Medicare Advantage Plans Denying Appropriate Care

April 29, 2022

Summary: This report from the US Dept of Health and Human Services Inspector General quantifies the high frequency of unjustified denials of care authorizations and payments by Medicare Advantage plans. This is private insurers maximizing profits at the expense of patients.

Some Medicare Advantage Organization Denials of Prior Authorization Requests Raise Concerns About Beneficiary Access to Medically Necessary Care
Office of Inspector General, US Dept of Health and Human Services
April 2022

What OIG Found

Our case file reviews determined that MAOs sometimes delayed or denied Medicare Advantage beneficiaries’ access to services, even though the requests met Medicare coverage rules. MAOs also denied payments to providers for some services that met both Medicare coverage rules and MAO billing rules. Denying requests that meet Medicare coverage rules may prevent or delay beneficiaries from receiving medically necessary care and can burden providers. …

Prior authorization requests. We found that among the prior authorization requests that MAOs denied, 13 percent met Medicare coverage rules—in other words, these services likely would have been approved for these beneficiaries under original Medicare (also known as Medicare fee-for-service). We identified two common causes of these denials. First, MAOs used clinical criteria that are not contained in Medicare coverage rules (e.g., requiring an x-ray before approving more advanced imaging), which led them to deny requests for services that our physician reviewers determined were medically necessary. … 

Second, MAOs indicated that some prior authorization requests did not have enough documentation to support approval, yet our reviewers found that the beneficiary medical records already in the case file were sufficient to support the medical necessity of the services. 

Payment requests. We found that among the payment requests that MAOs denied, 18 percent met Medicare coverage rules and MAO billing rules. Most of these payment denials in our sample were caused by human error during manual claims-processing reviews (e.g., overlooking a document) and system processing errors (e.g., the MAO’s system was not programmed or updated correctly).

Comment by: Don McCanne

The private insurance companies have been very successful at marketing their private Medicare Advantage plans as a substitute for traditional Medicare under the Part C Medicare program. Since they are paid on a capitation basis rather than fee-for-service, once patients are enrolled, the insurers can increase their profits by denying requests for prior authorization of legitimate services or by simply denying payment for services that have already been provided in compliance with the rules. Prior studies have demonstrated that they do both, and this study from the OIG confirms that they continue to do so.

Mind you, these are legitimate services for which the insurers have already been paid through capitation. Keeping government funds under their control for their own profits that rightfully should be directed elsewhere (the insurance function) is dishonest. Regardless, the government has allowed the insurers to continue to market these plans in a manner that has resulted in ever increasing diversion of public funds to the private insurers through higher sales of Medicare Advantage plans.

Traditional Medicare can offer the same services for lower administrative costs and without the necessity to include extra charges for profits. Any extra benefits that would be appropriate for the Medicare Advantage plans would also be appropriate for traditional Medicare as well. The Medicare Advantage plans should be eliminated and the traditional Medicare program should be modified to provide the best deal for the Medicare beneficiaries and the taxpayers.

Haven’t we said this often enough? Why aren’t Congress and the Administration responding?

Editor’s note: This behavior by private insurers is part of a broad societal trend favoring the rich. Today Heather Cox Richardson reviews our country’s historical cycling of rights for the many vs. for the few. We are living through a wealth inequality ascendant phase, on the cusp of oligarchy / fascism. Her analysis is critically important. It is imperative to reverse the trend, with real health care reform part of the solution. – JGK