The Case for Program Integrity in Medicaid Managed Care

We recognize that certain claims and prior authorization denials are legitimate – individuals may no longer be part of the plan or medical necessity cannot be supported. As PI professionals, we see trends in select services and prescription medications being denied more than others, although determining denial reasons can be difficult because the data often lacks necessary detail. Decades of experience confirms that more accurate data means greater transparency, enhanced oversight capability, and ultimately better outcomes for health care for members and stewardship of taxpayer monies.

The following are important claims and PA data issues that states should consider:

• Incomplete Data. We often see PA denial data that lacks the necessary detail to support the denial, sending us back to MCOs for the information to discern missing fields and evaluate the effects on data sets or decision outcomes. Incomplete data reduces data transparency as states have limited ability to assess claims for appropriateness and accuracy, which in turn limits the effectiveness of PI activity
• Inconsistent Data. We also see a lack of data consistency driven by differing formats, levels of information, and handling. For example, MCOs may use different claim numbers in each phase of their adjudication and adjustment processes for the same claim, making it harder for external users to follow the claim timeline, making the claim tracking process less transparent.
  • Denial Reason Coding Challenges. We have observed claim denials with coding that is unclear, inconsistent between MCOs, or absent altogether. Without standardized codes, finding high-risk claims that merit review can be extremely challenging.
  • Denial Explanation – Lack of Clarity. Oftentimes, reasons for denials are erratic, incomplete, unclear, or proprietary. In the absence of consistent codes, denial explanations might only be a sentence or two of narrative, which may not provide proper insight into whether the denial is appropriate. Further, the descriptions provided might conflict with other information available on the record, causing the reviewer to question the denial accuracy. Claim system edits can be too stringent, preventing human evaluation from occurring when it may be necessary to effectively render an accurate claim payment decision. Additionally, denials based on medical necessity or experimental status can be too general or coded with a meaning that is unclear because the codes are proprietary.
• Unclear Language and Untimely Denial Notifications. Clarifying the obtuse language of denial notifications and improving the denial timelines are increasingly important, so much so that starting January 1, 2026, MCOs must provide clear and specific reasons for the denial to the provider, and they must do it within seven calendar days instead of the current 14-day window. Read more about it in our post on PA denials.
• Repeated Denials. Repeated denials from an MCO merit attention, because these could indicate problems at the processing level, such as claim system that are too stringent, data-entry errors, or incorrect codes.
• Weak or Missing Appeals Support. While a third-party reviewer supports denial appeals at the federal level, at the state level, MCOs do not always make a third-party reviewer available to evaluate Medicaid claims denials and support members who need help navigating the system during appeals.
• Absent Grievance Reviews. When claim denials occur, a member or provider may submit a grievance to the MCO. In those instances, states should check these reports to confirm the MCO has done its due diligence to confirm the claims were appropriately denied. Additionally, frequent grievances in a particular area may indicate an underlying issue in the MCO’s claims processing environment.

In a previous post, we discussed how provisions in the Interoperability and Patient Access final rule (CMS-0057-F), intended to increase transparency and prevent erroneous or fraudulent denials, directly affect Medicaid and CHIP managed care plans. A few provisions become effective January 1, 2026, and others will be effective January 1, 2027. For now, states can do more to enforce greater data gathering diligence, discipline, and rigor around gather data, while requiring data reporting in clear, standardized, complete, and accurate ways – in other words, states need better data integrity from MCOs to ensure proper oversight of their MCOs.

Read our upcoming post titled Claim Denial Recommendations to see what states can do now to directly ensure better PI to improve transparency, efficiency, and accuracy in the health and human services programs designed to serve the nation’s most fragile.