OIG Faults MAOs for Inappropriate Denials

OIG report: widespread and persistent problems related to inappropriate denials of services and payment by Medicare Advantage Organizations.

Organizations continue to find the management of denials an Achille’s heel within the revenue cycle.  Insufficient documentation, system flaws, and errors related to human intervention are common reasons for generating a claim denial. 

The U.S. Department of Health and Human Services (HHS) Office of Inspector General (OIG’s) involvement with Medicare Advantage Organizations (MAO) brings heightened awareness and anticipated improvement for the claim payment process and ultimately the patient experience. 

The Medicare Fee for Service (FFS) program provides coverage for an array of healthcare services. MAO should provide the same coverage as traditional Medicare but with the added benefit of coordinating care for beneficiaries.  As with many managed care plans, the coordination of care is thought to improve efficiencies and quality of care while managing cost.  MAOs may require specific stipulations in addition to traditional Medicare coverage requirements, for example, pre-authorizations, physician referral, and required use of in network physicians for specialty services. Capitated payment models, to include Medicare Advantage, raise an overarching concern of payers denying access to service and/or payment to improve profits.

The OIG conducts annual random reviews of MAO denied claims.  In 2015, the Centers for Medicare & Medicaid Services (CMS) cited more than half of the claims MAO denied for preauthorization or payment were inaccurate. In 2018 CMS revealed 75 percent of initial MAO denials were overturned. This year, the OIG reviewed claims data from 15 of the largest MAO, totaling 500 claims from June 1 through 9, 2019. Using a random sample, expert coders and/or physician reviewers examined the reliability of 250 prior authorization request denials and 250 payment denials.

The objectives of the review were clear; determine the extent to which selected MAOs denied prior authorization requests that met traditional Medicare coverage rules, uncover the why behind these denials, identify healthcare services meeting Medicare and MAO coverage and billing requirements which continue to result in denials.  Thirteen percent of preauthorization denials were related to claims meeting Medicare coverage but denied by the MAO due to their clinical criteria, not included in Medicare coverage.  Nevertheless, after physician review the services conducted were considered medically necessary.   Denials also included in the thirteen percent denial rate relate to insufficient documentation to support a billed service.  CMS reviewers were able to locate the documentation in the medical record.   

Eighteen percent of payment denials relate to human error during a manual claim review or system flaws due to incorrect or outdated programming. System errors are of grave concern as initial denials are autogenerated, which can create a larger volume of inaccurate denials. These denials increase the burden on organizations to discover the root cause and appeal many claims.

High-cost imaging, post-acute nursing facilities, and acute inpatient rehabilitation were among the front runners of services initially denied. MAOs often deny expensive services and offer an alternative option in an effort to contain cost.  Pain management injections were also noted to trigger a high volume of denials due to the increased amount of fraud and abuse related to pain management; therefore, these services are under the watchful eye of MAO reviewers.  

The OIG recommends MAOs to assess the use of clinical criteria, re-evaluate the root cause of the volume of denials regarding insufficient documentation when the documentation is present, and assess system vulnerabilities for incorrect algorithms or updates, both of which require manual intervention in order to submit an appeal. CMS agreed with all of the OIG’s recommendations.

Thwarting denials are a costly administrative burden that directly affects the patient experience during or following direct care.  Unsubstantiated Medical Necessity denials may prevent patient access to necessary services unless they agree to pay out of pocket. 

Among the 15 MAOs included in the sample, United Healthcare Group, Humana, CVS Health Corporation, Kaiser Health Foundation Plan, and Anthem are the top five in terms of enrolled beneficiaries and/or covering the highest number of states or territories.  Medicare Advantage had 26.2 billion beneficiaries in 2021 with a projected 51 percent increase in participants by 2030.  Nine percent of the claims included in the OIGs review were initially denied by Medicare Advantage, later to be overturned within three months of an appeal.  Healthcare organizations are buried in their attempt to implement a denial management plan without relief in sight.

Hopefully, the OIG findings will prompt productive discussions between payers and providers, whereas forward motion in this arena historically has been nonexistent.    

Programming Note: Listen to Susan Gatehouse live today during Talk Ten Tuesdays when she cohosts the broadcast with Chuck Buck at 10 Eastern.