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The problems with Medicare Advantage have been called out by APTA and other provider and patient organizations for some time — now a new federal report underscores those concerns by uncovering a pattern of denials for services that should've been covered.

The study from the U.S. Department of Health and Human Services' Office of the Inspector General focused on 15 of the largest Medicare Advantage organizations, examining a stratified random sample of 250 prior authorization and 250 claims denials. After expert review of the denials, OIG determined that 18% of the payment denials and 13% of prior authorization denials were made in error.

According to the report, the denials were rooted in three major areas: use of clinical criteria that isn't part of Medicare coverage rules, requests for unnecessary documentation, and errors introduced in both the manual and computerized review processes. The denials spanned nearly all areas of care, but they were especially pronounced in claims and prior authorizations related to imaging, injections, and stays in post-acute care facilities.

The report includes specific examples of denials, including a refusal, later reversed, to cover a beneficiary's transfer from a hospital to a skilled nursing facility. The patient was recovering from cellulitis and pressure ulcers and was unable to walk or carry out activities of daily living, but the MAO denied the request to transfer to a SNF, arguing that adequate care could be provided via home health.

In another decision later reversed, an MAO used an incorrect taxpayer identification number for a physical therapist's claim, erroneously identifying the provider as out-of-network. The MAO only recognized the programming error after OIG requested study data.

The OIG report says that the U.S. Centers for Medicare & Medicaid Services needs to take action to address the problem and recommends three major steps: issuing new guidance to MAOs to ensure they don't make decisions that are more restrictive than Medicare coverage rules, beefing up its MAO audit protocols, and directing MAOs to evaluate their operations to "identify and address vulnerabilities that can lead to manual review errors and system errors." According to the report, CMS has agreed to pursue all three actions.

In the meantime, the pressure for change to Medicare Advantage continues on Capitol Hill: APTA-supported bipartisan legislation that would make Medicare Advantage more transparent and less burdensome for providers has been introduced in both chambers of the U.S. Congress. Known as the "Improving Seniors' Timely Access to Care Act" (H.R. 3173. S. 3018), the law would put up what APTA believes are much-needed guardrails around a system that can create unnecessary obstacles to needed care.

"Several members of Congress have had concerns about Medicare Advantage for years, but the release of this OIG report could provide real momentum for the bipartisan legislation supported by APTA aimed at addressing some of these concerns," said Justin Elliott, APTA vice president of government affairs. "It's well past time that providers be spared some of the excessive administrative burdens MAOs impose, and that these organizations do a better job of making timely, well-informed coverage decisions."

For its part, the OIG report acknowledges that "capitated payment models, such as Medicare Advantage, can create an incentive for MAOs to deny the prior authorization of services for beneficiaries and payments to providers, including some services and payments that would not have been denied under Medicare."

"Denied requests that meet Medicare rules may prevent or delay beneficiaries from receiving medically necessary care and can burden providers," the report continues. "Even when denials are reversed, avoidable delays and extra steps create friction in the program and may create an administrative burden for beneficiaries, providers, and MAOs."


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