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With enrollment in Medicare Advantage Organizations (“MAOs”) on the rise, concerns are emerging about questionable tactics that MAOs deploy, resulting in denials and delays for beneficiaries and their providers.  The Department of Health and Human Services’ Office of Inspector General (“OIG”) recently shed further light on these practices in a recent report, “Some Medicare Advantage Organization Denials of Prior Authorization Requests Raise Concerns About Beneficiary Access to Medically Necessary Care.” Based on a review of claims denied by the nation’s largest MAOs, the OIG found that MAOs have used the prior authorization process to deny or delay approvals of services to Medicare Advantage beneficiaries that met Medicare coverage standards. Moreover, MAOs have also denied and delayed payments to providers, resulting in costly and time-consuming administrative burdens.   

In the report, the OIG cited the “central concern” that MAOs, which are paid based on a capitated model, may be denying beneficiaries access to services and payments to providers to increase profits.  The OIG selected a random sample of 250 denials issued by the 15 largest MAOs. Health care coding experts and physicians reviewed the samples, finding that 13% of coverage denials met Medicare coverage rules (i.e., services that would have been approved under the traditional Medicare fee for service rules). Analysis of the reviews revealed two common reasons for denials: (i) MAOs used clinical criteria that are not contained within the Medicare coverage rules and (ii) MAOs denied prior authorization requests because of insufficient documentation to support approval, although the study found that the beneficiary’s medical records were sufficient to support a determination of medical necessity. MAOs also denied 18% of payment requests that were found to have met Medicare coverage and Medicare Advantage billing rules. Common reasons for these denials were human error during manual claims reviews and system processing errors.

While some denials were ultimately reversed, that often happened due solely to a beneficiary or provider appeal of the denial. As a result, beneficiaries did not receive timely treatment.  In one example cited, an MAO denied a request for a CT scan of the chest and pelvis of a beneficiary with endometrial cancer.  The MAO ultimately decided to approve the procedure, but not until five weeks after the physician filed an appeal. OIG physician reviewers found that the CT scan should never have been denied in the first place.  In addition to delaying medically necessary care, MAO tactics have caused providers to shoulder the administrative burden of processing multiple appeals. Moreover, in some cases, hospitals have experienced “avoidable days,” providing free care to patients while awaiting MAO approval to discharge the patient to a skilled nursing facility. 

In the report, the OIG urged the Centers for Medicare & Medicaid Services (“CMS”) to take the following steps to prevent unnecessary denials by MAOs:  (i) issue new guidance on the appropriate use of MAO clinical criteria that are not contained in the Medicare coverage rules, including clarifying what the Medicare Manage Care Manual means when it says that MAO clinical criteria should not be “more restrictive” that Medicare coverage rules; (ii) update audit protocols to address issues identified by the study, including adding aggravating factors in civil money penalty calculations if the denial results in a beneficiary not being able to access necessary services and adding additional enforcement actions for MAOs that demonstrate a pattern of inappropriate denials; and (iii) direct MAOs to take steps to identify and address their processes for manual reviews and system processing that are known to result in inappropriate denials. CMS stated that it concurs with the OIG’s recommendations.

This is not the first time the OIG has put the spotlight on MAO prior authorization practices.  In a September 2018 report, the OIG found that MAOs overturned about 75% of their own prior authorization and payment denials and recommended that CMS address these “persistent problems” related to MAO denials. Medicare Advantage Appeal Outcomes and Audit Findings Raise Concerns About Service and Payment Denials (OEI-09-16-00410; 09/18) (hhs.gov)

Wiggin and Dana is monitoring this topic, including any guidance that CMS may publish in response to the OIG’s recommendations, as well as legislative and regulatory efforts to reform MAO prior authorization practices. Please reach out to Maureen Weaver at mweaver@wiggin.com or 203.498.4384 for additional information on this topic.