CHICAGO (Reuters) - A growing number of U.S. seniors are choosing Medicare Advantage, the popular private insurance alternative to traditional coverage. But a new report by federal investigators finds that Advantage plans have a pattern of inappropriately denying patient claims.
The good news is that those denials are frequently overturned if people bother to appeal.
The report found "widespread and persistent problems related to denials of care and payment in Medicare Advantage" plans, which usually are managed-care HMO or PPO plans. The Advantage payment model reimburses plans a pre-set amount per patient, and this may be incentivizing plans "to deny preauthorization of services for beneficiaries, and payments to providers, in order to increase profits," concludes the report, which was conducted by the Office of Inspector General (OIG) at the U.S. Department of Health and Human Services. (bit.ly/2q08ydS)
The OIG report, which looked at appeals filed by patients and healthcare providers from 2014 through 2016, found that when denied claims were appealed, the Advantage plans themselves overturned those denials 75 percent of the time.
The findings are worrisome because very few claim denials are appealed - just 1 percent during the three-year period reviewed in the OIG report. That suggests that patients who do not appeal claims are going without the requested services, or may have paid out of pocket. It also means the provider may not have been paid.
“One of the professed upsides of Medicare Advantage is that care is coordinated or managed,” said David Lipschutz, senior policy attorney at the Center for Medicare Advocacy. “But this report shows this can mean that care or coverage can be denied at a high rate.”
Enrollment in Medicare Advantage is growing quickly. The annual fall Medicare enrollment period is under way now (reut.rs/2yj24dB), and Medicare projects Advantage enrollment next year will rise 11.5 percent to 22.6 million, accounting for 37 percent of beneficiaries.
The overturn rates uncovered by the OIG report are significantly higher than in the traditional fee-for-service Medicare program. In 2013, the OIG reviewed traditional Medicare appeals from 2008 to 2012. The review found that 24 percent of denied Medicare Part A (hospitalization) claims were overturned on appeal, and 51 percent of Part B (outpatient services) denials were overturned. A larger share of enrollees in traditional Medicare (2.6 percent) appealed claim denials - still a relatively small share. (The OIG notes that numbers from the two reports are not directly comparable due to the different time periods studied.)
The new OIG report made three key recommendations for improvement to the Centers for Medicare & Medicaid Services (CMS), which administers Medicare. Those included enhancing oversight of Advantage contracts, addressing “persistent problems related to inappropriate denials” and providing clear, accessible information to beneficiaries about violations by plans identified in plan audits.
In a statement, a CMS spokesman told me: “One of CMS’s top priorities is to ensure that all Medicare beneficiaries – including Medicare Advantage enrollees – have access to high-quality health care.”
In its written response to the report, CMS concurred with all three recommendations. But it added that it already uses several tools to oversee the Advantage program and ensure that enrollees have adequate access to healthcare services, including regular audits and enforcement actions. CMS noted that the average number of issues cited per audit have fallen almost 70 percent from 2012 to 2017.
CMS also noted that 82 percent of the denials cited in the OIG report were for payments to providers for services that had already been provided, “which means the majority of denials do not impact beneficiary access to care and services.”
But Lipschutz disagreed with that conclusion. “If you are going to a healthcare provider who has had their payments denied by your plan and you need continuing care, that could influence the provider’s behavior - they might not want to engage with you.”
America’s Health Insurance Plans (AHIP), an insurance trade association, defended Advantage plans, noting that the OIG report found overall denial rates of only 4 percent for prior authorization requests and 8 percent for payment requests - meaning that nearly all claims are approved.
“Of note, a denial can often be a request for additional information for the claim, or a move to an alternative treatment that’s more effective,” a spokeswoman said.
But in a system as large as Medicare, the small share of denials translates into very substantial numbers of individuals. Advantage plans overturned more than a half-million preauthorization and payment denials during the three-year period - and that was just the first level of appeal. An additional 380,471 appeals were overturned by subsequent independent reviewers.
The claim denial data should not be read as a blanket indictment of Advantage plans, cautions Erin Bliss, assistant inspector general for the office of evaluation and inspections at the OIG.
“Denial rates are important starting points for flagging a potential concern, but overturn of a denial doesn’t always mean that an Advantage plan made a wrong initial decision,” she said. “Sometimes the right information may not have been provided to support the claim.”
Bliss added: “What I would say is this - arm yourself with information that you need to understand your right to appeal rights and the process for doing that, no matter which program you choose.”
In Medicare Advantage, the first level of appeal is made to the plan itself. Start by requesting a written determination from the plan, Lipschutz said. In traditional Medicare, the first level of appeal is made to a claims administration contractor hired by Medicare. For more resources on how to appeal a denied claim visit the Medicare Rights Center (bit.ly/2CRWDHx)
The opinions expressed here are those of the author, a columnist for Reuters.