Medicare Advantage plans at times deny seniors access to medical care, federal watchdog finds

By Tami Luhby, CNN

Medicare Advantage plans, which are swiftly growing in popularity among senior citizens, have at times delayed or denied beneficiaries’ access to medical care — even though the requests met Medicare coverage rules, a federal watchdog said Thursday.

The report from the inspector general’s office of the Department of Health and Human Services is the latest red flag related to inappropriate denials by Medicare Advantage plans, which are run by private health care insurers. Annual federal audits have highlighted “widespread and persistent problems related to inappropriate denials of services and payment,” the office said.

Of the more than 64 million Americans covered by Medicare, more than 29 million are now enrolled in Medicare Advantage plans. The policies often have lower premiums and provide more services than traditional Medicare. But they may also have more limited networks of doctors and require prior approval or referrals for certain services.

A central concern is the potential incentive Medicare Advantage plans have to deny access to services and payments to providers in an attempt to increase profits, the office said. Insurers are given a set amount of money per patient regardless of the amount of care received.

The two leading insurer industry groups — America’s Health Insurance Plans, known as AHIP, and Blue Cross Blue Shield Association — did not return requests for comment.

Inspector general report

The plans turned down some prior authorization requests from medical providers that likely would have been covered by traditional Medicare, according to the inspector general’s office. Among the denied requests, some 13% met Medicare coverage rules.

The office identified two common reasons behind the denials. In some instances, insurers used clinical criteria not contained in Medicare coverage rules — such as requiring an X-ray before allowing more advanced imaging, like an MRI. And the insurers ruled in some cases that documentation was not sufficient for approval, even though the inspector general’s physician reviewers found that existing medical records were enough to support the necessity of the services.

Also, Medicare Advantage plans denied payment requests, mostly because of human mistakes during manual claims reviews or because of system processing errors. Some 18% of payment requests that were denied met Medicare coverage rules and Medicare Advantage billing rules.

Some of the denied prior authorization and payment requests that met coverage and billing rules were later reversed, often because the beneficiary or provider appealed.

Recommendations for improvement

The inspector general’s office recommends that the Centers for Medicare and Medicaid Services, which oversees Medicare Advantage, issue new guidance on the appropriate use of insurers’ clinical criteria in medical necessity reviews and update its audit protocols to address the issues identified in the report. It also suggests CMS direct Medicare Advantage plans to take additional steps to reduce manual review and system errors.

CMS said it agrees with all these recommendations and is determining the next steps to take.

Medicare Advantage plans may institute additional requirements to better define the need for a medical service, but they cannot be more restrictive than traditional Medicare’s national and local coverage policies, the agency said. It conducts audits of plans’ compliance and targets areas of concern, such as services with high rates of denial. Plans found to have repeated violations are subject to penalties, sanctions and contract termination.

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