OIG calls out issues with denials of payment and services in Medicare Advantage

CMS responded to the report in part by saying it will issue new guidance on appropriate use of clinical criteria in medical necessity evaluations.

April 29 update: This article has been updated with comments from the Better Medicare Alliance.

Medicare Advantage (MA) processes related to prior authorization can end up restricting beneficiaries’ access to medically necessary care, according to a new report from the Office of Inspector General at the U.S. Department of Health and Human Services.

OIG conducted the investigation by examining a collection of 250 denials of prior authorization requests and 250 payment denials issued by 15 large MA health plans during a seven-day period in June 2019.

In numerous instances, the MA plans “denied Medicare Advantage beneficiaries’ access to services, even though the requests met Medicare coverage rules,” the report states.

Specifically, among the prior authorization denials in the study sample, 13% met Medicare coverage rules and thus would have been covered in Medicare fee-for-service.

Two common issues with such denials were:

• Using clinical criteria that are not contained in Medicare coverage rules
• Citing a lack of sufficient documentation despite indications that beneficiary medical records supported medical necessity

OIG also found that 18% of payment denials met Medicare coverage rules and health plan billing rules. The majority of those cases were the result of errors during manual claims processing or system processing.

Payment denials spanned a wide range of services, but three of the most common were:

• Advanced imaging
• Post-acute care
• Injections

The report notes that “to reduce their costs, MAOs [Medicare Advantage organizations] may have an incentive to deny more expensive services, such as inpatient rehabilitation facility stays, and/or require that beneficiaries receive less expensive alternatives.

“We also observed denials that met Medicare coverage rules and MAO billing rules for items or procedures that may receive extra scrutiny from MAOs because they can be vulnerable to fraud, such as durable medical equipment and injections for pain management.”

The plans did reverse 3% of prior authorization denials and 6% of payment denials, according to the report.

Reaction from stakeholders

The American Hospital Association said the findings are confirmation of “the harm that certain commercial insurer policies have on patients and the providers that care for them.”

The Better Medicare Alliance, an advocacy organization that supports MA, called attention to the fact that “nearly 9 in 10 prior authorization coverage denials were consistent with Medicare coverage rules and more than 8 in 10 denials for payment requests met Medicare billing rules.”

The alliance’s president and CEO, Mary Beth Donahue, said in a written statement: “The use of medical management tools, including prior authorization, is one way that Medicare Advantage ensures beneficiaries receive the right care, in the right setting, and at the right time.

“While this study represents only a narrow sample of Medicare Advantage beneficiaries and polling data shows that less than half of Medicare Advantage beneficiaries have ever experienced a prior authorization themselves, Better Medicare Alliance has strongly supported efforts to streamline and simplify the prior authorization process for patients and providers.”

What should change

The report includes recommendations for CMS to:

• Issue new guidance to MA plans on the appropriate use of clinical criteria in medical necessity reviews
• Update audit protocols to address the issues identified in the report
• Direct plans to take steps to identify and address vulnerabilities that can lead to manual review errors and system errors

CMS responded with a letter signed by Administrator Chiquita Brooks-LaSure, saying it agreed with each recommendation. “CMS plans to issue clarifying guidance regarding appropriate use of clinical criteria in medical necessity reviews,” the letter states.

A bipartisan group of four members of Congress responded to the report by touting previously introduced legislation that would seek to streamline the use of prior authorization in MA and increase oversight and transparency around the process.

“The House must move on this bill quickly,” they stated in a news release.

One member of the quartet, Rep. Suzan DelBene (D-Wash.), appeared on HFMA’s “Voices in Healthcare Finance” podcast in November to discuss the legislation.