The Office of the Inspector General has released a report that raises questions about whether Medicare Advantage plans have inappropriately denied claims to increase profits.
Although it did not name specific plans, the OIG report is based on appeals to MA denials and the outcomes. MA organizations overturned 75 percent, amounting to 216,000 denials, from 2014 to 2016. Independent reviews at higher levels overturned an additional 80,000 denials during those two years in favor of the beneficiaries and providers, the report said.
The report did not give a comparison of the rate of overturned denials from other plans.
WHY IT MATTERS
Medicare Advantage is the plan of choice for a third of all Medicare beneficiaries, a rapidly growing population. Numerous insurers are in the MA market.
A central concern about the capitated payment model used in Medicare Advantage is the potential incentive for MA organizations to inappropriately deny access to services and payment in an attempt to increase their profits, the report said. Denied authorization of services for beneficiaries, or payments to healthcare providers, may contribute to physical or financial harm and also misuses Medicare dollars, the report said.
ON THE RECORD
"Because Medicare Advantage covers so many beneficiaries (more than 20 million in 2018), even low rates of inappropriately denied services or payment can create significant problems for many Medicare beneficiaries and providers," the report said.
"The high number of overturned denials raises concerns that some Medicare Advantage beneficiaries and providers were initially denied services and payments that should have been provided. This is especially concerning because beneficiaries and providers rarely use the appeals process, which is designed to ensure access to care and payment."
In 2015, the Centers for Medicare and Medicaid Services cited 79 of the 140 audited MA contracts (56 percent) for two types of violations related to inappropriately denying requests for preauthorization of services and/or payment.
CMS cited nearly half for sending incorrect or incomplete denial letters, which may inhibit beneficiaries' and providers' ability to appeal.
CMS suspended new enrollment for two MA organizations because of serious threats to the health and safety of their beneficiaries. Neither were named. One has a longstanding history of noncompliance.
CMS fined nine MAs a total of $1.9 million for violations related to denials and appeals.
The OIG recommends CMS enhance its oversight of MA contracts including those with extremely high overturn rates and/or low appeal rates and take corrective action as appropriate; address persistent problems related to inappropriate denials and insufficient denial letters; and provide beneficiaries with clear, easily accessible information about serious violations. CMS concurred with all three recommendations, the OIG said.
Medicare Advantage organizations place a high emphasis on star ratings and need a rating of 4 and higher to receive the bonus payment, which increases the amount of federal revenue they receive.
Yet, although Medicare Advantage program audits are one of CMS's most direct methods for oversight, they have only a minimal and delayed impact on the star ratings, the report said. Beginning in 2019, audit violations will no longer directly impact the star ratings, in part because CMS does not have audit information for each contract each year, the report said.
Instead of having audits directly impact star ratings, CMS added an indicator on the Medicare plan finder website to alert beneficiaries if contracts are under sanction. This is not as great an impact to MA plans as an audit result that would affect their star ratings.