The Department of Health and Human Services Office of the Inspector General (OIG) has issued a report entitled Some Medicare Advantage Organization Denials of Prior Authorization Requests Raise Concerns About Beneficiary Access to Medically Necessary Care (“the Report”).

 The OIG conducted its investigation as a result of its concern that the government’s payment to Medicare Advantage plans on a capitated per-member per-month basis provides “the potential incentive for Medicare Advantage Organizations (MAOs) to deny beneficiary access to services and deny payments to providers in an attempt to increase their profits.” The OIG’s investigation was also prompted by annual audits showing “widespread and persistent problems related to inappropriate denials of services and payment.”

The investigation reviewed a stratified random sample of 250 denials of prior authorization requests and 250 payment denials from the 15 largest Medicare Advantage plans, including UnitedHealth Group, Humana, CVS Health, and Anthem.  The investigation found:

  • 13% of the prior authorization denials met Medicare coverage rules, “likely preventing or delaying medically necessary care for Medicare Advantage beneficiaries”
  • 18% of the denied claims for payment met Medicare coverage rules and the Medicare Advantage plans’ billing rules, “which delayed or prevented payments for services that providers had already delivered”
  • Imaging services, stays in post-acute facilities, and injections were the three most prominent services improperly denied by Medicare Advantage plans, even though the services met Medicare coverage rules for medical necessity

One reason cited by the Report for the denial of prior authorization requests for medically necessary services was the Medicare Advantage plans’ application of “clinical criteria that are not contained in Medicare coverage rules.”  Medicare’s Managed Care Manual requires that plans’ medical necessity determinations use “coverage criteria no more restrictive than original Medicare’s nation and local coverage policies.”  Chapter 4, §10.16.  As a result, the OIG recommended that CMS issue new guidance governing the appropriate use of clinical criteria in Medicare Advantage plans’ medical necessity reviews.  The Report also recommended that CMS update its audit protocols to address issues raised by the Report, including the use of clinical criteria.

A reason cited for the inappropriate payment denials was a request for additional documentation, even though the requested documentation was already in patients’ records. As a result, the Report recommended that CMS should direct Managed Care plans to take additional steps to identify system vulnerabilities that can lead to errors.

CMS concurred in all three recommendations.

In a video released in conjunction with the report, Rosemary Bartholomew, who led the investigation, stated that the OIG had three primary concerns as a result of Medicare Advantage plans denying medically necessary care that would have been approved had patients been enrolled in original Medicare:

  • The denials can cause delays or prevent patients from access to needed medical care
  • The denials can cause patients to pay out of pocket for services that should have been paid for by their Medicare Advantage plans
  • The denials can create administrative burdens for patients and providers who file appeals

The American Medical Association agreed with the Report’s findings.  In a statement, AMA President Gerald E. Harmon, M.D. said:  “Surveys of physicians have consistently found that excessive authorization controls required by health insurers are persistently responsible for serious harm when necessary medical care is delayed, denied, or disrupted.  The American Medical association agrees with the federal investigators’ recommendations for preventing inappropriate use of authorization controls to delay, deny and disrupt patient care….”

The Report’s findings that Medicare Advantage plans inappropriately deny or reduce payments for medically necessary services that would have been covered if patients had been enrolled in original Medicare is consistent with the experience of many of Whatley Kallas, LLP’s provider clients. In addition to the issues raised by the Report, Whatley Kallas has found that Medicare Advantage and commercial plans inappropriately deny inpatient admission based on application of commercial screening criteria. Through these inappropriate denials and reduced payments, Medicare Advantage plans are taking money due to providers to increase their profits. The attorneys at Whatley Kallas, LLP have successfully represented hospitals in challenging these plans’ inappropriate denials and reductions in payments.

The OIG Report is linked here.  The video released by the OIG in conjunction with the Report is linked here.

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