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According to a Report from the Office of Inspector General (OIG) of the U.S. Department of Health and Human Services (HHS) entitled, "Medicare Advantage Appeal Outcomes and Audit Findings Raise Concerns About Service and Payment Denials," published on September 27, 2018, Medicare Advantage Plans cover more than 20 million beneficiaries in 2018.

By: Elizabeth Hogue, Attorney

 The large number of beneficiaries now covered by Medicare Advantage Plans and the capitated payment model used to pay Medicare Advantage Plans caused the OIG to be concerned about whether Medicare Advantage Plans were denying care inappropriately in order to make more money.

With regard to the capitated model of payment, a significant concern, according to the OIG, is the potential incentive the model creates for Plans to inappropriately deny access to services and payment in order to increase their profits. Plans that deny authorization of services for beneficiaries or payments to health care providers may contribute to physical or financial harm. Such denials also misuse monies that the Centers for Medicare and Medicaid Services (CMS) paid Plans for beneficiaries' healthcare. Even low rates of inappropriately denied services or payments can create significant problems for many Medicare beneficiaries and providers.

The OIG is preachin' to the choir here! Many providers have experienced wholesale denials of payment in recent years. So, what should providers do?

As described in the report referenced above, the OIG found that when beneficiaries and providers appeal preauthorization and payment denials, Medicare Advantage Plans overturned 75% of their denials during the period 2014-2016. In fact, the Plans reversed approximately 216,000 denials in each of these years. During the same period, independent reviewers at higher levels of the appeals process overturned additional denials in favor of beneficiaries and providers.

The OIG expressed concern about the high number of overturned denials in its Report. The OIG says that it raises concerns that beneficiaries and providers were initially denied services and payments that should have been rendered. The OIG was especially concerned because beneficiaries and providers rarely use the appeals process that is specifically designed to ensure access to care and payment. In fact, during 2014-2016, beneficiaries and providers appealed only 1% of denials to the first level of appeal.

According to the OIG, audits by CMS also reveal widespread and persistent problems with Medicare Advantage Plans related to denials of care and payment. In 2015, for example, CMS cited 56% of audited Plans for inappropriate denials. CMS also cited 45% of Plans for sending denial letters with incomplete or incorrect information, which may inhibit the ability of beneficiaries and providers to file successful appeals. Based on these audits, CMS took enforcement action against some Plans, including imposition of penalties and sanctions.

The OIG urges CMS in its Report to continue to monitor Plans, especially those with extremely high overturn rates and/or low appeal rates. The OIG also urges CMS to address persistent problems related to inappropriate denials and insufficient information in denial letters.

What should providers do? The "name of the game" for denials in the Medicare fee for service or "original" Medicare has always been appeal, appeal, appeal! As the above Report makes clear, the same applies to Medicare Advantage Plans. Both providers and beneficiaries should appeal, appeal, appeal!

©2018 Elizabeth E. Hogue, Esq.  All rights reserved. No portion of this material may be reproduced in any form without the advance written permission of the author.

For more resources on Medicare Advantage Plans see:

Medicare Advantage Plans 2019: Testing New Payment Models and Care Delivery

Medicare Advantage and the IMPACT Act: Social Risk Factors Best Practice

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