Some Medicare Advantage programs denying medically necessary care

Office of the Inspector General found that some Medicare Advantage organizations were delaying or denying care that should have been allowed.

The Office of the Inspector General found that some Medicare Advantage organizations have been delaying or denying medically necessary care to boost profits.

Medicare Advantage uses a capitated payment model, so there is an incentive for organizations overseeing Medicare Advantage programs to deny services and payments to increase profits. The OIG said that while the vast majority of claims are paid, millions of denials are issued each year and CMS’s annual audits have identified widespread problems related to inappropriate denials. As enrollment in Medicare Advantage continues to grow, the OIG investigated the issue further.

Overall, the findings showed that requests that met Medicare coverage rules were sometimes delayed or denied by the Medicare Advantage Organizations. They also denied payments to providers for some services that met both Medicare coverage rules and MAO billing rules. These denials can hurt patient health and also burden providers.

Although some of the denials that we reviewed were ultimately reversed by the MAOs, avoidable delays and extra steps create friction in the program and may create an administrative burden for beneficiaries, providers, and MAOs.

Examples of health care services involved in denials that met Medicare coverage rules included advanced imaging services and stays in postacute facilities.

For prior authorization requests denied by MAOs, 13 percent met Medicare coverage rules and should have been approved. There were two common causes of these denials identified by OIG. First, MAOs used clinical criteria that are not contained in Medicare coverage rules (e.g., requiring an x-ray before approving more advanced imaging), which led them to deny requests for services that OIG’s physician reviewers determined were medically necessary. Although the review determined that the requests in these cases did meet Medicare coverage rules, CMS guidance is not sufficiently detailed to determine whether MAOs may deny authorization based on internal MAO clinical criteria that go beyond Medicare coverage rules.

Second, MAOs indicated that some prior authorization requests did not have enough documentation to support approval, yet OIG reviewers found that the beneficiary medical records already in the case file were sufficient to support the medical necessity of the services.

For the payment requests that MAOs denied, 18 percent met Medicare coverage rules and MAO billing rules. Most of these payment denials in the OIG sample were caused by human error during manual claims-processing reviews and system processing errors. OIG also found that MAOs reversed some of the denied prior authorization and payment requests that met Medicare coverage rules and MAO billing rules. Often the reversals occurred when a beneficiary or provider appealed or disputed the denial, and in some cases MAOs identified their own errors.

As a result of the investigation, OIG recommended to CMS that it:

  • Issue new guidance on the appropriate use of MAO clinical criteria in medical necessity reviews;
  • update its audit protocols to address the issues identified in this report, such as MAO use of clinical criteria and/or examining particular service types;
  • direct MAOs to take steps to identify and address vulnerabilities that can lead to manual review errors and system errors.

CMS concurred with all three recommendations.