Every year, tens of thousands of Medicare beneficiaries who are enrolled in private Medicare Advantage health plans are denied medically necessary care that otherwise would have been covered by traditional fee-for-service Medicare. The denials are for services and treatments that should be covered by their plan according to new report from the Office of Inspector General (OIG) of the Department of Health and Human Services. Federal investigators recently called upon the Centers for Medicare and Medicaid Services to strengthen oversight and to increase enforcement against plans with a pattern of improper denials.
Medicare Advantage plans have become increasingly popular with enrollment more than doubling over the past 10 years. Often the plans attract enrollees with low or even no premiums, and other benefits such as discounts on dental services or glasses. As many as half of all Medicare beneficiaries are expected to receive their Medicare covered health care services through these Medicare Advantage plans in the next few years.
The federal government uses a capped reimbursement model for Medicare Advantage, which provides an incentive for these plans to deny access to services and payments to providers to boost profits of these plans, according to the HHS OIG. While Medicare Advantage Organizations approved most requests received for services and payments to providers, they issue millions of denials every year. The OIG found that Medicare Advantage Organizations sometimes delayed or denied beneficiaries’ access to services, even though the requests met Medicare’s coverage rules. The Medicare Advantage Organizations also denied payments to providers for some services that met both Medicare coverage rules and Medicare’s billing rules.
The OIG audit found that 13% of prior authorization requests and 18% of legitimate claims from healthcare providers were wrongly denied by Medicare Advantage Organizations and should have been approved under Medicare coverage rules. Two common causes of pre-authorization denials had to do with the Medicare Advantage Organization imposing requirements to receive care that are not contained in Medicare coverage rules. For example, Medicare Advantage plans can require an X-ray before approving more advanced imaging. Of the 18% of payment denials, the most common cause was said to be human error during the claims-processing reviews, such as overlooking a document or system error.
The report noted that these denials can harm Medicare Advantage enrollees. Denials can lead to delay or even prevent many beneficiaries from receiving medically necessary care. It can also lead to beneficiaries paying out-of-pocket for services that should be covered by their health plan. In addition, denials create an administrative burden for beneficiaries, their caregivers, and their doctors when an appeal is necessary to overturn a denial for services that should be covered. The audit noted that reversals often occurred when a beneficiary or provider appealed or disputed the claim denial.
Sources: “Some Medicare Advantage Organization Denials of Prior Authorization Requests Raise Concerns About Beneficiary Access to Medically Necessary Care,” U.S. Department of Health and Human Services, Office of Inspector General, April 2022.