Medicare Advantage plans profit by wholesale denial of legitimate claims

Medicare Advantage Appeal Outcomes and Audit Findings Raise Concerns About Service and Payment Denials

U.S. Department of Health and Human Services, Office of Inspector General, September 2018

Why OIG Did This Review

A central concern about the capitated payment model used in Medicare Advantage is the potential incentive for 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 healthcare providers, may contribute to physical or financial harm and also misuses Medicare Program dollars that CMS paid for beneficiary healthcare.

What OIG Found

When beneficiaries and providers appealed preauthorization and payment denials, Medicare Advantage Organizations (MAOs) overturned 75 percent of their own denials during 2014–16, overturning approximately 216,000 denials each year. During the same period, independent reviewers at higher levels of the appeals process overturned additional denials in favor of beneficiaries and providers. The high number of overturned denials raises concerns that some Medicare Advantage beneficiaries and providers were initially denied services and payments that should have been provided. This is especially concerning because beneficiaries and providers rarely used the appeals process, which is designed to ensure access to care and payment. During 2014-16, beneficiaries and providers appealed only 1 percent of denials to the first level of appeal.

Centers for Medicare & Medicaid Services (CMS) audits highlight widespread and persistent MAO performance problems related to denials of care and payment. For example, in 2015, CMS cited 56 percent of audited contracts for making inappropriate denials. CMS also cited 45 percent of contracts for sending denial letters with incomplete or incorrect information, which may inhibit beneficiaries’ and providers’ ability to file a successful appeal. In response to these audit findings, CMS took enforcement actions against MAOs, including issuing penalties and imposing sanctions. Because CMS continues to see the same types of violations in its audits of different MAOs every year, however, more action is needed to address these critical issues.…

The findings of this review by CMS’s Inspector General are shocking. Of the claim rejections by the private Medicare Advantage Organizations that were appealed, most of them were overturned, indicating that the claims were certainly legitimate. But likely due to the tremendous administrative burden on the providers of health care, 99 percent of the claim rejections were never appealed. For these organizations to keep funds entrusted to them that were designated to pay for health care services that were actually delivered is worse than thievery because it is on such a massive scale. This is racketeering at its worst.

In her response to this report, CMS Administrator Seema Verma concurs with the recommendations for corrective actions, but then offers no new remedial measures. It is likely that they are not forthcoming. In an effort to privatize Medicare she has greatly increased the payment rates for the plans well beyond legislative intent. She has relaxed the star rating requirements allowing more plans to receive bonuses. She has recently relaxed the regulations on benefits to encourage more Medicaid beneficiaries to enroll in the private plans. And yet she states, “We are not steering any Medicare beneficiary anywhere� (Pear, NYT, 10/13/18).

At the same time, Verma has refused to recommend much needed reforms in the traditional Medicare program. In fact, she is fighting to force physicians to take downside risk in the traditional program (i.e., bear losses), likely with the intent of driving physicians out of the traditional program and into the private Medicare Advantage plans. Verma makes the outrageous claim that Medicare for All “would destroy Medicare for the seniors” (AHIP 10/16/18), when it would actually increase their benefits. Yet she is doing all she can herself to destroy Medicare while building up the private plans so that they can eventually take over.

Enough with the privateers and the racketeers. Let’s take back our Medicare, improve it, and expand it to cover everyone. But we do need public stewards in charge who actually believe in government of, by, and for the people.

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Source: Finance Solidaire
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