HHS Inspector General Says Medicare Advantage Plans Guilty of “Widespread Denial of Claims”

A new report from the Office of Inspector General at the Department of Health and Human Services says it has found “widespread and persistent problems related to denials of care and payment” in the Medicare Advantage program.   The report recommends increased oversight of the plans and more information for beneficiaries about the problem and denials.  The report says that Medicare Advantage plans, also known as Medicare managed care, deny claims in order to maximize profits.  Many Medicare beneficiaries are not really aware that the denials are inappropriate or that they could appeal.  In fact, when they do appeal, 75% of those appeals are successful to gain coverage that is denied.

About one third of Medicare beneficiaries have joined the Medicare Advantage plans with many experts predicting that half of all beneficiaries will be in Medicare Advantage in the coming year.  These plans typically provide greater benefits than regular Medicare offering those extras like gym membership or partial coverage for dental or eyeglasses which are meant to entice beneficiaries to join their plans.  However, this report from the Inspector General says they attempt to maximize their profits by controlling costs and denying claims.   They are supposed to provide all the benefits that the regular Medicare plan provides.

Beneficiaries can switch plans or go back to traditional Medicare.  The open enrollment period begins today, October 15

Here is a summary of the report findings from the Inspector General


A central concern about the capitated payment model used in Medicare Advantage is the potential incentive for MAOs to inappropriately deny access to services and payment in an attempt to increase their profits. An MAO that inappropriately denies authorization of services for beneficiaries, or payments to health care providers, may contribute to physical or financial harm and also misuses Medicare Program dollars that CMS paid for beneficiary healthcare. 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 their providers.


We collected data on denials, appeals, and appeal outcomes for 2014-16 at each level of the Medicare Advantage appeals process. We calculated the volume and rate of appeals and overturned denials at each level. To examine CMS oversight, we analyzed CMS’s 2015 audit results and the resulting enforcement actions, including Star Ratings data from 2016 to 2018.


When beneficiaries and providers appealed preauthorization and payment denials, Medicare Advantage Organizations (MAOs) overturned 75 percent of their own denials during 2014-16, overturning approximately 216,000 denials each year. During the same period, independent reviewers at higher levels of the appeals process overturned additional denials in favor of beneficiaries and providers. 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 used the appeals process, which is designed to ensure access to care and payment. During 2014-16, beneficiaries and providers appealed only 1 percent of denials to the first level of appeal.

Centers for Medicare & Medicaid Services (CMS) audits highlight widespread and persistent MAO performance problems related to denials of care and payment. For example, in 2015, CMS cited 56 percent of audited contracts for making inappropriate denials. CMS also cited 45 percent of contracts for sending denial letters with incomplete or incorrect information, which may inhibit beneficiaries’ and providers’ ability to file a successful appeal. In response to these audit findings, CMS took enforcement actions against MAOs, including issuing penalties and imposing sanctions. Because CMS continues to see the same types of violations in its audits of different MAOs every year, however, more action is needed to address these critical issues.


We recommend that CMS (1) enhance its oversight of MAO contracts including those with extremely high overturn rates and/or low appeal rates and take corrective action as appropriate; (2) address persistent problems related to inappropriate denials and insufficient denial letters in Medicare Advantage; and (3) provide beneficiaries with clear, easily accessible information about serious violations by MAOs. CMS concurred with all three recommendations.

Copies can also be obtained by contacting the Office of Public Affairs at Public.Affairs@oig.hhs.gov.

National Council on Aging (NCOA) Raises Alarm about Trump Plan to Penalize Immigrants Using Public Programs

On September 22, the Trump Administration issued a proposed rule change regarding immigration policy that would expand the number of public programs taken into consideration in determining whether a immigrant is a “public charge” who would be dependent on public funding.    The public charge determination would negatively impact whether an immigrant should be admitted to the United States or given permanent residence with green cards.

The National Council on Aging (NCOA)  and other aging advocates have raised concerns not only about the impact on older immigrants using public benefits but also about the 1 in 4 direct care workers who are immigrants in health and service professions taking care of seniors and the disabled.  Advocates worry that immigrants will forego needed benefits in order to preserve chances for a green card.

NCOA said, “If the rule is finalized in its proposed form, this would mark a significant and harmful departure from the current policy. For over a hundred years, the government has recognized that work supports like health care and nutrition help families thrive and remain productive. And decades ago, the government clarified that immigrant families can seek health and nutrition benetits without fearing that doing so will harm their immigration case. If this rule is finalized, we can no longer offer that assurance. Benefits that could be considered in a “public charge” determination targets key programs that help participants meet their basic needs, such as: •

Non-emergency Medicaid (with limited exceptions for certain disability services related to education).

• Supplemental Nutrition Assistance Program (SNAP).

• Low Income Subsidy for prescription drug costs under Medicare Part D;

Section 8 Housing vouchers

Apple’s Newest Watch Takes Heart EKG

The consumer technology giant Apple continues to move into the health field.  It has a health app on the IPHONE that can be used to track patients records and data.  Its Apple Watch has a fitness tracking function.   Its newest watch produces an Electrocardiagram or EKG which is normally done in the doctor’s office with up to 12 electrodes  attached to various areas of your body.  The Apple Watch EKG has the approval of the Food and Drug Administration and uses electrodes on the watch to take the test.  The test will either give results showing your heart beats are normal or that you have atrial fibrillation and should see a doctor.

Of course the Apple Watch is quite expensive at over $300.  It does many other things, serving as a watch and a phone and can get email.  The EKG function is just the beginning of what are expected to be  many other innovations that will allow persons to monitor their health including blood sugar and heart rates.   Other screenings may be possible in the future for individuals to check  for artery disease and other conditions which they then can report to a doctor.

A note of disclosure:  my son Joseph works for Apple in California so I keep a close eye on what the company is doing, particularly in the health care field.

States Passing Laws to Address High Drug Prices in Battle with BIG PHARMA’s Market and Political Power

  • The New York Times reported last week that 24 states have passed 37 laws this year to address high drug costs.  Among the most prominent bills are those which require the companies to justify their costs, a move the companies say violates their freedom of speech.   States are also trying to regulate pharmacy benefit managers which can give preferential treatment for drugs if the companies pay them rebates.

  • Utah is exploring importing drugs from Canada.

  • Connecticut passed a law requiring justification of price increases above 20% in one year or 50% in three years.  California passed a law requiring advance notice of drug price increases with explanations for those increases.  The pharmaceutical industry is suing.

  • The generic drug industry sued Maryland which passed a price gouging law that was thrown out by a federal court after the generic drug industry sued the state.

  •   New York has a ceiling on Medicaid drug prices and can seek higher rebates or cuts in drug prices if the budget exceeds its ceiling.   The article says state officials claimed $60 million in savings were negotiations because costs were going to exceed the cap.

  • In one of the most creative and intriguing actions Oklahoma will only pay for new drugs if they produce a value in treatment.  The article quoted  Nancy Nesser, the state’s Medicaid pharmacy director, “If a drug claims to keep people out of the hospital and doesn’t, the manufacturer may be liable for the cost of the hospitalization.”

Paid Family Leave Advocates Urge Cuomo to Veto Bill Adding Bereavement Leave to State Law

A Better Balance, one of the key organizations which mobilized support for New York’s Paid Family Leave law has announced it opposes legislation passed in June to add bereavement leave to the program.  While the organization is sympathetic to bereavement leave needs, it feels that the bill passed has no cost estimates and that it could drag the entire program down which is paid for by workers through the New York State disability program.  A Better Balance noted that there is no state or city in the country which has paid bereavement leave paid for by workers.  The state of Oregon and the city of Tacoma, Washington have laws that employees can use up to five days of paid sick leave which is paid by employers.

The state’s paid family leave program is being phased in and by 2021 will provide up to 12 weeks of paid time at up to 2/3 of salary to a statewide average for persons caring for a newborn, a seriously ill relative or to care for family  members because of military deployment.

Other organizations which worked for the current law are also concerned about the bereavement bill.  The current program went into effect in January 2018. Governor Cuomo has not yet received the bill from the Legislature and probably won’t before the primary on September 13.  He would have ten days to sign or veto it.

Cuomo to Decide on Controversial Bill Adding Bereavement to Paid Family Leave Law

A bill  (A10639-S8380) passed late in the New York State legislative session adds bereavement to the list of eligible situations that allow an employee to apply for paid family leave.   The bill has to be sent by the Legislature to the Governor and then he has ten days to decide whether to sign it.   The legislation was passed not as a result of advocacy by the Paid Family Leave coalition that successfully pushed the original bill.  Rather, it seems that legislators who lost loved ones pushed the bill and passed it.  Assemblymember Joseph Morelle and Senator Richard Funke were the prime sponsors of the bill which passed in the Assembly 111-32 on June 20th.  The sponsor’s bill memo stated:

Facing the death of a child may be the hardest thing a parent ever has
to do. People who have lost a child have stronger grief reactions and a
longer and slower bereavement and recovery should be expected when    someone loses a child. For those suffering the loss of a spouse or
someone loses a child or domestic partner; studies have shown that
mortality increases from  40% - 90% in the three months following 
the death of a spouse and lingers at 15% during the months after.

The new Paid Family Leave Law went into effect on January 1st of this year and by 2021 will allow 12 weeks of paid family leave with up to 2/3 of an employee’s salary paid up to a statewide average.  Current law allows paid family leave for three situations:  caring for a newborn, caring for a relative with a serious medical condition and for caring for family members when a member is deployed in the military.  There are concerns about the bereavement legislation’s cost if added to the current program.   Some business groups have come out against the addition saying it could disrupt their workforce if workers took bereavement leave on multiple occasions.   A death certificate would be required as proof for applying for the paid leave. Some employers currently offer several days of bereavement leave but certainly not twelve weeks.

Advocates of the bill cited how the death of a child could cause an inability to work for an extended period of time.  However, some are raising the issue of whether persons in that situation would be suffering from depression and should be considered for disability benefits instead.  The Governor has a choice to sign or veto the bill or he could not approve it and ask for amendments.   He could also veto it and say he would give it further study and follow up with a proposal next year.

He may also quietly urge the Legislature to not send the bill to him before the election so he can address it after the voting.

Drug Companies Spent Millions to Support “Dark Money” Group Pushing to Eliminate Affordable Care Act

The following story was printed with permission from Kaiser Health News


In 2010, before the Affordable Care Act was passed by Congress, the pharmaceutical industry’s top lobbying group was a very public supporter of the measure. It even helped fund a multimillion-dollar TV ad campaign backing passage of the law.

But last year, when Republicans mounted an aggressive effort to repeal and replace the law, the group made a point of staying outside the fray.

“We’ve not taken a position,” said Stephen Ubl, head of the organization, the Pharmaceutical Research and Manufacturers of America, known as PhRMA, in a March 2017 interview.

That stance, however, was at odds with its financial support of another group, the American Action Network, which was heavily involved in that effort to put an end to the ACA, often referred to as Obamacare, spending an estimated $10 million on an ad campaign designed to build voter support for its elimination.

“Urge him to repeal and replace the Affordable Care Act now,” one ad running in early 2017 advised viewers to tell their congressman. That and similar material (including robocalls) paid for by the American Action Network ran numerous times last year in 75 congressional districts.

PhRMA was one of AAN’s biggest donors the previous year, giving it $6.1 million, federal regulatory filings show. And PhRMA had a substantial interest in the outcome of the repeal efforts. Among other actions, the GOP-backed health bill would have eliminated a federal fee paid by pharmaceutical companies, one estimated at $28 billion over a decade.

But there was no way the public could have known at the time about PhRMA’s support of AAN or the identity of other deep-pocketed financiers behind the group.

Unlike groups receiving its funds, PhRMA and similar nonprofits must report the grants in their own filings to the Internal Revenue Service. But the disclosures don’t occur until months or sometimes more than a year after the donation.

The conservative-leaning AAN has become one of the most prominent nonprofits for funneling “dark money” — difficult-to-trace funds behind TV ads, phone calls, grass-roots organizing and other investments used to influence politics. Such groups have thrived since the Supreme Court’s Citizens United decision in 2010, which loosened rules for corporate political spending, and amid what critics say is nonexistent policing of remaining rules by the IRS.

(It’s impossible to know from public records whether PhRMA donated before or after President Donald Trump’s victory, which made repealing the health law a substantial possibility. In any case, most donations to dark-money groups are not earmarked for a particular program.)

Generally speaking, dark-money groups are politically active organizations, often nonprofits, that are not required to disclose identities of their donors. Under IRS regulations, donors may fund a nonprofit group such as AAN, which is allowed to engage in political activities and is not required to reveal its funding sources.

Dark-money groups are often chartered under Section 501(c)(4) of the tax law, which grants tax exemption to “social welfare organizations.” For those seeking to influence politics but stay in the background, 501(c)(4) designations offer two big advantages: tax exemption and no requirement to disclose donors.

Against the backdrop of high drug prices and its heaviest political expenditures in years, the pharmaceutical industry is directing substantial resources through AAN and other such groups that hide the identity of their donors and have few if any limits on fundraising.

“PhRMA has always been very aggressive and very effective in their influence efforts,” said Michael Beckel, research manager at Issue One, a nonprofit devoted to campaign-finance transparency. “That includes using these new, dark-money vehicles to influence policy and elections.”

PhRMA’s $6.1 million, unrestricted donation to AAN was its single-biggest grant in 2016, dwarfing its $130,000 contribution to the same group the year before. Closely associated with House Republicans — AAN has a former Republican senator and two former Republican House members on its board — the group backed the failed GOP health bill intended to replace the Affordable Care Act. It also supported the successful Tax Cuts and Jobs Act of 2017, which reduced corporate taxes by hundreds of billions of dollars over a decade.

So far in this election cycle, AAN has given more than $19 million to the Congressional Leadership Fund, a Republican super PAC with which it shares an address and staff, according to the Center for Responsive Politics. The fund recently ran ads opposing Democratic candidates in high-profile special congressional elections in Georgia and Pennsylvania.

PhRMA disputes the suggestion that it backs particular actions by the recipients of its donations. “PhRMA engages with groups and organizations that have a wide array of health care opinions and policy priorities,” said its spokesman, Robert Zirkelbach. “It is inaccurate and would be inappropriate for you to attribute those grants to a specific campaign.”

AAN declined several requests for comment.

Including AAN, PhRMA gave nearly $10 million in 2016 to politically active groups that don’t have to disclose donors, its most recent filing with the IRS shows. By contrast, PhRMA and its political action committee, or PAC, made only about $1 million in comparatively transparent political donations in 2015 and 2016 that were disclosed to regulators and reported by the Center for Responsive Politics.

PhRMA’s 2016 political activities included support for the Republican National Convention. Rather than directly support the Cleveland convention, which several companies pulled out of after it became clear that Donald Trump was going to be the presidential nominee, PhRMA routed $150,000 through limited liability companies with names like Convention Services 2016 and Friends of the House 2016.

Like 501(c)(4)s, LLCs do not have to disclose their donors. PhRMA’s support was revealed in IRS filings more than a year later. (Donations by PhRMA and other groups to Friends of the House, which financed a luxury lounge for convention dignitaries, were first reported by the Center for Public Integrity last fall.)

PhRMA’s surge in donations to AAN coincides with the arrival of Ubl, who took over as president and CEO in 2015 and has long-standing ties to Norm Coleman, a former U.S. senator from Minnesota who is now AAN’s chairman. Ubl once ran the lobby for makers of knee implants, heart stents and other medical devices, one of whose most powerful members, Medtronic, is based in Minneapolis.

Dues paid by member drug companies rose by 50 percent after he got there. PhRMA’s total revenue increased by nearly a fourth in 2016, according to IRS filings.

PhRMA’s 2016 dark-money contributions included $150,000 to Americans for Prosperity, a conservative group associated with billionaires Charles and David Koch. Their group has already signaled it will be active in November’s elections, running attack ads against Sen. Jon Tester, a vulnerable Montana Democrat, for not supporting ACA repeal.

PhRMA also gave $50,000 to Americans for Tax Reform, run by conservative anti-tax activist Grover Norquist.

PhRMA and other trade associations donate to such groups “to avoid attracting attention” amid the political fray, said Bruce Freed, president of the Center for Political Accountability, which seeks to shed light on corporate political spending. Nevertheless “they’re achieving their goals by giving money to these folks and helping elect members that are going to be in support of them.”

Mostly smaller amounts went to centrist and liberal groups. Center Forward, which claims to seek bipartisan, common ground on drug policy and other issues, got $300,000 directly from PhRMA and another $179,000 from a PhRMA-backed group called the Campaign for Medical Discovery, according to tax filings.

Zirkelbach disputed the notion that PhRMA donations to AAN and other groups were intended to achieve specific goals, saying, “We seek to work with organizations we agree with as well as those where we have disagreements on public policy issues.”

Much of the work by PhRMA-linked, dark-money groups touches health policy and harmonizes with PhRMA’s positions.

During debates over the tax overhaul, Center Forward worked to preserve a tax credit for researching rare-disease medicines known as orphan drugs. PhRMA took a similar stance, encouraging Congress “to maintain incentives” for rare-disease drugs.

AAN, which collected total contributions and grants of $14.6 million for fiscal 2016, launched a $2.6 million mass-mailing and ad campaign against letting Medicare lower drug prices through negotiations. PhRMA supported that stance, telling Healthline that such a measure could jeopardize seniors’ access to medicine and discourage companies from developing drugs.

Americans for Tax Reform ran similar ads in local markets opposing “price controls” on prescription drugs.

PhRMA’s dark-money allies push its agenda without disclosing its role, critics say.

PhRMA is “spending millions of dollars on politics every cycle, and they’re splitting it up between the state and federal level,” said Robert Maguire, political nonprofits investigator for the Center for Responsive Politics, which tracks political donations. “They’re just not running the political ads themselves,” which keeps their name off the product, he said.

A group called Caregiver Voices United, which got $720,000 from PhRMA in 2016, backed a secret effort to generate letters opposing a drug-transparency bill in Oregon. The campaign surfaced when an employee leaked phone-script documents to a lawmaker, as reported in February by The Register-Guard newspaper in Eugene.

Caregiver Voices United is “not influenced” by PhRMA or any other outside group, said John Schall, its president.

Dark-money groups received pharmaceutical industry money from individual companies as well, not just the PhRMA trade organization.

In 2016, Amgen gave $7,500 to Third Way, a center-left group that supportsreimbursement for drugs and medical devices based on their results, according to the Center for Political Accountability. Johnson & Johnson gave $35,000 that year to the Republican Main Street Partnership, a 501(c)(4) that describes itself as a coalition of lawmakers committed to “conservative, pragmatic government,” the CPA data show.

But CPA’s research also reveals that many pharmaceutical companies don’t disclose donations made to 501(c)(4) organizations, nor are they legally required to.

Corporations “could dump millions into one of these (c)(4)s and nobody would ever know where it came from,” said Steven Billet, a former AT&T lobbyist who teaches PAC management at George Washington University.

KHN’s coverage of prescription drug development, costs and pricing is supported in part by the Laura and John Arnold Foundation.