According to a federal inquiry, many private Medicare Advantage plans refuse to pay for healthcare services covered under traditional Medicare. What’s worse, these denials keep or delay medically essential treatment for tens of thousands of Medicare Advantage members each year.
The Department of Health and Human Services Office of Inspector General investigation found that 13 percent of Medicare Advantage plan denials should have been covered under Medicare. Their research was based on an analysis of Medicare Advantage plan denials by 15 of the largest insurance companies conducted during the first week of June 2019 by doctors and coding specialists.
Extrapolating from their findings, investigators estimate that nearly 85,000 beneficiary requests for medical care — from MRIs to skilled nursing facility care — could have been wrongly denied in 2019.
In an even higher number of situations, plans erroneously deny claims. One-fifth of claims denied by Medicare Advantage plans initially were for services that satisfied Medicare coverage and plan billing rules. An estimated 1.5 million refused payments likely occurred in 2019, delaying or preventing services that providers had already provided.
Barriers to Care
As of 2021, more than twice as many Medicare beneficiaries are enrolled in Medicare Advantage plans compared to a decade ago (about 26 million total). By 2030, more than half of Medicare enrollees will be in a private Medicare plan, according to the Congressional Budget Office.
Medicare Advantage plans, unlike traditional Medicare, are overseen by private insurance corporations rather than the federal government. The plans get a set monthly fee from the government to provide services to each Medicare patient under their care, whether they’re paying out for healthcare costs during the month or not. That means the more money a healthcare provider saves on healthcare, the more it and its investors make. These plans have an incentive to keep costs down in this manner.
According to many beneficiaries, Medicare Advantage plans’ most vexing cost-cutting method is “preauthorization,” which is the typical requirement that doctors and other medical providers obtain the plan’s approval before a recipient may get specified medical treatments. If the plan administrators dispute that a treatment is medically required, they have the option of denying payment for it.
Because they provide the same basic coverage as original Medicare at a lower cost and add additional benefits and services such as vision and dental care that regular Medicare doesn’t cover, many Medicare Advantage plans appear to be a good value. One of the main reasons Medicare Advantage plans can provide those additional services is because they receive extra payments made by the federal government, while original Medicare doesn’t.
One of Medicare Advantage’s drawbacks is highlighted in the inspector general’s report below:
The report states, “Beneficiaries enrolled in Medicare Advantage may not be aware that there may be greater barriers to accessing certain types of health care services in Medicare Advantage than in original Medicare.”
One Medicare Advantage plan, as an example, initially refused to authorize a follow-up MRI to determine whether an adrenal lesion was malignant because the lesion was said to be too small. Medicare’s regulations, however, do not limit the use of follow-up MRIs based on the size of a lesion. (The plan that initially denied the MRI did end up reversing its decision after an appeal.)
Appeals Can and Do Work
The study identified two typical reasons for service denials. First, although Medicare Advantage plan clinical standards cannot be more “restrictive” than Medicare’s coverage rules, plans frequently utilize “tighter” clinical criteria such as demanding an x-ray before authorizing additional imaging.
Second, plans frequently stated that the service request lacked enough documentation, even though investigators who reviewed the denied claims found that the existing medical records were adequate to back it.
When a Medicare Advantage plan rejects a preauthorization or payment request, the beneficiary does have the option to appeal the decision. According to the inspector general, providers may reverse the decision when a beneficiary or provider challenges or disputes the denial of a service that met Medicare’s coverage requirements. In some situations, Medicare Advantage plans could correct their own mistakes.
The inspector general’s report offers several recommendations for the Centers for Medicare and Medicare Services, which oversees Medicare Advantage plans, including better auditing of plans.
The inspector general makes several recommendations for the Centers for Medicare and Medicare Services in their report, particularly around doing a better job of auditing their plans.
You can read the full inspector general’s report here: “Some Medicare Advantage Organization Denials of Prior Authorization Requests Raise Concerns About Beneficiary Access to Medically Necessary Care.”