There is consistent and growing evidence that Medicare Advantage (MA) plans are paid more on average than traditional Medicare for a given beneficiary, and such payments are causing significant challenges for Medicare’s financial sustainability. At the same time, there is growing scrutiny of MA plans’ use of prior authorization as a barrier to care for MA plan enrollees. As discussed below, the Centers for Medicare & Medicaid Services (CMS) recently released final and proposed rules that deal with MA payment, prior authorization, and other issues.
Final Audit Rule and Proposed Payment Rule
CMS recently released two important rules concerning Medicare Advantage payment issues: one concerning audits and recoupment of MA overpayments, and another outlining proposed MA payment for 2024. On February 3, 2023, we released an analysis of these policies in a document titled Center for Medicare Advocacy Statement on Recent Medicare Advantage Payment Policies and Proposals. The following is a summary of this analysis; for more information, see the full statement linked above.
MA overpayments stem, in part, from MA plans “upcoding” – reporting their enrollees as being more sick or requiring more intense levels of care than their medical records support in order to receive higher risk-adjusted payment. CMS has a process for auditing plan payments in order to recoup inappropriately paid dollars, called risk adjustment data validation (RADV) audits. This process, however, is years behind and a final rule updating the process has been long delayed.
On January 30, 2023, CMS released its long-awaited final rule regarding Medicare Advantage (MA) Risk Adjustment Data Validation (RADV). In the Center’s opinion, on the one hand, the final rule demonstrates CMS’ acknowledgment of the need to address inappropriate MA overpayments, and it retains methodology strongly opposed by the insurance industry. On the other hand, CMS is leaving behind significant amounts of money that it has already determined were inappropriately paid over many years.
On February 1, 2023, CMS released the Calendar Year (CY) 2024 Advance Notice for the Medicare Advantage (MA) and Part D Prescription Drug Programs, which includes proposed MA payment rates (the document is available here; also see CMS Fact Sheet here). On the one hand, CMS appears to be taking steps to address overpayments by revising risk adjustment methodology to more accurately determine appropriate payment amounts. The proposed payment rate for 2024 would be a significant decrease from the more than 8% payment bump MA plans received in 2023 and the 4% increase they got in 2022. The insurance industry is already misleadingly characterizing this smaller increase as a “cut” to payment (and therefore a cut to benefits). On the other hand, CMS is not proposing to use its discretion to employ a higher coding intensity adjustment – described by the Commonwealth Fund as “an across-the-board cut [CMS] makes to plans’ payments meant to adjust for the fact that some plans may be coding too intensely.” CMS has the authority to adjust plans’ payment more than the 5.9% statutory minimum, but it has so far not chosen to do so.
In our statement linked above, we note that, ultimately, Congress bears responsibility for setting Medicare payment and coverage policy. But despite some notable exceptions, most lawmakers do not even acknowledge, let alone try to address, Medicare Advantage overpayments, even when discussing the Medicare program’s fiscal solvency.
Absent Congressional action, it is up to the Administration and CMS to act. The Center for Medicare Advocacy is encouraged by many of the steps taken by this Administration to increase oversight of MA plans and strengthen consumer protections (see, e.g., the discussion re: the Proposed Part C & D rule, below). When it comes to MA overpayments, however, it appears to be doing too little, too late.
We are very likely to see the insurance industry take steps to thwart implementation of the RADV rule, and to exert significant pressure on CMS to revise its proposed 2024 payment rates. We urge CMS to hold fast against this pressure, and to reinforce its efforts to rein in and recoup Medicare Advantage overpayments. The Medicare program, the people it serves, and taxpayers cannot afford any other course of action.
Money in Health Care
Our statement on the two recently released rules concerning Medicare Advantage audits and payment rates discussed above highlights the insurance industry’s response whenever their revenue stream is threatened. For example, CMS estimates that their RADV rule will lead to recovery of “less than one-fifth of 1% of the amounts paid to Medicare Advantage plans,” yet in response to the rule, the industry issued dire predictions about increased premiums and reduced benefits that will result. Industry concern about plan enrollees vs. shareholders is not always easy to discern.
On January 30, 2023, the Journal of the American Medical Association (JAMA) published an article by former CMS Administrator Donald Berwick titled “Salve Lucrum: The Existential Threat of Greed in US Health Care”. In this opinion piece, Berwick states that “The grip of financial self-interest in US health care is becoming a stranglehold, with dangerous and pervasive consequences. No sector of US health care is immune from the immoderate pursuit of profit, neither drug companies, nor insurers, nor hospitals, nor investors, nor physician practices.” With respect to Medicare, Berwick notes:
Particularly costly has been profiteering among insurance companies participating in the Medicare Advantage (MA) program. Originally intended to give Medicare beneficiaries the choice of access to well-managed care at lower cost, MA has mushroomed into a massive program, now about to cover more than 50% of all Medicare beneficiaries and costing far more per beneficiary than traditional Medicare ever has. By gaming Medicare risk codes and the ways in which comparative “benchmarks” are set for expected costs, MA plans have become by far the most profitable branches of large insurance companies. According to some health services research, MA will cost Medicare over $600 billion more in the next 8 years than would have been the case if the same enrollees had remained in traditional Medicare. Opinions differ about whether MA enrollees experience better care and outcomes than those in traditional Medicare, but the weight of evidence is that they do not [citations omitted].
The health outcomes of MA enrollees are undoubtedly influenced, in part, by access to care concerns in such plans, including the proliferation of prior authorization and denials of care.
Prior Authorization and Coverage Denials
The Kaiser Family Foundation (KFF) noted in a report issued in 2022 that “nearly all Medicare Advantage enrollees (99%) are in plans that require prior authorization for some services” and that prior authorization is “most often required for relatively expensive services, such as Part B drugs (99%), skilled nursing facility stays (98%), and inpatient hospital stays (acute: 98%; psychiatric: 94%) and […] is also required for the majority of enrollees for some extra benefits”.
More recently, the KFF issued a report titled “Over 35 Million Prior Authorization Requests Were Submitted to Medicare Advantage Plans in 2021” (February 2023). The report analyzed the volume of MA prior authorization requests and approvals in 2021, and found that 6% of MA prior authorization requests were denied in full or in part. Overall, just 11% of denied prior authorization requests were appealed; of those that were appealed, 82% resulted in the initial denial being either fully or partially overturned. Kaiser noted:
The high frequency of favorable outcomes upon appeal raises questions about whether a larger share of initial determinations should have been approved. Alternatively, it could reflect initial requests that failed to provide necessary documentation. In either case, medical care that was ordered by a health care provider and ultimately deemed necessary was potentially delayed because of the additional step of appealing the initial prior authorization decision, which may have negative effects on beneficiaries’ health.
As discussed in previous CMA Alerts, including this one, the Department of Health & Human Services’ Office of Inspector General (OIG) issued reports in recent years analyzing MA denials. OIG’s 2018 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.” OIG issued another report in 2022 that analyzed denials issued by 15 of the largest MA plans during one week in June 2019. 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.
We routinely counsel Medicare beneficiaries who are inappropriately denied care, or have their care prematurely terminated, due to onerous MA plan utilization management techniques, including prior authorization. Such insurance practices are not limited to Medicare. The devastating impacts on individuals of prior authorization and coverage denials is poignantly highlighted in a recent ProPublica article titled “UnitedHealthcare Tried to Deny Coverage to a Chronically Ill Patient. He Fought Back, Exposing the Insurer’s Inner Workings” by David Armstrong, Patrick Rucker and Maya Miller (Feb. 2, 2023). Although the article does not involve a Medicare Advantage plan, it exposes the unconscionable activities of the insurance company with the largest number of MA enrollees. Unfortunately, many of the prior authorization and coverage denial tactics used by insurers in non-Medicare settings are also used by the same companies in their MA plan offerings.
Fortunately, as discussed below, CMS is proposing to make significant improvements to consumer protections surrounding MA plans’ use of prior authorization, along with other proposed changes that reflect the agency’s recognition that certain inappropriate conduct of MA plans must be reined in.
Proposed Part C & D Rule – Comments Due Feb. 13th
As noted in this December 2022 CMA Alert, CMS released a proposed rule for Medicare Advantage and Part D for 2024 available here (87 Fed Register 79452, December 27, 2022). CMS also published a press release and accompanying fact sheet addressing the proposed rule. Comments are due February 13, 2023.
This proposed rule reflects CMS’ intent to significantly improve consumer protections in a number of areas, including:
- Medicare Advantage Prior Authorization – among other changes, the rule would prohibit MA plans from denying coverage of a Medicare-covered item or service based on internal, proprietary, or external criteria not found in traditional Medicare coverage policies;
- Marketing of Medicare Advantage and Part D Plans – among other changes, the rule aims to crack down on misleading advertising, enhance requirements that agents and brokers explain coverage options, and better protect consumers from unwanted contact; and
- Enhance Access to Behavioral Health Services in MA Plans.
We urge stakeholders who are able to submit comments in response to CMS’ proposed rule. Other than weighing in on the various proposals, individuals can share their related personal experiences with Medicare Advantage plans.
February 9, 2023 – D. Lipschutz