OIG: MA Plans Inappropriately Shifting Care into the Home, Denying Providers Payment

Medicare Advantage (MA) organizations have limited beneficiaries’ access to necessary care. They have also denied payments to providers for services that are covered under Medicare rules, as well as MA billing rules.

That’s according to a report released Thursday by the Office of Inspector General (OIG).

The report examined data over the course of one week in June 2019 from the 15 of the largest MA organizations. This includes Humana Inc. (NYSE: HUM), CVS Health (NYSE: CVS), UnitedHealth Group (NYSE: UNH), Anthem Inc. (NYSE: ANTM), Kaiser Permanente and SCAN Health Plan. 


Specifically, OIG found that roughly 13% of prior authorization requests denied by MA plans met the criteria for Medicare coverage rules.

“In other words, these services likely would have been approved for these beneficiaries under original Medicare,” OIG wrote in the report.

Though Better Medicare Alliance pushed back on this finding, the organization has thrown its support behind the efforts to streamline the prior authorization process.


“While this study represents only a narrow sample of [MA] beneficiaries and polling data shows that less than half of [MA] beneficiaries have ever experienced a prior authorization themselves, Better Medicare Alliance has strongly supported efforts to streamline and simplify the prior authorization process for patients and providers,” Mary Beth Donahue, president and CEO of the Better Medicare Alliance, said in a press statement. “We look forward to our continued work with policymakers to strengthen [MA] for today’s seniors and tomorrow’s enrollees.”

OIG also found that 18% of payment requests denied by MA plans met Medicare coverage rules and MA billing rules. The majority of these denials were due to human error during manual claims-processing reviews and system processing errors, according to the report.

Generally, this finding falls in line with the vocal criticism MA plans have received from home-based care providers when it comes to reimbursement.

Most recently, Encompass Health Corporation (NYSE: EHC) leadership pointed out that MA plans were not sufficiently reimbursing the company for care services.

“We don’t want to de-prioritize their members, but they are going to force us to if we aren’t being paid the fair rate that we need to turn around and pay our clinicians,” Barb Jacobsmeyer, CEO of home health and hospice at Encompass, said Wednesday during the company’s Q1 earnings call

Jacobsmeyer noted that Encompass would like more contracts that are on episodic payment.

“We have industry-leading low rehospitalization rates — that’s critical to these MA plans,” she said.

Aside from denying care services and payment, MA plans have also denied requests for transfers to post-acute care facilities when patients met the clinical criteria for admission.

In the cases examined by OIG, patients received home health services instead. 

“In their justifications for these denials, [MA plans] often claimed that the patients did not need intensive therapy or skilled care and that their needs could be met at a lower level of care, such as home health services at the patient’s residence,” OIG wrote in the report. “However, our physician panel determined [that] … they would have benefited from the higher level of care ordered by the requesting physician, and that the alternatives offered by the [MA plans] were not clinically sufficient to meet the patients’ needs.”

Overall, OIG recommends that the U.S. Centers for Medicare & Medicaid Services (CMS) issue new guidance on the clinical criteria for medical necessity reviews, update its audit protocols and make moves to identify and address vulnerabilities that lead to manual reviews and system errors.

On its end, CMS has stated it agrees with these recommendations.

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