Medicare Advantage plans deny prior authorizations that meet Medicare approval, OIG says

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Medicare Advantage Organizations sometimes delayed or denied Medicare Advantage beneficiaries' access to services, even though the prior authorization requests met Medicare coverage rules, according to a new report by the Office of the Inspector General.

Examples of healthcare services involved in denials that met Medicare coverage rules included advanced imaging services such as MRIs and stays in postacute facilities such as inpatient rehabilitation facilities, according to the report. 

"We found that among the prior authorization requests that MAOs denied, 13% met Medicare coverage rules – in other words, these services likely would have been approved for these beneficiaries under original Medicare."

MAOs denied payments to providers for some services that met both Medicare coverage rules and MAO billing rules, it said. Among the payment requests that MAOs denied, 18% met Medicare coverage rules and MAO billing rules, the report said.

MA denials of prior authorization requests raise concerns about beneficiary access to medically necessary care, the report said.

"Denying requests that meet Medicare coverage rules may prevent or delay beneficiaries from receiving medically necessary care and can burden providers," the report said. "Although some of the denials that we reviewed were ultimately reversed by the MAOs, avoidable delays and extra steps create friction in the program and may create an administrative burden for beneficiaries, providers, and MAOs."

MA plans denied prior authorization and payment requests that met Medicare coverage rules by using clinical criteria that are not contained in Medicare coverage rules, according to the OIG. MA plans also request unnecessary documentation and make manual review errors and system errors.

MAOs indicated that some prior authorization requests did not have enough documentation to support approval, yet OIG reviewers found that the beneficiary medical records already in the case file were sufficient to support the medical necessity of the services. 

WHY THIS MATTERS

Enrollment in MA plans is projected to continue to grow, as well as insurers' participation in the lucrative program.

Of all Medicare beneficiaries in 2021, 42% were enrolled in a Medicare Advantage plan. The Congressional Budget Office projects that the share of all Medicare beneficiaries enrolled in Medicare Advantage plans will rise to about 51% by 2030, according to the report.

In 2019, CMS paid about $237 billion for Medicare Advantage plans – and MA expenditures are expected to grow to more than $600 billion by 2029.

A central concern about the capitated payment model used in Medicare Advantage is the potential incentive for Medicare Advantage Organizations to deny beneficiary access to services and deny payments to providers in an attempt to increase profits, the OIG said. 

"Although MAOs approve the vast majority of requests for services and payment, they issue millions of denials each year, and CMS's annual audits of MAOs have highlighted widespread and persistent problems related to inappropriate denials of services and payment," the OIG report said. "As enrollment in Medicare Advantage continues to grow, MAOs play an increasingly critical role in ensuring that Medicare beneficiaries have access to medically necessary covered services and that providers are reimbursed appropriately." 

Most of the payment denials in the OIG sample were caused by human error during manual claims-processing reviews. MAOs reversed some of the denied prior authorization and payment requests that met Medicare coverage rules and MAO billing rules. Often the reversals occurred when a beneficiary or provider appealed or disputed the denial, and in some cases MAOs identified their own errors, the OIG said.

The OIG recommended that CMS issue new guidance on the appropriate use of MAO clinical criteria in medical necessity reviews; update its audit protocols to address the issues identified in this report, such as MAO use of clinical criteria and/or examining particular service types; and direct MAOs to take steps to identify and address vulnerabilities that can lead to manual review errors and system errors. CMS concurred with all three recommendations.

THE LARGER TREND: REACTION

Dr. Gerald E. Harmon, president, American Medical Association said, "An investigation by the inspector general's office of the Health and Human Services Department into the inappropriate use of prior authorization by Medicare Advantage plans uncovered information that mirrors physician experiences. 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 AMA supports the Improving Seniors' Timely Access to Care Act, which would require Medicare Advantage plans to streamline and standardize prior authorization processes and improve the transparency of requirements.

"The proposed federal legislation has gained bipartisan support from more than 300 members in both chambers of Congress," Harmon said. 

Representatives Suzan DelBene, D-Wash., Mike Kelly, R-Pa., Dr. Ami Bera, D-Calif., and Dr. Larry Bucshon, R-Ind., support the legislation, saying in a statement, "It is well past time to bring prior authorization into the 21st century so seniors can get the care they deserve by passing the Improving Seniors' Timely Access to Care Act. The reforms in this legislation have widespread bipartisan support and the backing of hundreds of leading national health care organizations. The House must move on this bill quickly."

"Medicare Advantage is delivering high-quality, coordinated care to more than 28.5 million diverse beneficiaries – saving them nearly $2,000 per year, driving better health outcomes, and delivering a 94% beneficiary satisfaction rate," said Mary Beth Donahue, president and CEO of the Better Medicare Alliance. "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."

Twitter: @SusanJMorse
Email the writer: susan.morse@himssmedia.com