In strongly worded letters, the American Hospital Association (AHA) and the Federation of American Hospitals (FAH) ask the Centers for Medicare & Medicaid Services (CMS) “to conduct rigorous oversight” and to enforce its new rules governing Medicare Advantage (MA) plans in light of recently adopted MA plan policies that AHA and FAH believe violate the rules.  

The new rules were “designed to prohibit MA organizations from limiting or denying coverage when the item or service would be covered under Traditional Medicare” and specifically require Medicare Advantage plans to comply with Traditional Medicare rules governing inpatient admission, including compliance with the Two Midnight Rule as a benchmark. The new rules also specifically prohibit the Medicare Advantage plans from using commercial criteria, such as InterQual and MCG Guidelines, “to change coverage or payment criteria already established under Traditional Medicare.”

Pointing to specific language in new policies for inpatient admissions adopted by UnitedHealthcare and Aetna for their MA members, the AHA and FAH letters advise CMS that these plans’ policies violate the new rules and will harm seniors.  The AHA letter states that unless the rules are enforced, the result will be a continuation of “inappropriate denials of medically necessary care and disparities in coverage between beneficiaries in MA and those in the Traditional Medicare program.” (Emphasis in the original). Likewise, the FAH letter states: “Yet, despite the clarity that CMS provided in the Final Rules, the FAH is concerned that a large proportion of MA members will continue to be at risk of unlawful MA denials for inpatient hospital services that would be covered under Traditional Medicare.” (Emphasis in the original).

Denials of inpatient admission matter because as the FAH letter explains:

For years our members have experienced MA plans downgrading four-, five- and six-day lengths of stays to outpatient observation status (and even longer in many instances). This type of approach to ‘covering’ hospital stays has led to higher cost-sharing requirements for Medicare patients and is exactly the type of abuse that led CMS to make changes to the Final Rule. These patients have not been receiving the same benefits and coverage as their fee-for-service counterparts.

Denials of inpatient admission also matter for hospitals because reimbursement for outpatient observation care is much lower than reimbursement for inpatient care, unfairly reducing payments to hospitals.

In addition to asking CMS to track MA plan policies and to enforce the new rules, the AHA and the FAH asked to meet with CMS about this issue, which is of critical importance to their members.

The concerns expressed by the AHA and the FAH letters are consistent with the experience of Whatley Kallas, LLP’s hospital clients. In particular, the lawyers at Whatley Kallas have seen regular denials of inpatient admission based on commercial criteria, without regard to specific patients’ conditions or the judgment of their physicians regarding their treatment.  As a result, Whatley Kallas has had to take legal action to compel the MA plans to pay claims for medically necessary care that would have been paid by original Medicare.

The AHA letter is linked here and the FAH letter is linked here. Whatley Kallas’s previous article on the new Medicare Advantage rules, which take effect January 1, 2024, is linked here.


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