Medicare Advantage insurers could see more oversight of prior authorization practices.
The Centers for Medicare and Medicaid Services agreed with policy recommendations laid out in a federal report published Thursday, which shows how prior authorization has prevented enrollees from accessing necessary care.
An estimated 13% percent of denied prior authorization requests reviewed met Medicare coverage rules and likely would have been approved under fee-for-service Medicare, according to the Health and Humans Services Department's inspector general. The watchdog further determined that about 18% of payment requests insurance companies denied met Medicare coverage and Medicare Advantage billing rules. Insurers reversed their prior authorization denials in about 3% of cases and their payment denials in 6% of cases within three months, the Office of Inspector General found.
The OIG examined data from the 15 largest Medicare Advantage companies—including UnitedHealth Group, Humana, CVS Health, Kaiser Permanente and Anthem—over a one-week period in June 2019.
Advanced imaging services such as MRIs and CT scans, post-acute care following hospital stays, and injections used mainly for pain relief were the most commonly denied services, according to the inspector general.
In a statement, the insurance trade group AHIP emphasized that the report shows most Medicare Advantage prior authorization requests are approved and cautioned against making broad conclusions based on the report's limited sample.
The OIG's findings echo longstanding complaints from providers and patients that Medicare Advantage carriers apply prior authorization and medical necessity reviews in a way that is detrimental to patients, said Terrence Cunningham, director of administrative simplification policy at the American Hospital Association.
"Our hope would be that the analysis really pushes regulators and legislators to take steps to ensure that Medicare Advantage beneficiaries are entitled to appropriate and medically necessary care and that Medicare Advantage organization policies do not get in the way," Cunningham said.
The inspector general recommends CMS update its guidance on the clinical criteria for medical necessity reviews, revise audit protocols for Medicare Advantage carriers and require insurers to identify and address vulnerabilities that lead to manual reviews and system errors. In comments amended to the OIG report, CMS agrees with those suggestions.
CMS has increased scrutiny of Medicare Advantage carriers under President Joe Biden. The agency proposed boosting Medicare Advantage network adequacy requirements next year and issued a memo this month reminding insurers to submit accurate risk-adjustment data, for example.
CMS's concurrence with the OIG's recommendations suggests the agency will do more to reign in harmful prior authorization practices and make sure capitated payments are made with the right incentives in mind, said Alexander Dworkowitz, a partner at Manatt Health.
"I don't think CMS, in agreeing to this report, is saying we want to move away from risk sharing," Dworkowitz said. "They're saying that we just need to be a little more proactive in monitoring to make sure it's done the right way."
Prior authorization practices vary among Medicare Advantage insurers, which creates administrative complexity and increases costs for providers, said Adam Block, founder of digital health consulting firm Charm Economics.
A bipartisan bill backed by the American Medical Association would require Medicare Advantage carriers to streamline and standardize prior authorization processes and improve transparency.
"The time is now for federal lawmakers to act to improve and streamline the prior authorization process so that patients are ensured timely access to the evidence-based, quality healthcare they need," AMA President Dr. Gerald Harmon said in a news release.
The inspector general report concludes that insurers lacked justification when they denied patients access to inpatient rehabilitation or skilled nursing facilities after hospital discharges. The less-costly alternatives the carriers preferred were clinically insufficient, according to the auditor's review.
In one instance, a patient with a fractured femur recovering from surgery was denied a rehab referral despite meeting the medical necessity criteria and needing physician supervision.
Especially during the COVID-19 pandemic, prior authorization reviews have taken days to complete, Cunningham said. Patients wind up remaining in beds needed for others while they wait, or are sent home when they should be receiving post-acute care, he said.
While Medicare Advantage insurers can use additional clinical criteria when deciding whether to authorize or cover a service, they have to follow Medicare coverage rules and their standards can't be more restrictive than Medicare's traditional national or local coverage determinations.
But many denials the OIG identified were based on clinical criteria not required by Medicare. CMS guidance on what additional criteria Medicare Advantage carriers can impose isn't detailed enough to determine whether the denials should be considered allowable, according to the inspector general.
One Medicare Advantage insurer's clinical criteria required a patient to undergo an X-ray before it accepted a request for an MRI. Yet the OIG report concludes an X-ray was insufficient and that delayed treatment could have harmed the patient.
Another Medicare Advantage carrier denied a request for an MRI for a 91-year-old patient with chronic lower-back pain and sciatica because the patient had not completed six weeks of provider-directed treatment within the previous three months.