Bliss Collective,

This piece is longer than a typical Melanin Memo, by design. Some things do not shrink into three paragraphs. This is one of them.

In 2023 the U.S. Senate Permanent Subcommittee on Investigations released a report documenting the aggressive use of automated prior authorization systems by three of the largest Medicare Advantage insurers to deny post-acute care to elderly patients. That report is public. Its findings are well-established. What is less discussed is what happens next: how those same algorithmic systems, deployed across Medicare Advantage and Medicaid managed care contracts, disproportionately deny care to Black beneficiaries. This piece is about that.

The Receipts

Prior authorization is the process insurance companies use to require doctors to justify planned treatments before agreeing to cover them. Traditional Medicare uses prior authorization rarely. Medicare Advantage plans, run by private insurers under contract with CMS, use it heavily. Medicaid managed care plans use it heavily. Both increasingly rely on algorithmic decision-support tools to process prior authorization requests at scale.

The 2023 Senate report documented that at least one major Medicare Advantage insurer had a denial rate on post-acute care requests approaching 90 percent when the algorithm was engaged. When those denials were appealed, they were overturned at rates suggesting the algorithm was wrong in the first place.

Separately, Kaiser Family Foundation analyses have documented that Medicare Advantage beneficiaries who are Black are more likely than white beneficiaries to be enrolled in plans with higher administrative burden — including plans with more aggressive prior authorization practices. The disproportion is not accidental. It is the downstream effect of insurance market dynamics that concentrate certain beneficiary populations in certain plans.

The result: a Black Medicare Advantage beneficiary is statistically more likely to have care denied by an algorithm than a white Medicare Advantage beneficiary. The algorithm does not know race. It does not need to. It processes signals that correlate with race zip code, provider identity, claim history, plan type and produces denial outputs that correlate with race downstream. This is what modern algorithmic discrimination looks like.

What Most People Get Wrong

The first misconception: that algorithmic prior authorization means a computer made the decision. It does not. Federal Medicare rules require a qualified clinician to make the actual coverage determination. What the algorithm produces is a recommendation, a risk score, or a documentation packet that the clinician reviews. In practice, when the clinician is reviewing hundreds of decisions in a workday, the algorithm’s recommendation carries enormous weight. But legally, a human made the call. That distinction matters for how the denial can be fought.

The second: that appeals are a formality. They are not. In multiple documented studies, when denials are appealed, they are overturned at high rates — sometimes above 80 percent for certain categories. Appeals work. The problem is that most patients never appeal. Some do not know they can. Some do not know how. Some are told, incorrectly, that the denial is final. Some are appealing while their health condition worsens and cannot wait for the multi-week appeal process. Which brings us to the third misconception.

The third: that the denial system is neutral by design. It is not. Prior authorization denials are, structurally, a revenue-protection mechanism. Every denied claim that is not appealed is money the insurer keeps. Insurers know that a certain percentage of denied claims will not be appealed regardless of medical necessity. Denials that get appealed and overturned still slow spending. The system is not built to be neutral. It is built to be profitable.

What This Means For You

If you are a Medicare Advantage or Medicaid managed care beneficiary:

Get every denial in writing. Federal rules require it. If you get a verbal denial, ask for the written denial notice, formally called a Notice of Denial of Medical Coverage or similar depending on your plan. That notice must include the specific reason for the denial and the specific appeal rights available to you. Do not accept a denial that is not documented in writing.

Appeal every denial that affects a service you need. Even if you think the appeal will not work. The data says appeals frequently succeed. Your plan is required to have an internal appeal process, and if that fails, an external appeal process through an independent review organization. Medicare Advantage beneficiaries have additional appeal rights through the Medicare appeals process. Medicaid managed care beneficiaries have appeal rights through their state Medicaid fair hearing process.

For urgent care needs, request an expedited appeal. Federal rules require plans to respond within 72 hours for expedited appeals. If your health cannot wait for a standard 30-day or 60-day appeal timeline, use this option.

Keep records. Every denial notice, every appeal filed, every communication with the plan, every clinical note supporting the medical necessity of the care you were denied. If the case ends up before an external reviewer, before a Medicare Administrative Law Judge, or in state Medicaid fair hearing, the paper trail is your evidence.

If you are a healthcare provider:

Document medical necessity aggressively in the initial submission. Prior authorization denials are frequently issued because the initial submission did not include the specific clinical documentation the algorithm was looking for. Learn what your patient’s plan requires and submit it upfront.

When a denial arrives, the peer-to-peer review request is your fastest lever request it immediately.

Consider building appeal support into your clinic’s workflow. Some clinics now have dedicated staff who handle prior authorization denials because the volume is unmanageable at the individual clinician level. The clinics that invest in this get more of their patients’ care approved.

The MB Take

Algorithmic prior authorization is not a scandal about AI. It is a scandal about how American health insurance is structured to deny care as a business model, and how that denial process disproportionately harms Black beneficiaries because the market dynamics concentrate them in the plans that deny most aggressively.

The AI is a scaling tool for a pre-existing pattern. It does not create the pattern. It just makes it faster, cheaper, and more scalable for insurers to run. Fixing it does not require banning algorithms. It requires structural changes to how prior authorization is regulated: real-time transparency on denial rates by demographic, mandatory external audit of algorithm recommendations, and consequences when denial rates exceed clinically defensible thresholds.

Those regulatory changes are being pursued right now. The 2024 CMS interoperability and prior authorization rule (CMS-0057-F) is one step. HHS Office for Civil Rights enforcement of Section 1557 as applied to algorithmic decision-making is another. Neither is enough. MB will follow both closely.

For now, appeal every denial. Get everything in writing. Know your rights. And forward this piece to someone who has been told their care is denied.

Where To Learn More

Senate Permanent Subcommittee on Investigations — October 2024 report on Medicare Advantage prior authorization.

CMS.gov Medicare Advantage appeals process — medicare.gov/claims-appeals

Kaiser Family Foundation — Medicare Advantage and Medicaid managed care policy briefs — kff.org

Center for Medicare Advocacy — medicareadvocacy.org

National Health Law Program — Medicaid appeals resources — healthlaw.org

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