As highlighted last week in our CMA Alert, on July 27 the Center for Medicare Advocacy joined Be A Hero, Members of Congress, beneficiaries, and other advocates, at a rally at the U.S Capitol to underscore the harm Medicare Advantage (MA) is causing through wrongful delays and denials of necessary care.
As noted by PoliticoPro, lawmakers at the rally “said the Biden administration must do more to rein in overpayments and increase transparency of Medicare Advantage plans.” Similarly, Becker’s Healthcare noted that “[a] group of lawmakers is urging the Biden administration and Congress to do more to limit Medicare Advantage overpayments, misleading marketing and prior authorization denials.” Describing the rally, McKnights Long-Term Care News stated that “Federal lawmakers and activists are turning up the heat again with attacks on Medicare Advantage, a month after 300 members of Congress told the federal agency that oversees the system to make it easier to manage.” A Common Dreams article about the rally noted that Senator Elizabeth Warren emphasized the need to rein in MA overpayments and said,
“We can strengthen traditional Medicare, and by doing that, we can save money and we can use some of those savings to expand benefits, like hearing, dental, and vision… and add an out-of-pocket cap for all beneficiaries… and lower the eligibility age for Medicare.”
The Center will continue to highlight the ever-growing need for more action and oversight by Congress and the Administration to address Medicare Advantage overpayments and inappropriate denials, as well as the need for affirmative measures to strengthen the traditional Medicare program.
MA Overpayments
Evidence about wasteful overpayments made to Medicare Advantage plans continues to mount. The Committee for a Responsible Federal Budget (CRFB) recently posted a blog titled “New Evidence Suggests Even Larger Medicare Advantage Overpayments” (July 17, 2023) which builds off of research by MedPAC and the USC Shaeffer Center for Health Policy & Economics (see this CMA Alert addressing the USC study, June 22, 2023). CRFB notes that this research, combined with their own prior research, “suggests that MA plans might be overpaid by between $810 billion and $1.6 trillion over the next decade.” [Emphasis added.] This new research by MedPAC and USC “finds substantial favorable selection – meaning that the MA population is significantly healthier than the [traditional] Medicare population and thus are being overpaid more than prior estimates suggest.” [Emphasis added.] The blog notes that “This problem is in addition to overpayments due to coding intensity, where plans themselves can manipulate risk adjustment scores to make their beneficiaries appear sicker than similar [traditional Medicare] beneficiaries and garner higher plan payments.” In addition to such substantial sums paid by the Medicare program, CRFB finds that all Medicare beneficiaries – including those in traditional Medicare – could pay “an additional $140 billion to $260 billion” in premiums through 2033 due to overpayments to MA plans. CFRB notes that “under any estimating method, it is clear that the federal government is vastly overpaying MA plans with enormous federal budget ramifications.” [Emphasis added.]
These staggering overpayments are based, in part, on financial incentives that lead plans to manipulate the risk-adjusted payment system, including by recording their enrollees as having health conditions that are not treated or supported in the medical records. As described in a New York Times article titled “‘The Cash Monster Was Insatiable’: How Insurers Exploited Medicare for Billions” by Reed Abelson and Margot Sanger-Katz (Oct 8, 2022), “most large insurers” offering Medicare Advantage plans “have been accused in court of fraud.”
Improper “upcoding” is also performed by smaller MA insurers. As described in a McKnight’s Long-Term Care News article titled “Medicare Advantage plan settles upcoding allegations for $22.5M” by Kimberly Marselas (Aug 2, 2023), “[t]he Department of Justice accused Maine-based Martin’s Point Health Care of violating the False Claims Act by submitting inaccurate diagnosis codes for its plan enrollees in Maine and New Hampshire to increase reimbursement.” Describing the settlement, the Portland Press Herald notes in an article titled “Martin’s Point Health Care to pay $22 million to settle Medicare fraud claims” by Emily Allen and Joe Lawlor, that “Martin’s Point would routinely code patients’ historical health conditions – such as for cancers, strokes and heart conditions – as active conditions, according to court records. That generated additional revenue for the nonprofit that it was not entitled to receive from the Medicare Advantage program.”
The article quotes the complaint in the lawsuit against the insurer:
“Stunningly, in 2017, when Martin’s Point retroactively reviewed a sample of three years of medical charts, it found that the patients did not have (or the charts did not support) 60% of the illnesses reported to, and paid by (the Center for Medicare and Medicaid Services),” the complaint reads. “In response, Martin’s Point did nothing: it did not investigate further, broaden its sample size nor look for these errors in prior time periods. On information and belief, it did not even notify CMS and kept the resulting overpayments.”
Prior Authorization and Improper Denials
As noted in prior CMA Alerts, including here (July 13, 2023), there has been growing scrutiny of the improper use of prior authorization by MA plans, and the resulting inappropriate denials and delays in care. As discussed below, such abuse by health insurance companies is not limited to the Medicare Advantage program.
Medicaid Managed Care Denials
A recent New York Times article highlights denials of care by managed care plans offering coverage in the Medicaid program. An article titled “Insurers Deny Medical Care for the Poor at High Rates, Report Says” by Reed Abelson (July 19, 2023), describes a report issued by the Department of Health & Human Services Office of Inspector General (OIG) finding that “Private health insurance companies paid by Medicaid denied millions of requests for care for low-income Americans with little oversight from federal and state authorities.”
Whereas roughly half of the 65 million people on Medicare are in private Medicare Advantage plans, about three quarters of the 87 million people on Medicaid are in private managed care plans. Similar to criticisms raised about MA plans, The New York Times notes that OIG “also raised concerns about the payment structure that provides lump sums per patient. They worried it would encourage some insurers to maximize their profits by denying medical care and access to services for the poor.”
As discussed in previous CMA Alerts (See, e.g., here, May 5, 2022), OIG previously looked at whether MA denials were appropriate based on medical necessity. The Times article notes that while the “current report did not look at whether the Medicaid denials were valid, the investigators emphasized the insurers were much more aggressive in refusing to authorize care under Medicaid than under Medicare, the federal program for the elderly and disabled.” The article states that “[t]he companies denied one of eight requests in 2019, roughly two times the rate under Medicare Advantage.”
Cigna Sued Over Prior Authorization Practices
According to a STAT News article titled “Lawsuit says Cigna illegally denies claims in bulk, sticking patients with unexpected bills” by Tara Bannow (July 24, 2023), “[a] new lawsuit accuses Cigna of using an algorithm to automatically deny claims in bulk instead of individually reviewing each case, putting patients on the hook for bills the health insurer otherwise would have paid.” As discussed in this CMA Alert (May 18, 2023), an investigative report by ProPublica earlier this year exposed Cigna’s use of software called “PxDx” that over a period of two months in 2022, led to the insurer denying “over 300,000 requests for payments […] spending an average of 1.2 seconds on each case” with one company medical director denying 60,000 claims in a single month.
According to an article published by HealthCare Dive titled “Cigna Sued Over Algorithm Allegedly Used To Deny Claims” by Rebecca Pifer (July 25, 2023), the suit was filed by two Cigna members in California, one of whom was denied payment for an ultrasound procedure after being found at risk for ovarian cancer. The article notes that “[t]he high level of insurance claims denials is a perennial problem in healthcare, but rising evidence that companies are leaning on algorithms to automate claims denials has added a new angle to the debate.”
Conclusion
Thankfully, researchers and journalists are continuing to add to the overwhelming evidence that Medicare Advantage plans are overpaid and abuse the prior authorization and coverage determination process. As the Medicare program is becoming more privatized, it is getting harder for policymakers to ignore these issues.
August 3, 2023 – D. Lipschutz