Over the last decade, seniors have been choosing Medicare Advantage (MA) plans for their healthcare insurance at an increasing rate. More than half of those eligible are now enrolled in MA plans, and participation is expected to grow to sixty percent by the end of this decade. A cursory look at the increasing popularity of these programs might appear to tell a story of patient, insurer, and physician satisfaction. But, in fact, as enrollment in Medicare Advantage reaches new heights, so do the complaints about the care it provides and concerns about the management the Centers for Medicare & Medicaid Services (CMS) provides.

Given the cost of this behemoth health insurance program and the millions of people it impacts, it’s worth our time as taxpayers and health policy professionals to examine why this is happening and what CMS is doing about it. Unlike traditional Medicare fee-for-service programs, “utilization management’ is one of the key features of managed care plans. As part of this management approach, varying coinsurance amounts are often designed to encourage the use of a contracted network of providers; patients are often required to see a primary care doctor before going to see a specialist, and tools like prior authorization are used to determine if a service is medically necessary. From a health plan perspective, these tools are designed to control costs, deliver high-value care, and avoid having to recoup funds from providers for services later found to be unnecessary.

However, reliable data reveals that Medicare spends more per Medicare Advantage enrollee that it would spend if the person had remained in the original Medicare fee-for-service program. MEDPAC, the independent advisory commission responsible for making recommendations to the U.S. Congress regarding Medicare policy, estimates that this year the Medicare program will spend 22 percent more per Medicare Advantage enrollee ($83 billion) than for similar beneficiaries in traditional Medicare. And, despite this higher cost, according to KFF, “researchers have found few differences between Medicare Advantage and traditional Medicare in beneficiary experience, affordability, service utilization, and quality.”

CMS has made repeated efforts to strengthen its utilization management approach by incorporating and refining its oversight of prior authorization by MA plans. In a final rule issued in 2023, CMS took steps designed to limit plans’ use of prior authorization, ensure that plans complied with national and local coverage requirements, and required plans to honor prior authorization as long as it was deemed medically necessary. And, to add oversight to oversight, CMS required that plans establish “utilization management committees” to ensure compliance with Medicare rules.

While these requirements were designed to be very straightforward, they prompted an abundance of questions. In response, CMS issued a subregulatory guidance earlier this year, designed to increase transparency in prior authorization processes and, at the same time, yield data that would guide improvement of the system.

You can find the complete text of this subregulatory guidance, in the form of answers to frequently asked questions, on our website.  I encourage you to read through its somewhat dense content, but I will also offer some highlights here, especially those designed to improve or rein in the use of prior authorization. Beginning in 2026, Medicare Advantage insurers will be required to publish data such as the average timeframe of prior authorization decisions, as well as data on requests, denials and appeals. Additionally, “prior authorization may only be used by MA plans to confirm the presence or diagnoses or other medical criteria, to ensure the furnishing of a service or benefit is medically necessary or, for supplemental benefits, clinically appropriate. Therefore, prior authorization should not function to delay or discourage care.” In addition, prior authorization decisions “must be made as expeditiously as the enrollee’s health condition requires, but no later than the established deadlines,” which CMS recently shortened from 14 to7 days for a non-expedited request and 72 hours for an expedited request.

Overall, my main takeaway from this subregulatory guidance is not about whether plans can use prior authorization – they certainly can – but how they apply their utilization management policies fairly. What are their internal utilization management committees doing to reach their goals of compliance with Medicare rules? How are they using artificial intelligence, without introducing discrimination and bias? How are they ensuring that artificial intelligence is not being used to shift coverage criteria over time? MA organizations must provide internal coverage criteria in a “publicly accessible way” but what specifically does that mean? And how will plans define it?

By May 29 each of us either individually or through an organization has an opportunity to weigh in on efforts to improve Medicare Advantage. That is the deadline to submit comments in response to a CMS request for Medicare Advantage plan data. I recently moderated a panel that included Dr. Doug Jacobs, the Chief Transformation Officer in the Center for Medicare at CMS, and asked him what made a good comment letter, the kind that would cause CMS to take notice and take action.  He said that specific examples that show the impact on beneficiaries with how the proposed solution would address that are what gets his attention.

  CMS is now requesting information on:

• Utilization management and prior authorization, including denials and appeals and access to inpatient services and post-acute care
• All aspects of data related to the MA program, but within particular with respect to prior authorization, beneficiary experience with the appeals process and the use and reliance on algorithms

You can access a copy of the RFI here or here. At Applied Policy, we will be providing input based on our clients’ needs and experiences. If you feel strongly about the way Medicare Advantage is being administered, and spending taxpayer money, we hope you will join us in providing your expertise on how we might improve this critically important healthcare program.