On April 27, 2022, the Office of the Inspector General for the U.S. Department of Health and Human Services (“OIG”) released a report finding that Medicare Advantage Organizations (“MAOs”) are issuing unnecessary denials resulting in delayed care for patients and improper payments to healthcare providers. Though controversial, this report confirms what healthcare providers already know: MAOs are improperly denying claims at an unprecedented rate. Healthcare providers need to be ready to respond proactively to this heightened risk of denials.
The Study
The OIG reviewed file samples for two types of cases resulting in denied claims:
1) authorization request denials, and
2) payment request denials.
The Prior Authorization Denials
The OIG found that for prior authorization requests, 13% of denials were for services that met traditional Medicare coverage rules. Within this group of denials, OIG found that MAOs denied prior authorization requests by either using clinical criteria that exceed Medicare coverage rules, or by requiring additional documentation of the medical necessity of the services even though the medical records supplied to the MAOs were sufficient to support medical necessity.
The Payment Request Denials
The OIG also found that 18% of payment requests that were denied met Medicare coverage rules and MAO billing rules. Most of these payment denials resulted from two causes. The first was “human error during manual claims-processing reviews.” In other words, documentation received from the provider was overlooked. Secondly, the OIG found that the MAO’s prior authorization system was not programmed correctly or had not been updated correctly to meet Medicare’s requirements.
The OIG’s Conclusions
As we in the healthcare field already know, such MAO denials:
– Delay and prevent patient access to needed care. This is especially harmful for critically ill persons, like cancer patients.
– Cause patients to pay out-of-pocket for services that are covered by Medicare. This concern applies with particularity to low-income patients and retired beneficiaries who rely on Medicare for healthcare benefits.
– Impose administrative burdens for providers and patients. Providers and patients who decide to appeal these providers often must negotiate complicated obstacles and lengthy periods for responses. Going through the appeals process can be inefficient, costly to providers, and – most tellingly – stressful to patients facing the uncertainty of a favorable response.
The OIG’s Recommendations to CMS
In its report, the OIG recommends that CMS:
– 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; and
– Direct MAOs to take additional steps to identify and address vulnerabilities that can lead to manual review errors and system errors.
All of these recommendations were well received by CMS. See Exhibit D of report at pp. 53-55.
Our Take On the Study
The consortium of America’s Health insurance Plans has attacked the Study due to the “extraordinarily small” size of the denials studied. While the sample size was small, its conclusions are consistent with what we at Anderson & Quinn, and our clients have observed and experienced. Although the CMS intends to follow the OIG’s recommendations, this may or may not change behavior. Therefore, it is imperative that all improper denials be appealed in accordance with the applicable Provider Manual. Appeals can correct the human error element in denied claims. We have also found that carefully worded appeals with reference to specific medical records and citations to applicable law is effective in getting some medical necessity denials overturned. Not only does a failure to appeal a denial ensure that no payment will be received, the MAOs use this failure as a defense when providers take the denials beyond the appeals process.
We also suggest providers ensure that their managed care contracts include appropriate terms to avert improper denials. For instance, if an MAO does not respond promptly to a provider request for authorization, then a denial on the basis of “lack of authorization” should be waived under the provider services agreement if the service was medically necessary. Similarly, defining “medical necessity” in the contract specifically adopting the CMS definition would be helpful.
Finally, providers should take advantage of rights already set out in the law. For example, providers should insist on peer-to-peer medical reviews for lack of authorization denials. Providers should also seek appropriate interest for overturned denials.
These are first steps but necessary to the viability of healthcare providers and of our nation’s healthcare system.
Anderson & Quinn, LLC is a law firm based in Rockville, Maryland, providing individuals, businesses, corporations, and healthcare providers with the legal and litigation support they need to protect revenues. Gustavo Matheus, Esq. is a member of Anderson & Quinn, LLC, 25 Wood Lane, Rockville, MD, 20850. Tel: 301-762-3303. Gustavo may be reached at gmatheus@andersonquinn.com.
