The Cost of Prior Authority: More Medicaid Cuts and More Delays

Prior authorization is one of the largest administrative burdens within the U.S. healthcare system. Prior authorization was originally intended to ensure that health services were “medically appropriate” and “medically necessary”. However, it has evolved into a maze of profit-driven rules and regulations that payers use in order to delay, discourage and deny care. This is especially true in Medicaid where nearly one in four adults reported prior approval issues in 2023. Prior authorization is a tool that payers use to delay, discourage and deny care. It’s a maze of red tape, paperwork and confusing rules. MCOs use this to reduce utilization, decrease payouts, and increase profits margins. Former Cigna medical director gave a troubling example of how the company pushed doctors to rush claim reviews, often denying care before even looking at patient’s medical records. By turning the process to receive treatment into an obstacle course for providers and patients, insurers count on patients and providers to simply give up, leading to fewer claims and higher profits.

Little John Cupp’s story shows just how deadly these delays can be. Cupp began showing signs of serious cardiac problems in the fall of 2021. United Healthcare, via its contractor EviCore denied his doctor’s request for a heart cath to check for blockages. They refused even after a second request. Cupp’s heart was found to be even weaker after a test approved nearly three months later. Cupp died the next day after he went into cardiac arrest. If Congress continues to cut funding, states will be left with shortfalls, and plans will have to operate on tighter finances. The result? More barriers–like additional prior authorization requirements and less regulation for automated decision-making–and less access to care for the people who need it most.

Medicaid Faces the Harshest Prior Authorization Burdens

Prior authorization impacts Medicaid beneficiaries more than any other type of insured group, particularly in Medicaid Managed Care Organizations (MCOs), which control access to care for over 75 percent of Medicaid beneficiaries. These prior authorization barriers disproportionately affect people with disabilities and chronic conditions, including 25 percent of adults who seek treatment for mental health conditions.

Its effects are especially severe in Medicaid. One third of Medicaid recipients with prior authorization issues (25%) could not receive the recommended care. These hurdles caused one in four people to experience a decline in their health. In 2023, a Congressional Request prompted the HHS Office of the Inspector General (OIG) to review delays in prior authorization in Medicaid. The report revealed that 12 plans had denial rate above 25%. The largest 115 Medicaid MCOs denied over 2 million of 17 million prior authorisation requests. The rule does not address core issues such as decision standards and appeals procedures. It also excludes prescription drugs, job-based insurance, and excludes prescription drug coverage. CMS has recently signaled it may not enforce the rule strictly.

Providers Agree that Prior Authorization Delays Care and Leads to Serious, Adverse Outcomes

The time and staffing required to manage prior authorization requests are staggering – not just for consumers, but also for providers. 40% of physicians hire staff to work exclusively on prior approval, while the remainder spend an average of 13 hours per week on prior authorization work. Patients wait days, and sometimes even weeks, to receive the treatment they need. Payers, who are often reviewers without medical training or credentials, deny treatment because it is not medically necessary. They know that the vast majority will never challenge the denial. According to a 2024 AMA provider survey:[1]

93% of physicians reported that PA causes delays in care.

Nearly 90% described the burden of PA as “high” or “extremely high.”

Nearly 90% said that PA can lead to patients abandoning treatment due to the burden.

82% said that PA can lead to patients abandoning treatment due it’s burden. According to a 2024 AMA provider survey:

93% of physicians reported that PA causes delays in care.

Nearly 90% described the burden of PA as “high” or “extremely high.”

• 82% said PA can lead to patients abandoning treatment due to the burden.
• 1 in 4 physicians reported that prior authorization has led to a serious adverse event for a patient in their care – including 23% who said prior authorization processes led to a patient’s hospitalization.
• These findings underscore that PA is not merely a nuisance – it is a barrier to care and a contributor to poor health outcomes. Providers overwhelmingly agree that the system is broken, inefficient, and harmful to patients.
• Impact of Medicaid Cuts

If Congress moves forward with massive Medicaid cuts, it is only going to make problems with prior authorization worse. States will have to scramble to cover the shortfalls and will tell managed care plans that they must do more with less. Managed care plans will turn to their familiar playbook, which likely means even more prior authorization, more red tape, more hours on the phones, and more delayed and denied treatments.

To make matters worse, the proposed reconciliation bill would block states from regulating how artificial intelligence (AI) is used in prior authorization for the next decade, just as Medicaid Managed Care Organizations increasingly use automated decision-making tools for medical necessity determinations with little transparency or oversight. These reckless cuts won’t reduce “waste”, they will create it. They will worsen delays, denials and harm for those who cannot afford it.