Medicare Advantage Plans Denying Items That Original Medicare Would Have Covered

Published in Government Relations on May 17, 2022

Do Medicare Advantage plans really follow Medicare guidelines like they say they do? For any provider that deals with both traditional fee-for-service (FFS) Medicare, as well as Medicare Advantage (MA) plans, you’ve probably found yourself asking that very question. You’ve also likely heard more times than you care to count from Medicare Advantage plans that “we follow Medicare guidelines” when it comes to authorizing, covering, and paying claims for the products and services you provide that are covered by Medicare. Despite hearing from those MA plans repeatedly that they “follow Medicare guidelines,” if you do any volume at all with these plans, you also likely have tens or hundreds (depending on your volume with them) of examples of them denying an authorization request or a claim for something that you see routinely covered by Medicare. You have all of the same appropriate and adequate documentation to substantiate medical necessity and coverage for the item that is being ordered, yet for some reason the MA plans are denying your claim or your auth request, and Medicare FFS is covering based on the same documentation. This may have happened frequently enough that you start to question whether you really understand Medicare guidelines. Before you questioned your sanity or your understanding of Medicare, if it got to that point, you likely first questioned whether the MA plan itself understood Medicare rules and guidelines. Some even feel that there is incentive for these plans to deny authorizations and claims, since not paying for those services could potentially increase their profits.

As it turns out, you may have been right to question their understanding of Medicare. In a recent study published by the Office of Inspector General (OIG), there was substantial evidence to reach a conclusion that some Medicare Advantage Organizations (MAOs) delayed or denied beneficiaries’ access to services, even though the requests met both Medicare’s coverage criteria as well as the MAO’s rules. MAOs are required to cover the same products and services under the same defined circumstances as Medicare. According to CMS’ Medicare Managed Care Manual, MAOs must make determinations based on internal policies (including coverage criteria no more restrictive than original Medicare’s national and local coverage policies) reviewed and approved by the medical director. However, the study shows, as many of you have suspected or known, MAOs don’t always do that. The study examined 250 Prior Authorization (PA) denials and 250 claim denials. The full 60-page document contains lots of details, as well as specific examples which you can review, but some of the key takeaways and statistics from the report are as follows:

  • Samples were collected from 15 of the largest MAOs in the U.S.
  • For the sample reviewed, 13% of the PA requests that were denied by the MAO met Medicare coverage rules and would have been authorized by traditional Medicare FFS.
  • For the sample reviewed, 18% of the claims that were denied by the MAO met Medicare coverage rules and would have been paid by traditional Medicare FFS.
  • The samples reviewed included auth requests and claims for several service types, including DME.
  • Both authorization requests and claims that met Medicare coverage rules for items and services were denied due to:
    • MAOs using clinical criteria that are not contained in Medicare FFS coverage rules (criteria that goes beyond Medicare or is more restrictive than Medicare)
    • MAOs requesting unnecessary documentation or documentation that had already been submitted by the provider
    • Manual errors or system errors at the MAOs
  • In some cases, the MAO requested additional documentation that was not necessary and then denied the auth request due to insufficient documentation to substantiate, even though proper documentation was already submitted.
  • Some claims were denied due to “no authorization on file,” even though a prior auth was obtained by the provider.
  • Incorrect coverage decisions were reached because Medicare coverage rules were misapplied.

Based on the 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 in the report (MAO use of clinical criteria and/or examining particular service types)
  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 of the OIG recommendations, and their official response to the report is included in the document linked above. CMS has also stated that they do plan to issue additional guidance to the MAO plans, and we will watch for that to come out. They also reiterated that MAOs must follow Medicare coverage rules. Roughly 40% of beneficiaries that are eligible for Medicare are enrolled in a MA plan. That number will continue to grow. We all know that things like this can happen and very few things flow smoothly 100% of the time. However, these auth and claim denials, whether intentional are not, create more work and therefore add cost to a process that often can’t absorb additional costs, especially preventable ones.

VGM and several other DME industry stakeholders have been advocating for more oversight of managed care plans that operate in both the managed Medicare and managed Medicaid spaces. This report certainly helps bolster the opinion that additional oversight is needed for these plans. VGM will continue to push for that in order to protect access to the critical DMEPOS products and services that patients rely on to best manage their acute and chronic conditions.

Please reach out to VGM’s Craig Douglas at [email protected] or 877-218-2825 if you have questions or need additional information regarding this topic.


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