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The Department of Health and Human Services (DHHS) Office of Inspector General (OIG) recently issued a report entitled “Medicare Advantage Appeal Outcomes and Audit Findings Raise Concerns About Service and Payment Denials” (OEI-09-16-00410) (see summary and full report).

Among the report’s findings are that when beneficiaries and providers appealed preauthorization and payment denials, MA plans “overturned 75 percent of their own denials.” However, OIG found that during the time period analyzed, “beneficiaries and providers appealed only 1 percent of denials to the first level of appeal.”

In an explanation of why the OIG conducted this study, the agency states:

“[a] central concern about the capitated payment model used in Medicare Advantage is the potential incentive for [Medicare Advantage Organizations, or MAOs] to inappropriately deny access to services and payment in an attempt to increase their profits. An MAO that inappropriately denies authorization of services for beneficiaries, or payments to health care providers, may contribute to physical or financial harm and also misuses Medicare Program dollars that CMS [Centers for Medicare & Medicaid Services] paid for beneficiary healthcare. Because Medicare Advantage covers so many beneficiaries (more than 20 million in 2018), even low rates of inappropriately denied services or payment can create significant problems for many Medicare beneficiaries and their providers.”

As summarized in the report’s conclusion,

“MAOs may have an incentive to deny preauthorization of services for beneficiaries, and payments to providers, in order to increase profits. High overturn rates when beneficiaries and providers appeal denials, and CMS audit findings about inappropriate denials, raise concerns that some beneficiaries and providers may not be getting services and payment that MAOs are required to provide. These findings are particularly concerning because beneficiaries and providers rarely use the appeals process designed to ensure access to care and payment, and CMS has repeatedly cited MAOs for issuing incorrect or incomplete denials letters, which can impair a beneficiary’s or provider’s ability to mount a successful appeal. Additionally, because audit violations will no longer be reflected in Star Ratings, beneficiaries may be unaware of MAO performance problems when selecting a plan. Although CMS uses several compliance and enforcement tools to address MAO performance problems, more action is needed to address these widespread and persistent problems in Medicare Advantage.”

As noted in a New York Times article about the OIG report, these findings “come as policies in Washington are creating new incentives for older Americans to enroll in Medicare Advantage plans.”  The article states: “[s]everal factors have contributed to a favorable environment for Medicare Advantage plans, allowing them to reduce premiums or add benefits [including] [t]he Trump administration approved a big increase in payments to private plans for 2019, saying it was ‘committed to unleashing and strengthening the Medicare Advantage program.’”

The Center shares the OIG's concerns about unfair Medicare Advantage denials. Further, as the Times notes, this is particularly important as MA plans are paid more and consumer protections are reduced.

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