KFF: Medicare Advantage Insurers Made Nearly 50 Million Prior Authorization Determinations in 2023

Author: Jeannie Fuglesten Biniek, Nolan Sroczynski, Meredith Freed, and Tricia Neuman | January 28, 2025

Virtually all enrollees in Medicare Advantage (99%) are required to obtain prior authorization for some services – most commonly, higher cost services, such as inpatient hospital stays, skilled nursing facility stays, and chemotherapy. This contrasts with traditional Medicare, where only a limited set of services, including certain outpatient hospital services, non-emergency ambulance transport, and durable medical equipment, require prior authorization (see Box 1).

Prior authorization requirements are intended to ensure that health care services are medically necessary by requiring approval before a service or other benefit will be covered. Medicare Advantage insurers typically use prior authorization, along with other tools, such as provider networks, to manage utilization and lower costs. This may contribute to their ability to offer extra benefits and reduced cost sharing, typically for no additional premium, while maintaining strong financial performance. At the same time, prior authorization processes and requirements, including the use of artificial intelligence to review requests, may result in administrative hassles for providers, delays for patients in receiving necessary care, and in some instances, denials of medically necessary services, such as post-acute care.

This analysis uses data submitted by Medicare Advantage insurers to the Centers for Medicare and Medicaid Services (CMS) to examine the trends in the number of requests for prior authorization determinations, denials, and appeals for 2019 through 2023, as well as differences across Medicare Advantage insurers. It does not include determinations or denials by type of service or plan because CMS does not collect or report this information, though such data could help inform consumers in choosing among plans. It also presents data from CMS about the use of prior authorization in traditional Medicare, including the number of reviews and denials for 2021 through 2023, and the share appealed and the outcome of the appeal for 2021 and 2022 (the 2023 data do not include this information).

Key Takeaways:

• Medicare Advantage insurers made nearly 50 million prior authorization determinations in 2023, reflecting steady year-over-year increases since 2021 (37 million) and 2022 (42 million) as the number of people enrolled in Medicare Advantage has grown. The determinations represent requests for approval that providers are required to submit before providing a service. Substantially fewer prior authorization reviews for traditional Medicare beneficiaries were submitted to CMS – just under 400,000 in fiscal year 2023 – though the number of people enrolled in Medicare Advantage and traditional Medicare were similar in these years.
• In 2023, there were nearly 2 prior authorization determinations on average per Medicare Advantage enrollee, similar to the amount in 2019. In contrast, in 2023, about 1 prior authorization review was submitted per 100 traditional Medicare beneficiaries – a rate of about 0.01 per person — which reflects the limited set of services subject to prior authorization in traditional Medicare.
• In 2023, insurers fully or partially denied 3.2 million prior authorization requests, which is a somewhat smaller share (6.4%) of all requests than in 2022 (7.4%). Though there were substantially fewer prior authorization reviews for traditional Medicare beneficiaries, a larger share was denied – 28.8% in 2023.  Denial rates varied across the limited set of services subject to prior authorization in traditional Medicare.
• A small share of denied prior authorization requests was appealed in Medicare Advantage (11.7% in 2023). That represents an increase since 2019, when 7.5% of denied prior authorization requests in Medicare Advantage were appealed. A relatively small share of denied prior authorization reviews was appealed in traditional Medicare (6.4% in 2022) as well.
• Though a small share of prior authorization denials were appealed to Medicare Advantage insurers, most appeals (81.7%) were partially or fully overturned in 2023. That compares to less than one-third (29%) of appeals overturned in traditional Medicare in 2022. These requests represent medical care that was ordered by a health care provider and ultimately deemed necessary but was potentially delayed because of the additional step of appealing the initial prior authorization decision. Such delays may have negative effects on a person’s health.

Prior authorization practices have gotten a fair amount of attention in recent years. During the Biden Administration, CMS finalized three rules related to the use of prior authorization in Medicare Advantage. Among other changes, the three rules clarify the criteria that may be used by Medicare Advantage plans to establish prior authorization policies, streamline the prior authorization process for Medicare Advantage and certain other insurers, and require Medicare Advantage plans to evaluate the effect of prior authorization policies on people with certain social risk factors. In December 2024, the outgoing Biden Administration proposed further changes, including clarifying coverage requirements in Medicare Advantage. The Trump Administration will have an opportunity to modify or finalize these proposed changes and may propose additional regulatory changes. Additionally, lawmakers in Congress have held hearings, requested detailed data from the largest Medicare Advantage insurers, and introduced several bills to improve transparency and reform other aspects of prior authorization (see Box 2). Despite bipartisan support encompassing a majority of members in both houses of Congress, legislation on the use of prior authorization has not been enacted.

Use of Prior Authorization in Medicare Advantage

As part of its oversight of Medicare Advantage plans, CMS requires Medicare Advantage insurers to submit data for each Medicare Advantage contract (which usually includes multiple plans) that includes the number of prior authorization determinations made during a year, and whether the request was approved. Insurers are additionally required to indicate the number of initial decisions that were appealed (reconsiderations) and the outcome of that process, including whether the initial decision was affirmed, partially overturned, or fully overturned. These data are useful for assessing overall trends and variations across insurers, but do not contain the information necessary to understand how the use of prior authorization varies by type of service or type of plan.

This article was originally published on KFF.