Medicare Advantage insurers have been improperly denying beneficiaries access to services and payments in an effort to increase their profits, according to a new report released by the HHS Office of Inspector General.
The watchdog agency—which identified "widespread and persistent problems" with denials—is recommending that the Centers for Medicare & Medicaid Services (CMS) step in and increase its oversight of these organizations.
"An [Medicare Advantage organization] that inappropriately denies authorization of services for beneficiaries, or payments to healthcare providers, may contribute to physical or financial harm and also misuses Medicare Program dollars that CMS paid for beneficiary healthcare," the report said (PDF).
The OIG notes that capitated payments used in the Medicare Advantage program could incentivize insurers to limit care in order to increase profits.
Medicare Advantage organization performance problems have been on CMS' radar for some time, but the renewed attention comes after OIG analyzed data on payment denials and appeals of those denials between 2014 and 2016. The OIG found that insurers overturned 75% of their own denials upon appeal—approximately 216,000 denials each year.
That high rate of return raised concerns that the payments in question should have been authorized the first time around.
OIG was also concerned because despite the high rate of success, the appeals process was rarely used. Beneficiaries only appealed 1% of denials during the analyzed period, meaning the other 99% of denied services were either paid by patients or not provided.
"High rates of overturned denials upon appeal are especially concerning because beneficiaries and providers appealed relatively few of the total number of denials issued each year," the OIG wrote. "The appeals process is one of the safeguards against inappropriate denials in Medicare Advantage and gives beneficiaries and providers the ability to appeal denials that they believe should be overturned. However, patient advocates have raised concerns that the appeals process can be confusing and overwhelming, particularly for critically ill beneficiaries."
To correct the problem, OIG recommended that CMS increase its oversight of insurers in three central ways:
- Take corrective action with contracts that demonstrate extremely high overturn rates and/or low appeal rates.
- Address persistent problems with inappropriate or insufficient denial letters. The office found that many denial-of-service letters were incorrectly filed, making them difficult to appeal.
- Provide beneficiaries with clear, accessible information about violations.
CMS concurred with all three recommendations.