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
WHY WE DID THIS STUDY
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.
HOW WE DID THIS STUDY
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.
WHAT WE FOUND
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.
WHAT WE RECOMMEND
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.