Earlier this year, the Trump administration launched a pilot program, through which it is testing prior authorization in traditional Medicare in six states, on a limited set of medical services. From the get-go, many advocates and policymakers believed the pilot would fail, because its design gives the corporations administering prior authorization a financial incentive to delay and deny care inappropriately. Not surprisingly, the pilot is failing.
The Centers for Medicare and Medicaid Services (CMS), which oversees Medicare, is reprimanding its contractor in Washington state for unduly delaying people’s care and being out of compliance with its contract.
Prior authorization has a role to play in our health care system. When used appropriately, it can prevent the delivery of harmful or unnecessary services. It also can protect people from the consequences of poor care. But, when used inappropriately, as is too often the case, it can endanger people’s health and, in some cases, lead to their premature deaths.
With prior authorization, the devil is in the details. To work effectively, the company charged with applying prior authorization should not profit from denying or delaying care, as health insurers do in the Medicare Advantage program. If a corporate health insurer has a financial incentive at odds with the public good, there is an inherent conflict of interest that leads to inappropriate delays and denials of care, as there is in Medicare Advantage.
Unfortunately, CMS unleashed the devil when it designed its traditional Medicare prior authorization pilot. It contracted to pay the companies administering prior authorization more, the less care they covered. It allows them to keep a percentage of the money they “saved,” incentivizing them to delay and deny care excessively. And, that’s what they are doing.
The question is why would CMS allow this conflict of interest in its pilot, when the data is clear that this financial incentive leads companies to deny people needed care. The HHS Office of the Inspector General has repeatedly found that insurers in Medicare Advantage engage in widespread and persistent delays and denials of care and coverage through the prior authorization system, as a way to maximize profits.
Recognizing the serious issues with the pilot program, the House Appropriations Committee has voted unanimously to amend the 2027 spending legislation for the Department of Health and Human Services to prohibit any spending on prior authorization programs in traditional Medicare. And, 34 House members have asked CMS for more information on how the prior authorization pilot is working, including denial rates. Whether Congress will pass legislation to end the pilot is an open question.
Here’s more from Just Care:
- Prior authorization in Medicare Advantage harms patients, sometimes severely
- OIG finds widespread inappropriate care denials in Medicare Advantage
- 2026: Five things to think about when choosing between Traditional Medicare and a Medicare Advantage plan
- Oncologists report excessive deaths from prior authorization
- Medicare agency to test prior authorization in traditional Medicare
