Medicare Advantage Plans that have become popular among many seniors are offered by private insurance companies. They are advertised as alternatives to traditional Medicare that can be less expensive and provide a wider array of benefits than the traditional government-run program offers.
More than 27 million seniors are covered through private Medicare Advantage plans, which receive a set amount to cover each enrollee’s projected cost of care. The plans receive higher “risk-adjusted” payments for sicker individuals with more projected medical costs.
Those plans are offered because they are very profitable for the companies. However, a new report from the Office of the Inspector General (IG) of the Department of Health and Human Services raises troubling questions about how some companies are trying to increase their profits.
According to the report, some companies have denied access to medically necessary care by denying prior authorization and payment requests that, in fact, met Medicare coverage rules. They have done that by:
- using clinical criteria that are not contained in Medicare coverage rules;
- requesting unnecessary documentation; and
- making manual review errors and system errors.
They have also sometimes denied payments to providers for some services that met both Medicare coverage rules and the companies’ own billing rules. Denying requests that meet Medicare coverage rules may prevent or delay beneficiaries from receiving medically necessary care and can burden providers.
Under traditional Medicare, there may be an incentive for hospitals and doctors to overtreat patients because they are paid for each service and test performed. But the fixed payment given to private plans provides “the potential incentive for insurers to deny access to services and payment in an attempt to increase their profits,” the report concluded.
According to one health care lawyer, people signing up for Medicare Advantage are surrendering their right to have a doctor determine what is medically necessary, he said, rather than have the insurer decide.
The investigators urged Medicare officials to beef up oversight of Advantage plans and provide consumers “with clear, easily accessible information about serious violations.”
Medicare officials said in a statement that they are reviewing the findings to determine the appropriate next steps, and that plans found to have repeated violations will be subject to increasing penalties.
The agency “is committed to ensuring that people with Medicare Advantage have timely access to medically necessary care,” officials said.