 
CMS has developed a strategy for review of the MCPARs that prioritizes the analysis of MCPAR 
submissions in the short-term, with the addition of proactive technical assistance to states in the future. 
In addition, the regulations at 42 CFR  438.66(d) require that states conduct a readiness review of each 
managed care plan that they contract with to assess its ability to perform satisfactorily in several areas, 
including appeals and grievances. 9 Appeals and grievances data collected through this process provide 
critical insight into the performance of a managed care plan, especially during the first year of 
implementation of a new program or new eligibility group. To that end, CMS is currently piloting a 
standard appeals and grievances data collection tool to be used for the first year of implementation as a 
part of a states readiness review. 
As described in the OIGs report, the regulations at 42 CFR  438.210 allow managed care plans to 
implement prior authorization processes, so long as certain requirements are met. Managed care plans 
must also comply with the grievance and appeal system requirements laid out in 42 CFR  438 Subpart 
F, including the requirement that they can only have one level of appeal. The 2016 Final Rule clarified 
that states could offer enrollees the option of an external medical review, as long as the review is 
provided at the enrollee's option, is not a requirement, and is not used as a deterrent to proceeding to the 
state fair hearing.5 Further, if states want to offer enrollees the option of an external medical review, it 
must be independent of both the state and managed care plan, and must be offered without any cost to 
the enrollee. While not a regulatory requirement, the OIG report shows that some states utilized this 
flexibility and chose to offer an external medical review to enrollees when the managed care plan upheld 
the initial prior authorization denial. 
In addition to the regulations at 42 CFR  438.210, CMS recently proposed a rule in December 2022 
that, if finalized, would require managed care plans to publicly report certain aggregated metrics about 
prior authorization.10 These metrics would include, among others, the percentage of standard prior 
6 CMS, Managed Care Program Annual Report (MCPAR) Workbook. Accessed at: 
https://www.medicaid.gov/medicaid/managed-care/downloads/amcpr-reporting-template.xlsx 
7 CMS, Medical Loss Ratio (MLR) Reporting Template. Accessed at: https://www.medicaid.gov/medicaid/managed-
care/downloads/mlr-reporting-template.xlsx 
8 CMS, Network Adequacy and Access Assurances Report Template. Accessed at: 
https://www.medicaid.gov/medicaid/managed-care/downloads/network-assurances-template.xlsx 
9 Managed care plan as used here includes managed care organizations, prepaid inpatient health plans, and prepaid 
ambulatory health plans, as defined in 42 CFR  438.2 
10 Federal Register: Medicare and Medicaid Programs; Patient Protection and Affordable Care Act; Advancing 
Interoperability and Improving Prior Authorization Processes for Medicare Advantage Organizations, Medicaid Managed 
High Rates of Prior Authorization Denials by Some Plans and Limited State Oversight Raise Concerns About 
Access to Care in Medicaid Managed Care  Appendix E | 41
OEI-09-19-00350                authorization requests that were approved, denied, or that were approved after appeal. State Medicaid 
agencies and managed care plans would also be required to report certain metrics to CMS annually, 
which would support CMS's oversight, evaluation, and administration of the Medicaid program. The 
rule also proposes requirements for managed care plans to make detailed information about prior 
authorization requests and decisions for items and services (excluding drugs) available to providers 
electronically, significantly shorten response times for the managed care plan to respond to a prior 
authorization request, and make prior authorization status available to enrollees electronically within one 
business day. Further, in the case of a prior authorization denial, the managed care plan would have to 
provide a specific reason for all denied requests. 
Additionally, current CMS regulations also require that states have a monitoring system for their 
managed care programs. While states have flexibility in how they design their monitoring system, it 
must address the performance of the 14 specific program areas enumerated at 42 CFR  438.66(b), 
which include, among other things, the states appeals and grievance system. The regulations further 
require that each state uses the data collected from its monitoring activities to improve the performance 
of its managed care program. CMS regulations do not include an exhaustive list of performance areas in 
which data may be used for oversight; however, 42 CFR  438.66(c) describes several areas that are 
fundamental to every managed care program, including member grievance and appeal logs. States have 
flexibility in determining how to operationalize their monitoring system, and in their report the OIG 
found that some states chose to regularly conduct appropriateness reviews of Managed Care 
Organization (MCO) prior authorization denials, and others chose to conduct reviews as necessary on an 
ad hoc basis.  
As noted above, CMS has developed a series of technical assistance tools, toolkits, and reporting 
templates to assist states in complying with various managed care standards and regulations. CMS looks 
forward to engaging and collaborating with states to improve their managed care programs, and 
anticipates issuing additional tools, guidance, and technical assistance to continually improve 
monitoring and oversight activities. CMS appreciates the information shared in the OIGs report, and 
will take it into consideration in future work with states. 
The OIGs recommendations and CMSs responses are below. 
OIG Recommendation 
Require States to review the appropriateness of a sample of MCO prior authorization denials regularly. 
CMS Response 
CMS will consider the OIGs findings and recommendation, along with other available information, to 
determine whether there is a need to require states to review the appropriateness of a sample of MCO 
prior authorization denials regularly, which would likely require notice and comment rulemaking. 
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; Proposed Rule (87 FR 76238) (December 13, 2022). 
High Rates of Prior Authorization Denials by Some Plans and Limited State Oversight Raise Concerns 
About Access to Care in Medicaid Managed Care  Appendix E | 42
OEI-09-19-00350  OIG Recommendation 
Require States to collect data on MCO prior authorization decisions. 
CMS Response 
As mentioned above, in December 2022, CMS proposed a rule that, if finalized, would improve the 
electronic exchange of health care data and streamline processes related to prior authorization. 11 
Specifically, it would require managed care plans to publicly report certain aggregated metrics about 
prior authorization. These metrics would include, among others, the percentage of standard prior 
authorization requests that were approved, denied, or that were approved after appeal. State Medicaid 
agencies and managed care plans would also be required to report certain metrics to CMS annually, 
which would support CMS's oversight, evaluation, and administration of the Medicaid program. 
The rule also proposes requirements for managed care plans to make detailed information about prior 
authorization requests and decisions for items and services (excluding drugs) available to providers 
electronically, significantly shorten response times for the managed care plan to respond to a prior 
authorization request, and make prior authorization status available to enrollees electronically within one 
business day. Further, in the case of a prior authorization denial, the managed care plan would have to 
provide a specific reason for all denied requests. If finalized, CMS believes the data and metrics that 
managed care plans would be required to report, both publicly and to CMS, will address the intent of the 
OIGs recommendation. 
OIG Recommendation 
Issue guidance to States on the use of MCO prior authorization data for oversight. 
CMS Response 
In December 2022, CMS proposed a rule that, if finalized, would improve the electronic exchange of 
health care data and streamline processes related to prior authorization.12 If finalized, CMS will consider 
issuing guidance to states on ways in which the prior authorization data that is reported could be used for 
oversight by states, which CMS believes will address the intent of the OIGs recommendation.  
OIG Recommendation 
Require States to implement automatic independent medical reviews of upheld MCO prior authorization 
denials. 
CMS Response 
CMS will consider the OIGs findings and recommendation, along with other available information, to 
determine whether there is a need to require states to implement automatic independent medical reviews 
of upheld MCO prior authorization denials, which would likely require notice and comment rulemaking. 
11 Federal Register: 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; Proposed Rule (87 FR 76238) (December 13, 2022). 
12 Ibid 
High Rates of Prior Authorization Denials by Some Plans and Limited State Oversight Raise Concerns 
About Access to Care in Medicaid Managed Care  Appendix E | 43
OEI-09-19-00350  OIG Recommendation 
Work with States on actions to identify and address MCOs that may be issuing inappropriate prior 
authorization denials. 
CMS Response 
CMS concurs with this recommendation. CMS is committed to partnering with states to help strengthen the 
monitoring and oversight of Medicaid managed care programs and has already taken a number of steps to 
support states in these efforts. CMS provides guidance, as well as individualized technical assistance, to 
states in order to support them in developing, enhancing, implementing, and evaluating their managed care 
programs. CMS will issue guidance and provide technical assistance to states on ways in which prior 
authorization data could be used for oversight by states, which CMS believes will address the intent of the 
OIGs recommendation. 
High Rates of Prior Authorization Denials by Some Plans and Limited State Oversight Raise Concerns 
About Access to Care in Medicaid Managed Care  Appendix E | 44
OEI-09-19-00350  ACKNOWLEDGMENTS AND CONTACT 
Acknowledgments 
Matt DeFraga served as the team leader for this study, and Emily Borgelt served as the 
lead analyst.  Office of Evaluation and Inspections headquarters staff who provided 
support include Rob Gibbons, Lyndsay Hopper, and Kevin Manley.  
This report was prepared under the direction of Blaine Collins, Regional Inspector 
General for Evaluation and Inspections in the San Francisco regional office, and 
Rosemary Rawlins Bartholomew, Subject Matter Expert for Health Care Quality. 
Contact 
To obtain additional information concerning this report, contact the Office of Public 
Affairs at Public.Affairs@oig.hhs.gov.  OIG reports and other information can be found 
on the OIG website at oig.hhs.gov. 
Office of Inspector General 
U.S. Department of Health and Human Services 
330 Independence Avenue, SW 
Washington, DC 20201 
High Rates of Prior Authorization Denials by Some Plans and Limited State Oversight Raise Concerns 
About Access to Care in Medicaid Managed Care 
OEI-09-19-00350  Acknowledgments and Contact | 45   
ABOUT THE OFFICE OF INSPECTOR GENERAL 
The mission of the Office of Inspector General (OIG) is to provide objective oversight 
to promote the economy, efficiency, effectiveness, and integrity of the Department of 
Health and Human Services (HHS) programs, as well as the health and welfare of the 
people they serve.  Established by Public Law No. 95-452, as amended, OIG carries out 
its mission through audits, investigations, and evaluations conducted by the following 
operating components: 
The Office of Audit Services.  OAS provides auditing services for HHS, either 
by conducting audits with its own audit resources or by overseeing audit work done 
by others.  The audits examine the performance of HHS programs, funding recipients, 
and contractors in carrying out their respective responsibilities and provide 
independent assessments of HHS programs and operations to reduce waste, abuse, 
and mismanagement. 
The Office of Evaluation and Inspections.  OEIs national evaluations 
provide HHS, Congress, and the public with timely, useful, and reliable information on 
significant issues.  To promote impact, OEI reports also provide practical 
recommendations for improving program operations. 
The Office of Investigations.  OIs criminal, civil, and administrative 
investigations of fraud and misconduct related to HHS programs and operations 
often lead to criminal convictions, administrative sanctions, and civil monetary 
penalties.  OIs nationwide network of investigators collaborates with the Department 
of Justice and other Federal, State, and local law enforcement authorities.  OI works 
with public health entities to minimize adverse patient impacts following enforcement 
operations.  OI also provides security and protection for the Secretary and other 
senior HHS officials. 
The Office of Counsel to the Inspector General.  OCIG provides legal 
advice to OIG on HHS programs and OIGs internal operations.  The law office also 
imposes exclusions and civil monetary penalties, monitors Corporate Integrity 
Agreements, and represents HHSs interests in False Claims Act cases.  In addition, 
OCIG publishes advisory opinions, compliance program guidance documents, fraud 
alerts, and other resources regarding compliance considerations, the anti-kickback 
statute, and other OIG enforcement authorities 
 
 
 
 
High Rates of Prior Authorization Denials by Some Plans and Limited State Oversight Raise Concerns  
About Access to Care in Medicaid Managed Care 
OEI-09-19-00350  About OIG | 46    
ENDNOTES  
 
 
1 In addition to the comprehensive, risk-based MCO health plans, which are the focus of this study, Medicaid 
managed care programs may also provide services through other entities, such as Prepaid Inpatient Health Plans 
(PIHPs) and Prepaid Ambulatory Health Plans (PAHPs).   
2 42 CFR  438.210(a)(3)(ii). 
3 42 CFR  438.2. 
4 Chad Terhune, Coverage Denied: Medicaid Patients Suffer as Layers of Private Companies Profit, Los Angeles 
Times, December 19, 2018.  Accessed at https://www.latimes.com/business/la-fi-medicaid-denial-nurse-20181219-
story.html on March 20, 2023.  Jason Clayworth, Stubborn and Absurd. Iowas Ombudsman Slams Private 
Medicaid Managers for Denying Medical Care to Disabled, Des Moines Register, April 2, 2018.  Accessed at 
https://www.desmoinesregister.com/story/news/investigations/2018/04/02/iowa-medicaid-service-denials-
disabled-absurd-ombudsman-says/478077002/ on March 20, 2023.  Years of Poor State Oversight Have Allowed 
Companies to Skimp on Essential Care for Sick Kids and Disabled Adults, The Dallas Morning News, June 3, 2018.  
Accessed at https://interactives.dallasnews.com/2018/pain-and-
profit/part2.html#_ga=2.262496396.142881624.1551293707-1471592254.1551293707 on April 1, 2022. 
5 Kevin H. Nguyen, Ira B. Wilson, Anya R. Wallack, and Amal N. Trivedi, Racial And Ethnic Disparities In Patient 
Experience Of Care Among Nonelderly Medicaid Managed Care Enrollees, Health Affairs, Vol. 41, No. 2, February 
2022.  Accessed at https://www.healthaffairs.org/doi/10.1377/hlthaff.2021.01331 on January 5, 2023. 
6 In 2020, median income eligibility in Medicaid expansion States was 266 percent of the Federal poverty level for 
children and 138 percent of the Federal poverty level for nonpregnant adults.  Kaiser Family Foundation, Medicaid 
and CHIP Eligibility, Enrollment, and Cost Sharing Policies as of January 2020: Findings from a 50-State Survey, 
March 26, 2020.  Accessed at https://www.kff.org/coronavirus-covid-19/report/medicaid-and-chip-eligibility-
enrollment-and-cost-sharing-policies-as-of-january-2020-findings-from-a-50-state-survey/ on January 5, 2023. 
7 Kaiser Family Foundation, Disparities in Health and Health Care: 5 Key Questions and Answers, April 21, 2023.  
Accessed at https://www.kff.org/racial-equity-and-health-policy/issue-brief/disparities-in-health-and-health-care-
5-key-question-and-answers/ on May 31, 2023. 
8 Medicare Advantage is the managed care option available to people in the Medicare program and serves more 
than 28 million older adults and people with disabilities.  Although Medicaid managed care and Medicare 
Advantage serve different populations and have different coverage rules, they have similar incentive structures, 
and many insurance companies offer health plans in both programs.   
9 CMS, May 2022 Medicaid and CHIP Enrollment Trends Snapshot, May 2022, page 5.  Accessed at 
https://www.medicaid.gov/medicaid/national-medicaid-chip-program-information/downloads/may-2022-
medicaid-chip-enrollment-trend-snapshot.pdf on February 15, 2023.  Kaiser Family Foundation, Medicaid 
Enrollment: June 2012 Data Snapshot, August 21, 2013.  Accessed at https://www.kff.org/medicaid/issue-
brief/medicaid-enrollment-june-2012-data-
snapshot/#:~:text=In%20June%202012%2C%20Medicaid%20enrollment,turn%20to%20Medicaid%20for%20cover
age on February 15, 2023. 
 
High Rates of Prior Authorization Denials by Some Plans and Limited State Oversight Raise Concerns  
About Access to Care in Medicaid Managed Care 
OEI-09-19-00350   Endnotes | 47    
 
10 CMS, Medicaid Managed Care Enrollment and Program Characteristics, 2020, Spring 2022, page 12.  Accessed at 
https://www.medicaid.gov/medicaid/managed-care/downloads/2020-medicaid-managed-care-enrollment-
report.pdf on November 16, 2022. 
11 The most common Medicaid managed care arrangement is comprehensive, risk-based managed care.  
Comprehensive, risk-based contracts must cover inpatient hospital services and any of the following services, or 
any three or more of the following services: (1) outpatient hospital; (2) rural health clinic; (3) Federally Qualified 
Health Center; (4) laboratory and x-ray; (5) nursing facility; (6) early and periodic screening, diagnostic, and 
treatment; (7) family planning; (8) physician; or (9) home health.  42 CFR  438.2.  As of July 2020, there were 
285 MCOs that offered comprehensive risk-based coverage in 40 States.  See: Kaiser Family Foundation, Total 
Medicaid MCOs.  Accessed at https://www.kff.org/medicaid/state-indicator/total-medicaid-
mcos/?currentTimeframe=0&sortModel=%7B%22colId%22:%22Location%22,%22sort%22:%22asc%22%7D on 
November 16, 2022.  
12 Kaiser Family Foundation, Total Medicaid MCO Spending.  Accessed at https://www.kff.org/other/state-
indicator/total-medicaid-mco-
spending/?currentTimeframe=0&sortModel=%7B%22colId%22:%22Location%22,%22sort%22:%22asc%22%7D on 
November 16, 2022. 
13 States determine the capitated amount paid to MCOs according to Federal requirements.  The capitation 
payment must be adequate for MCOs to provide for all contracted Medicaid benefits to enrollees.  Capitation 
rates must be developed to reasonably achieve a medical loss ratio standard where at least 85 percent of the total 
amount paid to an MCO by the State is spent on patient care and quality improvements rather than profits, 
advertising, or similar expenses.  42 CFR  438.4 and  438.8. 
14 42 CFR  438.210(a)(4).  MCOs may use prior authorization in accordance with the State plan or for utilization 
control within certain parameters. 
15 42 CFR  438.210(a)(2).   
16 87 FR 76238, 76238-76371 (December 13, 2022). 
17 42 CFR  438.404(b) and 42 CFR  438.228.  People enrolled in Medicaid have 60 days from the date on the 
denial notice to file an appeal with the MCO.  42 CFR  438.402(c)(2)(ii).  The MCO must continue the appellants 
benefits throughout the appeals process if the following conditions are met: (1) the appeal involves the 
termination, suspension, or reduction of previously authorized services; (2) the appellant files the request for an 
appeal in a timely manner; (3) the services were ordered by an authorized provider; (4) the period covered by the 
original authorization has not expired; and (5) the appellant files for continuation of benefits in a timely manner.  
42 CFR  438.420(b).  States can establish their own timeframes for resolution of the appeal, but these timeframes 
must not exceed 30 days for standard appeals or 72 hours for expedited appeals.  42 CFR  438.408(a) and (b). 
18 As specified in 42 CFR  438.400, adverse benefit determinations include the denial or limited authorization of a 
requested service, including determinations based on the type or level of service, requirements for medical 
necessity, appropriateness, setting, or effectiveness of a covered benefit.  For the purposes of this report, we refer 
to adverse benefit determinations as denials. 
19 If State law permits and with the written consent of the enrollee, a provider or an authorized representative may 
request an appeal, or request a State fair hearing, on behalf of an enrollee.  42 CFR  438.402(c)(1)(ii).  For the 
purposes of this report, we consider all appeals filed on behalf of an enrollee to be an enrollee appeal.  
20 People enrolled in Medicaid managed care may also request a State fair hearing if the MCO fails to issue a 
decision on the appeal according to the timeframe and notice requirements.  42 CFR  438.408(f)(1)(i).  For State 
fair hearing requirements, see 42 CFR  438.408(f). 
 
High Rates of Prior Authorization Denials by Some Plans and Limited State Oversight Raise Concerns  
About Access to Care in Medicaid Managed Care 
OEI-09-19-00350   Endnotes | 48    
 
21 42 CFR  438.400(b) defines appeal as a review by a health plan of an adverse benefit determination.  For the 
purposes of this report, we use the term appeal to mean reviews by the MCOs or State fair hearings. 
22 42 CFR  438.66(c), 42 CFR  438.66(e)(1) and (2)(v).  The requirement to produce this report was contingent on 
the publication of CMS guidelines.  On June 28, 2021, CMS issued guidance to States specifying what should be 
included in the report.  The deadlines for issuing the reports depend upon each States contract period with its 
MCOs, with the first reports (for the 202122 contract year) due on December 27, 2022.  (See CMCS Informational 
Bulletin available at https://www.medicaid.gov/federal-policy-guidance/downloads/cib06282021.pdf). 
23 States must also collect other data from MCOs that may provide insight into denial and appeal processes, 
including enrollee grievances, provider complaints, and enrollee and provider surveys.  
24 42 CFR  438.350(a).  The State may exempt an MCO from external quality review under certain circumstances.  
See 42 CFR  438.362. 
25 42 CFR  438.358(b)(1)(iii).  The MCO standards related to authorization decisions are found at 42 CFR  438.210. 
26 OIG, Medicare Advantage Appeal Outcomes and Audit Findings Raise Concerns About Service and Payment 
Denials, OEI-09-16-00410, September 2018, available at https://oig.hhs.gov/oei/reports/oei-09-16-00410.asp.  
27 OIG, Some Medicare Advantage Organization Denials of Prior Authorization Requests Raise Concerns About 
Beneficiary Access to Medically Necessary Care, OEI-09-18-00260, April 2022, available at 
https://oig.hhs.gov/oei/reports/OEI-09-18-00260.pdf. 
28 OIG, Keystone First Should Improve Its Procedures for Reviewing Service Requests That Require Prior Authorization, 
A-03-20-00201, December 2022, available at https://oig.hhs.gov/oas/reports/region3/32000201.pdf. 
29 For this study, we chose to focus on comprehensive, risk-based MCOs because they provide a more 
comprehensive set of services than other managed care arrangements, such as PIHPs and PAHPs, and to allow 
comparison of prior authorization rates across similar entities.  
30 Council of the Inspectors General on Integrity and Efficiency, Quality Standards for Inspection and Evaluation, 
December 2020, available at 
https://www.ignet.gov/sites/default/files/files/QualityStandardsforInspectionandEvaluation-2020.pdf. 
31 The three MCOs with the highest denial rates in these States were operated by three different parent 
companies. 
32 42 CFR  422.592.  The Independent Review Entity is a CMS contractor that employs physicians and other 
consultants to review denials to determine whether the requests are medically necessary and meet relevant 
Medicare requirements.     
33 OIG analysis of Medicare Advantage annual performance data.  CMS, 2019 Parts C and D Reporting 
Requirements PUF, accessed at https://www.cms.gov/files/zip/2019-parts-c-and-d-reporting-requirements-puf-
not-incl-part-d-mtm-data.zip on October 18, 2022. 
34 Prior OIG work found that the Independent Review Entity overturned just 9 percent of denials that Medicare 
Advantage Organizations forwarded to the second level of appeal in Medicare Advantage in 2016.  OIG, Medicare 
Advantage Appeal Outcomes and Audit Findings Raise Concerns About Service and Payment Denials, OEI-09-16-
00410, September 2018, available at https://oig.hhs.gov/oei/reports/oei-09-16-00410.asp. 
35 States varied in terms of when external medical review may be requested in the appeal process.  For example, 
some States reported that external medical reviews are a distinct level of review between an MCO appeal and a 
State fair hearing.  Other States reported that external reviews may occur as part of a State fair hearing. 
36 Per 42 CFR  438.402(c)(1)(i)(B), external medical reviews, when offered, are not automatic but can be initiated 
by enrollees or their providers with enrollee permission.  
 
High Rates of Prior Authorization Denials by Some Plans and Limited State Oversight Raise Concerns  
About Access to Care in Medicaid Managed Care 
OEI-09-19-00350   Endnotes | 49    
 
37 In some cases, MCOs may choose to offer the option of an external medical review as part of their appeals 
process, despite not being required to do so by the State in which they operate.      
38 Kaiser Family Foundation, Medicaid Enrollment in Managed Care by Plan Type for 2019, July 1, 2020.  Accessed at 
https://www.kff.org/medicaid/state-indicator/enrollment-by-medicaid-mc-plan-
type/?currentTimeframe=1&selectedDistributions=mco&sortModel=%7B%22colId%22:%22Location%22,%22sort
%22:%22asc%22%7D on January 5, 2023.  
39 We were unable to include appeals data from one parent company (12 MCOs) in our analysis of appeals to 
MCOs because the parent company was unable to report the number of unique appeal cases.   
40 Although delayed decisions and notices may delay enrollees in filing an appeal, 42 CFR  438.402(c)(1)(A) does 
permit enrollees to initiate a request for a State fair hearing immediately if the MCO fails to adhere to notice and 
timing requirements. 
41 42 CFR  438.10(g)(2)(xi).  MCOs are required to provide all enrollees an enrollee handbook that contains 
information about grievance, appeal, and fair hearing procedures and timeframes, including the right to request a 
State fair hearing after an MCO has upheld a denial on appeal. 
42 Kevin H. Nguyen, Ira B. Wilson, Anya R. Wallack, and Amal N. Trivedi, Racial And Ethnic Disparities In Patient 
Experience Of Care Among Nonelderly Medicaid Managed Care Enrollees, Health Affairs, Vol. 41, No. 2, February 
2022.  Accessed at https://www.healthaffairs.org/doi/10.1377/hlthaff.2021.01331 on January 5, 2023.  Milliman, 
Comparing the Demographics of Enrollees in Medicare Advantage and Fee-For-Service Medicare, October 2020.  
Accessed at https://bettermedicarealliance.org/wp-content/uploads/2020/10/Comparing-the-Demographics-of-
Enrollees-in-Medicare-Advantage-and-Fee-for-Service-Medicare-202010141.pdf on January 5, 2023.  Note that 
the Medicaid managed care data on race and ethnicity is from 2014 to 2018, and the Medicare Advantage data is 
from 2019. 
43 In 2020, median income eligibility in Medicaid expansion States was 266 percent of the Federal poverty level for 
children and 138 percent of the Federal poverty level for non-pregnant adults.  Kaiser Family Foundation, Medicaid 
and CHIP Eligibility, Enrollment, and Cost Sharing Policies as of January 2020: Findings from a 50-State Survey, 
March 26, 2020.  Accessed at https://www.kff.org/coronavirus-covid-19/report/medicaid-and-chip-eligibility-
enrollment-and-cost-sharing-policies-as-of-january-2020-findings-from-a-50-state-survey/ on January 5, 2023.  In 
comparison, only 50 percent of Medicare Advantage enrollees had incomes below 200 percent of the Federal 
poverty level in 2019.  Better Medicare Alliance, Medicare Advantage Outperforms Traditional Medicare on Cost 
Protections for Low- and Modest-Income Populations, January 2021.  Accessed at 
https://bettermedicarealliance.org/wp-content/uploads/2020/04/Medicare-Advantage-Outperforms-Traditional-
Medicare-on-Cost-Protections-for-Low-and-Modest-Income-Populations2.pdf on January 5, 2023. 
44 Kaiser Family Foundation, Disparities in Health and Health Care: 5 Key Questions and Answers, April 21, 2023.  
Accessed at https://www.kff.org/racial-equity-and-health-policy/issue-brief/disparities-in-health-and-health-care-
5-key-question-and-answers/ on May 31, 2023. 
45 87 FR 76238, 76304-76305 (December 13, 2022). 
46 42 CFR  438.66(c).  
47 81 FR 27497, 27505 (May 6, 2016).  See section I.B.1.b. Appeals and Grievances.   
48 We asked MCOs to report data based on the date that an initial request or appeal decision was issued.  This 
means, for example, that a prior authorization request that the MCO received at the end of December, but had not 
yet issued a decision for by December 31, 2019, would not be included in the number of prior authorization 
decisions issued by the MCO in 2019.  Similarly, decisions issued by MCOs in January 2019 may include decisions 
for requests that were received at the end of 2018.  
 
High Rates of Prior Authorization Denials by Some Plans and Limited State Oversight Raise Concerns  
About Access to Care in Medicaid Managed Care 
OEI-09-19-00350   Endnotes | 50    
 
49 We were unable to include appeals data from one parent company (12 MCOs) in our analysis of appeals to 
MCOs because the parent company was unable to report the number of unique appeal cases.   
50 We did not inquire solely about the specific MCOs in our study population, but rather State Medicaid agencies 
oversight of all MCOs in their States. 
51 CMS has the authority to establish data reporting requirements for Medicare Advantage Organizations as 
described in 42 CFR  422.516(a).  Additional details about the data that Medicare Advantage Organizations are 
required to report are available on CMSs website at: https://www.cms.gov/Medicare/Health-
Plans/HealthPlansGenInfo/ReportingRequirements. 
52 CMS conducts program audits each year to evaluate a sample of Medicare Advantage Organizations delivery of 
health care services to Medicare Advantage enrollees.  For more information, see the 2021 Part C and Part D 
Program Audit and Enforcement Report available at https://www.cms.gov/files/document/2021-program-audit-
enforcement-report.pdf and CMSs website https://www.cms.gov/Medicare/Compliance-and-Audits/Part-C-and-
Part-D-Compliance-and-Audits/ProgramAudits. 
 
High Rates of Prior Authorization Denials by Some Plans and Limited State Oversight Raise Concerns  
About Access to Care in Medicaid Managed Care 
OEI-09-19-00350   Endnotes | 51