Insurers Deny Medical Care for the Poor at High Rates, Report Says

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

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

The report by the inspector general’s office of the U.S. Department of Health and Human Services details how often private insurance plans refused to approve treatment and how states handled the denials.

Doctors and hospitals have increasingly complained about what they consider to be endless paperwork and unjustified refusals of care by the insurers when they fail to authorize costly procedures or medicines. The companies that require prior authorization for certain types of medical services say these tools are aimed at curbing unnecessary or unproven treatments, but doctors claim it often interferes with making sure patients receive the services they need.

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

The report emphasized the crucial role that state and federal officials should play to ensure the denials were justified. “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,” the investigators said.

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

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

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

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

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

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

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

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

“These differences in oversight and access to external medical reviews between the two programs raise concerns about health equity and access to care for Medicaid managed care enrollees,” the investigators said.

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

“It might be a game changer for me,” said Ms. Moss, who added that her insurer initially would not cover it. Working with People’s Action, a national advocacy network, and a sister organization, Iowa Citizens for Community Improvement, where she is a member, Ms. Moss eventually won an appeal to get the device covered.

The investigators also found that state oversight of coverage denials was lax. Many states do not routinely examine the insurers’ denials nor collect information about how many times a plan denies requests for prior authorization. They do not make sure people can get another medical opinion if they want to appeal. The lack of review makes it challenging for federal and state officials to know if the insurers “are living up to their commitments to ensure coverage of medically necessary health care,” according to the report.

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

States are directly responsible for overseeing insurance providers of Medicaid coverage. But investigators urged the federal Centers for Medicare and Medicaid Services to require more oversight.

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

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

Elevance, the for-profit insurer previously known as Anthem, had plans with denial rates that varied from 6 to 34 percent, while UnitedHealthcare had plans that had rates ranging from 7 to 27 percent.

“Although any individual prior authorization denial may be appropriate, it is unclear why some M.C.O.s,” or managed care organizations, “had rates of prior authorization denials that were so much higher than their peers,” the investigators said.