For decades, nobody outside an insurance company could see how often it declined a prior-authorization request. A new CMS transparency rule just forced every Medicare Advantage insurer to publish that data for the first time. What the data show is not a neutral clinical screening process. Rather, it is a system that reduces the burden or prior authorizations whenever the insurer happens to employ the doctor submitting the request.
UnitedHealthcare’s own filings put its real Medicare Advantage denial rate at 12.9 percent, nearly three times the 4.6 percent it advertises to the public. Of the roughly 1.1 million people to whom it denied care, only about 1 in 10 ever appealed the denial. But when patients did, the company reversed itself 58 percent of the time. That single fact—that the insurer overturns most of the challenged denials—strongly implies that a large share of the 90 percent of unappealed decisions were probably wrong too.
The more striking finding is what happens when an insurer owns the doctors delivering the care. UnitedHealthcare owns Optum, a sprawling network of medical groups covering nearly one-tenth of America’s physicians. Mapping Optum’s local market share against UnitedHealthcare’s denial rates county by county reveals a stark pattern: the more of the local doctors UnitedHealthcare owns, the less often it says no to care. To rule out the possibility that this pattern is simply a feature of certain markets—perhaps some places are easier or healthier markets—the same test was run on Humana. The results showed no such pattern at all. The effect is specific to the insurer that owns the providers.
There’s a reason insurers are more lenient with prior authorizations to physicians that they directly employ. Federal law requires insurers to spend 80–85 percent of premiums on medical care (termed the Medical Loss Ratio or MLR). Paying an owned physician group counts toward that requirement, even though the money may never actually leave the company. Denying care from an outside provider, meanwhile, is pure savings. Prior authorization becomes the lever that sorts the two and patients literally pay the price. The people least able to fight a wrongful denial—those without the time or know-how to file an appeal—are disproportionately lower-income, and more likely to be the ones stuck simply going without medically appropriate care.
Three immediate actions should be taken based on the data presented in FREOPP’s new article: force every insurer to file this data in one standardized, searchable format instead of scattered PDFs; require insurers to report approval rates separately for their own doctors versus everyone else’s; and attach real consequences—audits, penalties, corrective actions—to plans whose overturn rates stay persistently high. The data to hold insurers accountable finally exists. Making it usable is the next fight.
Read the full white paper and methodology at FREOPP.org.