Senate Finance Committee Chair Ron Wyden (D-Ore.) and House Energy and Commerce Committee Ranking Member Frank Pallone, Jr. (D-N.J.) sent a series of letters on Oct. 3 to several Medicaid managed care organizations (MCOs) as part of an investigation into reports of high rates of prior authorization denials for patients.

Citing a report from the Department of Health and Human Services Office of the Inspector General (HHS OIG), Wyden and Pallone expressed concern that high levels of prior authorization denials revealed in the report are indicative of systemwide abuse of prior authorization, which blocks access to care. The report revealed that MCOs denied, on average, one out of every eight prior authorization requests for service — a denial rate of 12.5 percent.

The states in which MCOs operate pay the MCOs a specific amount each month to cover the expected costs of care for each enrollee. Wyden and Pallone surmise in their letters that this creates a financial incentive for the companies to deny care in favor of increasing their own profits.

Wyden and Pallone sent letters to the nation’s largest Medicaid MCOs, including Aetna, AmeriHealth Caritas, CareSource, Centene Corporation, Elevance, Molina Healthcare Inc., and United Healthcare. Among the questions posed to each company is whether prior authorization for Early and Periodic Screening, Diagnostic and Treatment services is required across any of its subsidiary health plans. They also requested a description of all algorithms used in prior authorization decisions and information on the rate of appeals.

The HHS OIG report offered several recommendations to the Centers for Medicare & Medicaid Services, including to direct states to review the appropriateness of prior authorization denials regularly, to collect data on prior authorization decisions, and to issue guidance to those states on how to use that data for proper oversight of the prior authorization process.