Medicare’s regular transition from its founding fee-for-service care model has hit a serious snag with the growing flap over coverage denials by this system’s private managed care plans.
By requiring plan approval, or “prior authorization,” before beneficiaries can receive certain health services, Medicare Advantage plans aim to cut back wasteful spending for unnecessary care, an issue that has dogged traditional Medicare for years.
In recent weeks, nevertheless, lawmakers, providers, patient advocates, and a government watchdog agency report have raised concerns that MA plans are using prior authorization to improperly deny medical care that fee-for-service Medicare typically covers. That features provider requests for diagnostic imaging, pain injections, and the transfer of patients from hospitals to nursing homes and inpatient rehabilitation facilities.
“The priority is that financial considerations, relatively than clinical characteristics, are getting used to drive where the patient finally ends up,” said Kate Beller, executive vice chairman for policy development and government relations on the American Medical Rehabilitation Providers Association.
The growing backlash has renewed calls for the Centers for Medicare & Medicaid Services to require greater transparency and oversight of MA plans, which were paid $350 billion in 2021 and will develop into the dominant coverage option for Medicare’s 64 million-plus beneficiaries in 2023.
The American Hospital Association has asked the Justice Department to ascertain a “Medicare Advantage Fraud Task Force” to research improper payment and claims’ denials. And nearly 500 medical organizations are backing bipartisan laws within the House (H.R. 3173) and Senate (S. 3018) to manage prior authorization in Medicare Advantage.
But America’s Health Insurance Plans is resolute in its defense of the practice. In a letter to CMS Administrator Chiquita Brooks-LaSure, AHIP President and CEO Matthew Eyles said groups just like the AHA and the American Medical Association were attacking Medicare Advantage “for their very own financial profit. Nowhere is that more evident than their unfounded attacks on evidence-based medical management tools like prior authorization.”
Eyles’s letter added that “certain provider organizations would favor that each one clinicians be given a blank check to order any test or procedure at any time, whatever the expected value or expense to the patient. But giving clinicians carte blanche is not any strategy to improve health care affordability and access for each American.”
Surge in Prior Authorization
Unlike fee-for-service Medicare, which pays caregivers for every medical service they supply, MA plans receive a flat monthly payment for every beneficiary based on their health risk aspects. The sicker the patient, the upper the payment. Since the payments must cover a patient’s total cost of care, MA plans employ utilization management techniques, like prior authorization, to supply care more efficiently.
Nearly 46%, or 29.4 million, of Medicare’s 64.2 million beneficiaries are enrolled in MA plans compared with 34.9 million in traditional fee-for-service, the CMS reports.
“From 2018 to 2021, the share of eligible Medicare beneficiaries enrolled in Medicare Advantage rose by 3 percentage points per yr. If the trend continues, a majority of eligible Medicare beneficiaries might be enrolled in MA by 2023,” based on the Medicare Payment Advisory Commission’s March 2022 Report back to Congress.
But as MA enrollment grows, so too has the usage of prior authorization. In 2021, 99% of MA enrollees were in plans that used prior authorization for no less than one service, up from 80% in 2018, said Meredith Freed, a senior policy analyst on the Kaiser Family Foundation.
Greater than 97% of MA plan enrollees should be pre-approved for inpatient hospital and nursing home stays, durable medical equipment, and medicines administered in doctors’ offices, Kaiser found. Ninety percent or more of MA plan enrollees require prior approval for diagnostic procedures and tests, diabetic supplies and services, non-emergency ambulance services, and residential health services, Kaiser found.
Transparency on Denial Rates
“Having a handle on how prior authorizations are working in plans and being more transparent about care denial rates across plans is vital for beneficiaries and for his or her decision making after they’re selecting plans,” Freed said.
While Medicare Advantage plans must cover all traditional Medicare Part A and Part B services, the plans can “apply internal coverage policies, including additional coverage requirements to raised define the necessity for the service, though these internal coverage policies can’t be more restrictive than traditional Medicare’s national and native coverage policies,” based on a press release from the CMS.
A 2018 report by the HHS Office of Inspector General found that MA plans overturned 75% of their very own prior authorization and payment denials when appealed by providers and beneficiaries between 2014 and 2016. But only one% of denials ever made it to the primary level of the appeals process over the identical period.
An HHS OIG study last month found that 13% of prior authorization requests denied by MA plans actually met Medicare coverage rules. These denials stemmed mainly from the plans’ use of clinical criteria not contained in Medicare coverage rules, and from not having enough documentation to support approvals, the report said.
Following recommendations from the OIG, the CMS plans to issue clarifying guidance on the suitable use of clinical criteria in such reviews, Brooks-LaSure wrote in response to the report. The CMS may also direct MA plans to “examine their manual review and system programming processes and address vulnerabilities which will lead to inappropriate denials,” Brooks-LaSure said.
Transfers to Inpatient Rehab Facilities
In January, a CMS proposed rule (RIN: 0938-AU30) included a request for information on how MA plans’ use of prior authorization affects hospital transfers to post-acute care facilities during a public health emergency.
In a comment letter, the American Medical Rehabilitation Providers Association said that in the course of the Covid-19 Delta variant surge in August 2021, MA plans used prior authorization to disclaim 53% of greater than 12,000 requests for admissions to inpatient rehabilitation hospitals. The common wait time for a choice was greater than 2.5 days.
Beller, the association’s executive vice chairman of policy development and government relations, said the group wants the CMS to hunt authority to suspend the usage of prior authorization during future public health emergencies and impose a shorter response time for plans to make your mind up on requests to transfer patients to inpatient rehab facilities.
The association also wants the agency to make sure prior authorization decisions are made by staff with training and experience that meet CMS standards.
The American Hospital Association urged Brooks-LaSure to incorporate MA plans in a proposed rule (RIN: 0938-AT99) drafted by the outgoing Trump administration in December 2020 that may have regulated the usage of prior authorization by Medicaid managed care organizations.
The proposal was never implemented and a related final rule is on hold pending review, the CMS said.