OIG Determined Some Medicare Advantage Organizations Denied Prior Authorization and Payment Requests
According to a new report by the Office of Inspector General (OIG), results of case reviews determined Medicare Advantage Organizations (MAOs) sometimes delayed or even denied beneficiaries’ access to services, even though prior authorization requests met Medicare coverage policies. This also included payment request denials. The OIG concluded the MAOs denied prior authorization and payment requests by:
- Using MAO clinical criteria not contained in the Medicare coverage policies. Examples of this practice include requiring an x-ray before approving more advanced imaging such as an MRI; and stays in postacute facilities such as skilled nursing facilities (SNFs) inpatient rehabilitation facilities (IRFs).
- Requesting unnecessary documentation. The review indicated the medical records in the case review were sufficient to support medical necessity of services.
- Making manual review errors and system errors. Most of the payment denials in the case review sample were caused by human error during manual claims processing reviews. System processing errors were a result of the MAO’s system not programmed or updated correctly.
The OIG discovered among the prior authorization requests that the MAOs denied, 13 percent met Medicare coverage rules. Meaning, these services would have likely been approved under original Medicare (fee for service). Also identified in the review is the reversal of some of the MAO denials that met Medicare coverage rules, often after a beneficiary or provider appealed or disputed the denials. In some cases, the MAOs identified their own errors.
The denials of prior authorization raised concerns about beneficiary access to medically necessary care: “Denying requests that meet Medicare coverage rules may prevent or delay beneficiaries from receiving medically necessary care and can burden providers,” the report said. “Although some of the denials that we reviewed were ultimately reversed by the MAOs, avoidable delays and extra steps create friction in the program and may create an administrative burden for beneficiaries, providers, and MAOs.”
The capitation payment model is used in MAOs, and is used to control health care costs by paying a fixed amount to providers based on the number of beneficiaries or members they treat during a designated period of time. This is different from a fee-for-service model in which providers receive payment based on the procedures and services they provide the patient. A concern about the capitation payment model used in MAOs led the OIG to perform these case reviews. The OIG stated this payment model is a “potential incentive” for MAOs to deny beneficiary access to services and deny payments to providers in order to increase profits.
Based on findings, the OIG recommended that CMS: (1) issue new guidance on the appropriate use of MAO clinical criteria in medical necessity reviews; (2) update its audit protocols to address the issues identified, such as MAO use of clinical criteria and/or examining particular service types; and (3) direct MAOs to take steps to identify and address vulnerabilities that can lead to manual review errors and system errors. CMS concurred with all three recommendations.
