Regulatory Bulletins

Bulletin 15 – What you need to know about the OIG April 2022 Report

Versalus Health Comments on the April 2022, Office of Inspector General Report on “Some Medicare Advantage Organization Denials of Prior Authorization Requests Raise Concerns About Beneficiary Access to Medically Necessary Care”

Summary:

The Center for Medicare and Medicaid Services (CMS) has had ample evidence through annual audits and previous Office of Inspector General (OIG) Reports that Medicare Advantage Organizations (MAOs) are incentivized to deny beneficiary access to services and deny payments to providers to increase profits.  In 2021, 42% of Medicare beneficiaries were enrolled in a Medicare Advantage program.  The Congressional Budget Office (CBO) projects that the share of all Medicare beneficiaries enrolled in Medicare Advantage plans will rise to about 51% by 2030.  In the April 2022 report “Some Medicare Advantage Organization Denials of Prior Authorization Requests Raise Concerns About Beneficiary Access to Medically Necessary Care,” the Office of Inspector General (OIG) evaluated a random sample of 250 denials of prior authorization requests and 250 payment denials issued by 15 of the largest MAOs during June 1−7, 2019 with the following objectives:

  1. To determine the extent to which selected MAOs denied prior authorization requests for services that met Medicare coverage rules, and to examine why these denials occurred.
  2. To determine the extent to which the selected MAOs denied payment requests that met Medicare coverage rules and MAO billing rules, and to examine why these denials occurred.
  3. To describe the types of health care services involved in denials of services and payments that met Medicare coverage rules and MAO billing rules.

The 15 selected MAOs accounted for almost 80 percent of beneficiaries enrolled in Medicare Advantage (MA) in June 2019. 

The OIG report identified that inappropriate denials of prior authorization and payment requests have resulted from MA plans:

  • using MA clinical criteria that are inconsistent with and often more restrictive than the coverage rules for fee-for-service (FFS) Medicare;
  • requesting unnecessary documentation; and
  • making manual review errors and system errors.

The report echoes similar findings by the OIG in the September 2018 report “Medicare Advantage Appeal Outcomes and Audit Findings Raise Concerns About Service and Payment Denials.”  Key take aways identified in the report indicate that MAOs denied prior authorization and payment requests that met Medicare coverage rules by:

  • using MAO clinical criteria that are not contained in Medicare coverage rules;
  • requesting unnecessary documentation;
  • making manual review errors and system errors.

Versalus Comments

The OIG stated “…that MAOs sometimes delayed or denied Medicare Advantage beneficiaries’ access to services, even though the requests met Medicare coverage rules”.   This finding accurately reflects the experience of patients and healthcare providers across the nation.  The OIG demonstrated that 13% of prior authorization denials fit within Medicare coverage requirements, as did 18% of denied payment requests.  While the findings were not a surprise, the conclusion and recommendation were disappointing.  Despite guidance at every level in the regulatory hierarchy such as in the Social Security Act Section 1852(a)(1)(A) that Medicare Advantage plans must provide a ‘basic benefit’ that is not less than the benefit(s) provided to Medicare Fee for Service (FFS) beneficiaries, as well as the Medicare Program Integrity Manual Chapter 6 which states that MA plans

“Must make determinations based on: (1) the medical necessity of plan-covered services – including emergency, urgent care and post-stabilization – based on internal policies (including coverage criteria no more restrictive than original Medicare’s national and local coverage policies) … Furthermore, if the plan approved the furnishing of a service through an advance determination of coverage, it may not deny coverage later on the basis of a lack of medical necessity.”

The OIG went on to say that “Although our review determined that the requests in these cases did meet Medicare coverage rules, CMS guidance is not sufficiently detailed to determine whether MAOs may deny authorization based on internal MAO clinical criteria that go beyond Medicare coverage rules.”  As written in multiple regulatory sources it is relatively clear that if traditional Medicare rules would cover a service, any criteria that would not cover a service is, by definition, more restrictive.  This does not require clarification; it only requires enforcement of the application of the rule.  As the OIG mission is to protect the integrity of HHS programs as well as the health and welfare of program beneficiaries focusing on the clarity of the rules introduces further bandwidth by which MAO’s can extort the system.  Ultimately the issue is not on about the clarity of the rule, the issue is accountability, or lack thereof, by MAOs to follow the rules. 

 

Further compounding the situation was the finding that many of the payment denials in the sample were caused by human error during manual claims-processing reviews (e.g., overlooking a document) and system processing errors (e.g., the MAO’s system was not programmed or updated correctly) or incorrect application of the National Coverage Determination (NCD) and/or the Local Coverage Determination (LCD) by the MAO or a subcontractor.  Again, this finding is consistent with healthcare provider experience across the nation as well as the findings of the OIG in 2018.  The OIG recommendation that CMS “update its audit protocols to address the issues identified in this report such as MAO use of clinical criteria” and “direct MAO’s to take additional steps to identify and address vulnerabilities that can lead to manual review errors and system errors” is on target and a valuable recommendation, to the extent that is followed by CMS.  Case in point, in the September 2018 report, the OIG found that when Medicare Advantage beneficiaries and providers appealed denied claims during 2014−2016, MAOs overturned about 75 percent of their own prior authorization denials and payment denials. It was also documented that CMS cited more than half of audited MAO contracts in 2015 for inappropriately denying prior authorization and payment requests. As a result, the OIG recommended that CMS address persistent problems related to denials identified in its audits. CMS responded that it had increased the penalties for MAO violations that prevent beneficiaries from accessing medically necessary services. As of March 2022, CMS had not yet implemented these recommendations.

Recommendations

Appeal adverse decisions:  For 3 percent of prior authorization denials, MAOs initially denied requests that met Medicare coverage rules, and later reversed these denials. Most of these reversals occurred because beneficiaries or their providers filed appeals.  For 6 percent of payment denials, MAOs initially denied payment requests that met Medicare coverage rules and MAO billing rules, and later reversed these denials.  These findings further emphasize the similar results from the 2018 OIG report that appealing denials is a meaningful and successful strategy.  While the appeal process can be arduous MAOs must be held accountable for erroneous and egregious behavior. Appendix C of the report identifies the 15 MAOs included in the review and hospitals in regions with high penetration by these MAOs should be particularly aggressive in pursuing all appeals.

Hold MAO’s Accountable: According to the OIG, “Our findings about the circumstances under which MAOs denied requests that met Medicare coverage rules and MAO billing rules provide an opportunity for improvement to ensure that Medicare Advantage beneficiaries have timely access to all necessary health care services, and that providers are paid appropriately”.  Beneficiary access and compliant provider reimbursement for services rendered require vigilance, resilience, and strategy to successfully hold MAOs accountable.

 

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