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GAO Calls for Oversight in Managed Care Prior Authorization

Julie Kozminski
June 3, 2024

A new Government Accountability Office (GAO) report reviews how health plans are administering Medicaid’s early and periodic screening, diagnostic, and treatment (EPSDT) benefit.

In “Medicaid Managed Care Plans’ Prior Authorization Decisions for Children Need Additional Oversight,” GAO reviewed the EPSDT services prior authorization process for five plans. The plans generally reviewed requests against medical necessity criteria and conducted a second review before denying a request. However, required prior authorization processes varied for different services.

GAO also reviewed state and federal oversight of prior authorization practices and identified several areas for improvement. CMS currently requires states to monitor how plans manage utilization, but the agency has not specified how states should monitor prior authorization decisions or assessed whether states are sufficiently monitoring plans to ensure appropriate decisions. GAO found that none of the states in its study reviewed a representative sample of denials or used data to assess the appropriateness of the plans’ prior authorization decisions.

CMS also has not clearly defined whether plans can require prior authorization for EPSDT services when the state Medicaid program does not have such requirements. Without ensuring plans’ prior authorization decisions are appropriate and that requirements are clear, plans might deny children access to medically necessary EPSDT services to which they are entitled.

Recommendations

GAO recommends that:

  • CMS communicate expectations for how states should monitor the appropriateness of managed care plans’ prior authorization decisions, including EPSDT services, and take steps to confirm whether states are meeting those expectations.
  • CMS clearly define whether managed care plans can require prior authorization for EPSDT services when the state does not have such requirements.

CMS partially concurred with GAO’s recommendations. The agency now is collecting information about states’ current practices for reviewing prior authorization denials to determine the need to increase monitoring and oversight requirements.

Contact Director of Policy Rob Nelb, MPH, at rnelb@essentialhospitals.org or 202.585.0127 with questions.

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