AHA wants False Claims Act enforcement of Medicare Advantage care denials

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The American Hospital Association on Thursday urged the Justice Department to conduct more False Claims Act investigations of Medicare Advantage insurers for denying patients access to services and payments to providers.

But whether the False Claims Act applies to Medicare Advantage prior authorization denials is up for debate.

AHA’s letter to the Justice Department cited a recent federal investigation that found Medicare Advantage plans have used prior authorization to disclaim beneficiaries access to medically crucial care. The association said civil and criminal penalties are crucial to forestall fraud by some Medicare Advantage insurers.

The AHA asked the Justice Department to establish a task force to conduct False Claims Act investigations of insurers that often deny care to beneficiaries or payment to providers.

“It’s time for the Department of Justice to exercise its False Claims Act authority to each punish those MAOs which have denied Medicare beneficiaries and their providers their rightful coverage and to discourage future misdeeds,” the letter sent to Acting Assistant Attorney General Brian Boynton said.

The False Claims Act is mostly utilized in healthcare to prosecute providers who submitted a claim for Medicare or Medicaid payment that they know is fraudulent. Healthcare firms paid nearly 90% of fraud settlements collected by the Justice Department in 2021.

When the federal government targets Medicare Advantage insurers for false claims, it’s typically because an insurer has been making members appear sicker than they’re.

The Supreme Court ruled in 2016 that firms are liable under the False Claims Act in the event that they lied by omission to the federal government, as long as certain conditions are met. Courts have also ruled that federal healthcare claims are fraudulent if care was provided so poorly that it essentially didn’t amount to care in any respect.

However the recent investigation found that current Medicare guidance on medical necessity reviews is vague. Bill Horton, a partner at law firm Jones Walker, said the False Claims Act might be too strong of an enforcement mechanism for Medicare Advantage prior authorization denials.

“I feel there’s some danger in using the False Claims Act, which is an enormous hammer, against things that is perhaps differences of medical opinion or might simply be differences of interpretation of unclear regulations and policies,” Horton said. “That will not be in any respect to say there will not be an issue… I just don’t see the False Claims Act as being the appropriate tool.”

Nonetheless, insurers must certify they’re in compliance with Medicare guidelines to receive capitated payments from the Centers for Medicare and Medicaid Services, said Jay Dewald, head of healthcare investigations at law firm Norton Rose Fulbright.

There’s an argument to be made that an insurer is lying to CMS if it routinely denies care it told the agency it will cover, he said.

“Every considered one of these problems, they at all times prejudice the beneficiaries, but they at all times profit the medical insurance company’s bottom line,” Dewald said. “While you see these problems stack up like that, so consistently in favor of the businesses, and it is so profit focused, I feel at that time, you actually begin to trigger a few of the knowledge elements of the False Claims Act—should they’ve known higher?”

AHA also wrote to CMS on Thursday urging more oversight of Medicare Advantage plans. The hospital lobby asked CMS to create standardized reporting on prior authorization metrics, implement non-compliance penalties for plans and stop plans from claiming diagnoses for risk adjustment after they’ve denied coverage for treatment of that diagnosis.

The organization also requested a gathering with CMS to debate fixing Medicare Advantage prior authorization.

Insurers and providers have been sparring over prior authorization for years. Almost 90% of providers reported prior authorization felt very burdensome, based on a 2021 Medical Group Management Association survey. But insurers maintain the system prevents unnecessary care and excess costs.

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