Medicare Advantage plans continue to thrive and now cover more than one third of all Medicare beneficiaries. But a new report by the Office of Inspector General (OIG) at the Department of Health and Human Services finds they may have an incentive to deny claims to increase their profits. The OIG found that when beneficiaries and providers appealed preauthorization and payment denials, Medicare Advantage Organizations overturned 75 percent of their own denials during 2014-2016, overturning an estimated 216,000 each year. “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,” the OIG said.
Medicare Advantage plans may be denying medical services to increase their profits, according to a recent government watchdog report, which recommends that the Centers for Medicare & Medicaid Services (CMS) take three actions to address widespread and persistent problems within the program.
The OIG said it decided to take a closer look at the capitated payment model used in Medicare Advantage because it offers a potential incentive for Medicare Advantage Organizations (MAO) to inappropriately deny access to services and payments to maximize their profits.
To determine whether MAOs were doing so, the agency collected data on denials, appeals, and appeal outcomes for 2014-2016 at each level of the Medicare Advantage appeals process. The OIG then calculated the volume and rate of appeals and overturned denials. It also analyzed CMS audit results from 2015 and resulting enforcements, as well as Star Ratings data from 2016 to 2018. It noted that during the same period, independent reviewers were overturning additional denials at the higher levels of the appeals process in favor of members and providers.
“This is especially concerning because beneficiaries and providers rarely used the appeals process, which is designed to ensure access to care and payment,” the OIG noted. “During 2014-16, beneficiaries and providers appealed only 1 percent of denials to the first level of appeal.”
The report also noted that the appeals process is supposed to be a safeguard against inappropriate denials, but patient advocates complain that the process can be confusing and overwhelming—one reason why beneficiaries and providers only appealed 1 percent of denials to the first level of appeal. When they decided not to appeal the decision, patients either went without the service or paid for it themselves, or the provider may not have been paid, the OIG said.
Investigation findings and recommendations
The investigation revealed that CMS audits showed widespread and persistent MAO problems related to denials of care and payment.
In 2015, the report said, CMS cited 56 percent of audited contracts for making inappropriate denials and cited 45 percent of contracts for sending denial letters with incomplete or incorrect information, which could make it difficult for a beneficiary or provider to successfully appeal the denial.
Although CMS took enforcement actions such as issuing penalties and imposing sanctions against the MAOs, the OIG report concluded the agency needed to take more actions because it continues to find the same violations in audits of different MAOs each year. The OIG recommended and CMS agreed to:
- Enhance its oversight of MAO contracts, including those with extremely high overturn rates and/or low appeal rates and take corrective action as appropriate. Those actions might include technical assistance, ongoing monitoring, or conducting additional audits.
- Address persistent problems related to inappropriate denials and insufficient denial letters in Medicare Advantage. The OIG suggested that CMS could offer MAOs a combination of technical assistance, training, education, and increased monitoring or enforcement actions, such as applying additional civil money penalties.
- Provide beneficiaries with clear, easily accessible information about serious violations by MAOs. Because audit violations will no longer impact Star Ratings, the agency suggested that CMS consider providing information about serious violations on the Medicare Plan Finder website, a place that patients typically use to access information.
Editor’s note: For more information about this topic, consider attending one of the upcoming RISE events: The 12th Annual Risk Adjustment Forum, Nov. 11-13, in Marco Island, Fla. or The 13th Annual RISE Nashville Summit in March 2019.