Prior Authorization as a Barrier to Care
Prior authorization and other utilization management tools can serve as significant barriers to care that both current and prospective Medicare Advantage enrollees are often unaware of until they need to access services.
As noted by the Kaiser Family Foundation in a June 2021 report, virtually all MA enrollees are in plans that require prior authorization:
Medicare Advantage plans can require enrollees to receive prior authorization before a service will be covered, and nearly all Medicare Advantage enrollees (99%) are in plans that require prior authorization for some services in 2021. Prior authorization is most often required for relatively expensive services, such as inpatient hospital stays, Part B drugs, and skilled nursing facility stays, and is rarely required for preventive services. Prior authorization is also required for the majority of enrollees for some extra benefits (in plans that offer these benefits), including comprehensive dental services, hearing and eye exams, and transportation. […] In contrast to Medicare Advantage plans, traditional Medicare does not generally require prior authorization for services and does not require step therapy for Part B drugs.
2018 OIG Report
In 2018, the Department of Health & Human Services, Office of Inspector General (OIG) issued a report titled “Medicare Advantage Appeal Outcomes and Audit Findings Raise Concerns About Service and Payment Denials”. This report found “‘widespread and persistent problems related to denials of care and payment in Medicare Advantage’ plans”. The report’s findings included that when beneficiaries and providers appealed preauthorization and payment denials, MA plans “overturned 75 percent of their own denials.” At the same time, “beneficiaries and providers appealed only 1 percent of denials to the first level of appeal.”
2022 OIG Report – Overview
Last week, the OIG issued another report focusing on Medicare Advantage plan denials titled “Some Medicare Advantage Organization Denials of Prior Authorization Requests Raise Concerns About Beneficiary Access to Medically Necessary Care” (April 2022, OEI-09-18-00260).
OIG describes why they conducted this review:
A central concern about the capitated payment model used in Medicare Advantage is the potential incentive for Medicare Advantage Organizations (MAOs) to deny beneficiary access to services and deny payments to providers in an attempt to increase profits. Although MAOs approve the vast majority of requests for services and payment, they issue millions of denials each year, and CMS’s annual audits of MAOs have highlighted widespread and persistent problems related to inappropriate denials of services and payment. As enrollment in Medicare Advantage continues to grow, MAOs play an increasingly critical role in ensuring that Medicare beneficiaries have access to medically necessary covered services and that providers are reimbursed appropriately. [Emphasis added.]
OIG reviewed a sample of denials of prior authorization requests and payment denials issued by 15 of the largest MA plans during one week in June 2019. From this review, which included the services of health care coding experts and physician reviewers, OIG estimated the rates at which MA plans denied prior authorization and payment requests that it determined met Medicare coverage and MA billing rules. It also examined the reasons for these denials and the types of services associated with the denials.
In short, among the prior authorization requests denied by MA plans, OIG found that 13 percent met Medicare coverage rules – “in other words, these services likely would have been approved for these beneficiaries under original Medicare”. With respect to payment requests denied, OIG found that 18 percent met Medicare coverage rules and MA billing rules.
OIG describes the “Key Takeaway” of the report that “MAOs denied prior authorization and payment requests that met Medicare coverage rules by:
- using MAO clinical criteria that are not contained in Medicare coverage rules;
- requesting unnecessary documentation; and
- making manual review errors and system errors.”
The Report briefly describes the harm that inappropriate denials can have on MA plan enrollees. OIG notes that MA plan:
denials of prior authorization requests for services that meet Medicare coverage rules can create significant negative effects for Medicare Advantage beneficiaries. These denials can delay or prevent beneficiary access to medically necessary care; lead beneficiaries to pay out of pocket for services that are covered by Medicare; or create an administrative burden for beneficiaries or their providers who choose to appeal the denial. These denials may be particularly harmful for beneficiaries who cannot afford to pay for services directly and for critically ill beneficiaries who may suffer negative health consequences from delayed or denied care. [Emphasis added.]
In its examination of the sample of denied requests “to assess the extent to which the denied requests met Medicare coverage rules, and thus would likely have been approved in original Medicare”, OIG notes that although MA plans:
must follow Medicare coverage rules, they are also permitted to use additional clinical criteria that were not developed by Medicare when they are determining whether to authorize or pay for a service, as long as such criteria are “no more restrictive than original Medicare’s national and local coverage policies.” [Emphasis added.]
For many of the denials that OIG analyzed, though, “MAOs denied the requests by applying MAO clinical criteria that are not required by Medicare.” As OIG demonstrates through a number of examples highlighted in the report, “in these cases MAOs used specific, mandatory requirements that resulted in the denial of prior authorization requests for medically necessary services. In contrast, original Medicare does not impose such specific requirements for covering the procedures involved.”
OIG’s review highlighted several types of services at issue in the sample of denials, including advanced imaging services (e.g., MRIs), injections and stays in post-acute facilities (e.g., inpatient rehabilitation facilities). OIG noted that “[t]o reduce their costs, MAOs may have an incentive to deny more expensive services, such as inpatient rehabilitation facility stays, and/or require that beneficiaries receive less expensive alternatives.” OIG highlighted several.
Describing several “prior authorization requests to discharge patients from the hospital to inpatient rehabilitation facilities or to skilled nursing facilities,” OIG notes that MA plans often justified these denials by claiming “that the patients did not need intensive therapy or skilled care, and that their needs could be met at a lower level of care, such as home health services at the patient’s residence.” The report continues: “However, our physician panel determined in these cases that the patients met the clinical criteria for admission to the relevant facilities, that they would have benefited from the higher level of care ordered by the requesting physician, and that the alternatives offered by the MAOs were not clinically sufficient to meet the patients’ needs.” [Emphasis added.]
OIG Recommendations to CMS
In order to address the problems identified in the review, the Report offers several recommendations to the Centers for Medicare & Medicaid Services (CMS):
(1) issue new guidance on the appropriate use of MAO clinical criteria in medical necessity reviews; “The guidance should clarify what the Medicare Managed Care Manual means when it says that MAO clinical criteria must not be “more restrictive” than Medicare coverage rules, and it should include specific examples of criteria that would be considered allowable and unallowable.” [Emphasis added.]
(2) 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, including adding aggravating factors in civil money penalty calculations if MAO denials resulted in beneficiaries’ not being able to access needed services, and considering additional enforcement actions for MAOs that demonstrate a pattern of inappropriate payment denials. OIG adds: “CMS could choose to focus on service types for which inappropriate denials may have a significant impact on beneficiary health and well-being, such as stays in post-acute facilities. Selecting a targeted sample may increase the likelihood of finding inappropriate denials.” and
(3) 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. But, as OIG notes concerning its recommendations from its September 2018 report “that CMS address persistent problems related to denials identified in its audits”, “[a]s of March 2022, CMS had not yet implemented these recommendations.”
Conclusion
OIG’s findings – in both its 2018 and 2022 reports – are consistent with the Center for Medicare Advocacy’s experiences both assisting and hearing from Medicare Advantage enrollees. All too often, MA plans deny or, even more frequently, prematurely terminate care that would otherwise be covered through traditional Medicare. As discussed in a companion CMA Alert, Insurance Industry v. Provider Response to the recent OIG Report re: MA Denials, many providers concur. In addition, as discussed in another CMA Alert, OIG Report Estimates of Inappropriate MA Plan Denials May be Understated, we have reason to believe that OIG’s estimates of MA plan denials of care might be understated and that an even higher percentage of necessary care is likely reduced.