Worth a Second Read: MA Proposed Rule: Clarifies Determinations in Inpatient Settings to Enhance Enrollee Protections

Worth a second read considering the fatal shooting of the CEO for United Healthcare.

The Centers for Medicare & Medicaid Services (CMS) has outlined critical updates to clarify the definition and processes surrounding organization determinations, particularly in inpatient settings. The proposed rule reaffirms that decisions made during concurrent reviews in inpatient settings, such as reclassification from inpatient to outpatient or denial of inpatient coverage, are organization determinations under § 422.566.

These determinations must comply with notification and appeal requirements to protect enrollees. CMS highlights past inconsistencies where enrollees were not informed of such decisions, leading to unexpected financial liabilities. This change emphasizes transparency and timely communication of decisions to enrollees, fostering better protection and equity. For further information please see page 378 of the proposed rule.

What Is an Organization Determination?

An organization determination, as defined in §422.566 of the Code of Federal Regulations, refers to any decision by an MA organization regarding the benefits an enrollee is entitled to receive under their plan and the associated costs. This encompasses various scenarios, including:

• Refusals to provide or pay for services, either wholly or partially.
• Reduction or premature discontinuation of previously authorized treatments.
• Decisions regarding inpatient admission status or level of care appropriateness.

Such determinations can occur before, during, or after services are rendered, applying to both contracted and non-contracted providers. Notably, these decisions are legally binding unless reconsidered, reopened, or revised.

When an MA organization issues an adverse organization determination, such as denying coverage for a service, CMS reminds MA plans in the proposed ruling that they must:

• Provide timely notice to the enrollee in a CMS-prescribed format (Integrated Denial Notice (IDN) or Explanation of Benefits (EOB)- or a yet to be determined notice which is open for public comment by CMS.
• Ensure decisions based on medical necessity are reviewed by a qualified healthcare professional.
• Allow the enrollee or their physician to request an expedited reconsideration if the adverse determination pertains to necessary services.

Clarification on Concurrent Review Decisions

CMS has identified significant issues with how some MA organizations handle concurrent review decisions. Concurrent reviews evaluate the appropriateness of ongoing care while the enrollee is actively receiving inpatient or similar services. Examples of these include:

• Rescinding previously approved inpatient admissions.
• Downgrading inpatient status to outpatient observation.
• Denying coverage for inpatient services while suggesting reclassification to outpatient services.

CMS made it clear that there appears to be some confusion in denial practices by the MA plans when care is being rendered for a patient as inpatient, but the MA plan is notifying the hospital that care is not approved at the inpatient level, despite services already being delivered.  They go on to provide further discussion about concerns of MA plans recommended lower levels of care, despite a request for payment having been provided to the payer yet blurring the lines between a coverage decision and a payment decision (see page 386).  Despite the legal requirement to notify enrollees of these decisions and afford them the opportunity to appeal, CMS audits reveal that enrollees are often left uninformed. For instance, hospitals may reclassify an enrollee’s status based on the MA organization’s decision without notifying the patient, leaving them unaware until they face potential cost-sharing or deductible requirements.

For example, a patient is admitted to an in-network hospital under inpatient status, as ordered by their treating physician. The hospital submits a Notice of Admission to the MA organization. During the hospitalization, the MA organization conducts a concurrent review and determines the inpatient admission does not meet coverage criteria. Without informing the enrollee, the MA organization denies inpatient coverage but approves outpatient observation services. The hospital, in response, may reclassify the admission as outpatient or continue providing non-covered inpatient services. The enrollee is left unaware of these changes.

To address these discrepancies, CMS is working to reiterate that concurrent review decisions constitute organization determinations under existing regulations.  CMS is proposing mandates by MA plans for timely notice to enrollees regarding such decisions and strengthening audit protocols to ensure compliance with notice and appeal requirements.  It is important to also note that appeals on the beneficiary behalf were called out several times as only applicable if the beneficiary is impacted financially, including cost-sharing responsibilities which is likely going to impact hospital’s strategy for appealing as the

Clarifying the definition of organization determinations and reinforcing compliance in concurrent review decisions are vital steps toward safeguarding the integrity of the Medicare Advantage program. By holding MA organizations accountable for transparent, timely, and equitable decision-making, CMS ensures enrollees are informed, empowered, and protected in their healthcare journeys.

As these updates are implemented, enrollees can expect greater clarity, fewer surprises, and enhanced confidence in their coverage.