A report issued Thursday by HHS' Office of the Inspector General (OIG) found that Medicare Advantage (MA) plans often denied beneficiaries care that OIG reviewers determined to be medically necessary and pointed to "widespread and persistent problems related to inappropriate denials of services and payment."

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Report details

For the report, OIG reviewed a random sample of 250 prior authorization denials and 250 payment denials from one week in June 2019 issued by the 15 largest MA plans.

The report found that 13% of prior authorization denials and 18% of payment denials met Medicare coverage rules, which MA plans are required to follow. Insurers reversed their prior authorization denials in about 3% of cases and their payment denials in 6% of cases within three months, Modern Healthcare reports.

The most frequent denials found by the investigators included those for imaging services, such as MRIs and CT scans.

OIG determined there were two reasons MA plans denied medically necessary claims. First, the private plans had coverage formulas beyond what is required by Medicare, including requiring an X-ray before allowing an MRI.

The MA plans also said claims lacked the correct documentation, but OIG investigators determined the medical record of beneficiaries was enough to support the claim.

OIG recommended that CMS issue new guidance for MA plans on "the appropriate use of … clinical criteria in medical necessity reviews" and that CMS "update its audit protocols to address the issues identified in this report." OIG also recommended that CMS direct MA plans to identify and address other vulnerabilities that can lead to review errors.

Reaction

Rosemary Bartholomew, an MA expert and lead author on the report, said investigators are generally more concerned about traditional fee-for-service Medicare. Since the government pays health care providers for each test or procedure performed, there may be an incentive for providers to overtreat patients under this reimbursement structure.

But since MA plans are paid a fixed rate per patient, "there can be an incentive to kind of stint on care a little bit in order to increase profits," she said.

Jack Hoadley, a research professor emeritus at Georgetown University's McCourt School of Public Policy, said the report shows some MA plans are aggressive in denying or delaying care.

"This is evidence that there needs to be increased scrutiny, more auditing, and more oversight," he said.

Jack Resneck Jr., president-elect of the American Medical Association, said MA denials have become widespread, and that prior authorization, which is intended to limit expensive or unproven treatments, has "spread way beyond its original purpose."

According to Terrence Cunningham, director of administrative simplification policy at the American Hospital Association (AHA), OIG's report echoes complaints providers and patients have long had about the prior authorization and medical necessity reviews employed by MA plans.

"Our hope would be that the analysis really pushes regulators and legislators to take steps to ensure that Medicare Advantage beneficiaries are entitled to appropriate and medically necessary care and that Medicare Advantage organization policies do not get in the way," Cunningham said.

Insurance trade group AHIP emphasized that the report shows most MA prior authorization requests are approved—and cautioned against drawing broad conclusions from the report's limited sample.

Alexander Dworkowitz, a partner at Manatt Health, said given that CMS concurred with OIG's recommendation, it's likely the agency will work to limit harmful prior authorization practices

"I don't think CMS, in agreeing to this report, is saying we want to move away from risk sharing," he said. "They're saying that we just need to be a little more proactive in monitoring to make sure it's done the right way."

Officials for Medicare said in a statement they are reviewing OIG's report to determine appropriate next steps, and added that MA plans with multiple violations will be subject to increasing penalties.

Medicare "is committed to ensuring that people with Medicare Advantage have timely access to medically necessary care," the officials said. (Alltucker, USA Today, 4/28; Choi, The Hill, 4/28; Abelson, New York Times, 4/29; Devereaux/Goldman, Modern Healthcare, 4/28)