Private health insurance plans wrongly deny medical services for many older Americans every year.
Nothing new actually
A recent study by the U.S. Department of Health and Human Services (HHS) Office of the Inspector General (OIG) points a finger at Medicare Advantage Plans.
♦ The study found an alarming number of instances where Medicare Advantage plans denied coverage for medical services that would have been covered under original Medicare.
Federal investigators reviewed a week’s worth of requests in 2019 and found that around 13% of denials in Medicare Advantage plans would have been allowed under original Medicare.
• The investigators estimate that based on the small sampling, 85,000 requests were likely denied in 2019.
The study also found that nearly one-fifth of the time Medicare Advantage plans denied payment requests when the request met Medicare coverage rules and should have been approved.
• This translates to an estimated 1.5 million refused payments for all of 2019, delaying or blocking payments for services that providers had already delivered.
Most of the payment denials OIG found were the result of human error during manual claims-processing review and system errors, according to the report.
♦ The report said many of the prior authorization denials came from Medicare Advantage plans applying their own clinical criteria that is not required by Medicare.
The report details examples of Medicare Advantage plans that used specific, mandatory requirements that resulted in the denial of prior authorization requests for medically necessary services.
One example in the report tells of a Medicare Advantage plan that refused to approve a follow-up MRI to find out whether an adrenal lesion was malignant because the lesion was allegedly too small. Medicare’s rules do not restrict the use of follow-up MRIs based on the size of a lesion. Upon appeal the plan agreed to pay.
Prior authorization denials of requests that meet coverage rules can create significant negative effects for Medicare Advantage beneficiaries, the report noted.
♦ “These denials can delay or prevent beneficiary access to medically necessary care; lead beneficiaries to pay out of pocket for services that are covered by Medicare; or create an administrative burden for beneficiaries or their providers who choose to appeal the denial.”
As of 2021, just over 26 million (42%) Medicare beneficiaries were enrolled in Medicare Advantage plans. This number is projected to grow to over half of all Medicare beneficiaries by 2030.
♦ Unlike original Medicare, where the federal government is the insurer, Medicare Advantage plans are run by private insurance companies.
The government pays insurers, who sell these plans, a fixed monthly fee to provide services to each Medicare beneficiary.
The report points out, which we all have known for some time. “There is the potential incentive for insurers to deny access to services and payments in an attempt to increase profits.”
• Medicare Advantage plans often look attractive because they offer the same basic coverage as original Medicare at a seemingly lower cost, plus some additional benefits and services like vision and dental care that traditional Medicare doesn't offer.
The reason Medicare Advantage plans can offer some extra benefits is because the federal government gives them additional payment.
The report actually mentions this as one of Medicare Advantage’s downsides. The report pointed out that beneficiaries enrolled in Medicare Advantage plans may not be aware that there may be greater barriers to accessing certain types of health care services compared to original Medicare.
• Medicare Advantage plans’ most disagreeable cost-cutting strategy is prior authorization.
This a common requirement that doctors and other medical providers obtain the plan's approval before a beneficiary can receive certain medical services. If the plan administrators disagree that a procedure is medically necessary, the plan may refuse to pay for it.
The beneficiary is then left with paying all costs out-of-pocket or delaying the service while an appeal plays out.
The appeal process is also another point of contention since due to the lack of skilled workers the backlog on appeals has grown substantially.
What will be done?
The inspector general called on the Center for Medicare & Medicaid Services (CMS), which oversees Medicare, to more tightly regulate these plans to make sure they follow Medicare’s rules for what should be covered.
CMS has agreed with the finding and has said the agency is considering the next steps.
♦ We should not expect any dramatic changes. A few slaps on the wrist and maybe a few token fines. This stuff has been going on for a long time.
The American Medical Association (AMA) is pushing for reform of the prior authorization process.
There is a House bill titled “The Improving Seniors’ Timely Access to Care Act” (H.R. 3173; S. 3018), which would require Medicare Advantage plans to streamline and standardize prior authorization processes and improve the transparency of requirements.
The bill has earned bipartisan support from over 300 members of Congress in the House and Senate.
♦ The Biden administration issued a rule change in May, 2022 that strengthens Medicare Advantage network adequacy.
Network adequacy refers to a health plan's ability to deliver the benefits promised by providing reasonable access to a sufficient number of in-network primary care and specialty physicians, as well as all health care services included under the terms of the contract.
Under the rule, CMS will approve an application for a new or expanded Medicare Advantage contract only after applicants demonstrate a sufficient network of contracted physicians to care for enrollees.
That might be good. Because right now too many people sign up for lower cost Advantage Plans only to find out they have a very limited choice of specialists.