In recent days, a report has been released that found that Medicare Advantage plans sometimes deny or delay claims that should be paid and deny care that is medically necessary. We thought the news was pretty important and deserves attention. Please make sure to read to the end of this post to get my entire response. I don’t want you to think that I believe choosing Medicare Advantage is a bad idea.
The Claim
The startling report was compiled by the U.S. Health and Human Services Office of Inspector General and states that private, for-profit Medicare Advantage plans denied 18% of claims allowed under Medicare coverage rules and denied 13% of authorizations for medical services that Medicare would have allowed.
In order to estimate how often insurers denied requests that should have been covered, coding experts and physician reviewers analyzed a sample of about 250 care preauthorization denials by 15 of the largest Medicare Advantage plans over one week in June, 2019.
These private Medicare plans cover more than 28 million older and disabled Americans and are an increasingly popular option. By 2030, it is expected that over half of Medicare recipients will be enrolled in an Advantage plan, which means that it is crucial that Medicare beneficiaries enrolled in Advantage plans have access to medically necessary covered services.
Traditional Medicare has no maximum out-of-pocket limit, but Medicare Advantage plans do offer out-of-pocket maximums while also offering perks such as vision, dental, and hearing benefits, telemedicine, and gym memberships - all at a price comparable to original Medicare. Their popularity has resulted in Advantage plan enrollments more than doubling in the past decade.
How do Medicare Advantage plans offer more while not charging much more?
To keep costs down, private Advantage plans employ various insurance industry tactics such as restricting networks of doctors and other medical providers people can use, requiring prior authorization for some services, requiring referrals for specialists, and promoting a healthy lifestyle (such as the gym memberships).
However, the report claims the private insurers were keeping costs down by denying coverage or forcing the insured to pay for services their plans should cover. Often, denials were made because the insurance companies required more preauthorization from patients than Medicare required, such as requiring an X-ray before authorizing an MRI, or requiring more documents than were required by Medicare.
HHS recommendations for getting Medicare Advantage plans to approve more requests for coverage
In order to address the discrepancies, the Health and Human Services Inspector General recommended that the Centers for Medicare & Medicaid Services (CMS):
issue new guidance on the appropriate use of clinical criteria in medical necessity reviews;
update its audit protocols to address the issues identified in this report, such as use of clinical criteria and/or examining particular service types; and
direct Advantage plans to take additional steps to identify and address vulnerabilities that can lead to manual review errors and system errors.
The Rebuttal
America’s Health Insurance Plans (AHIP) is a Washington-based group for health insurers that includes to 15 private Medicare Advantage plan insurers cited in the report. They took issue with the report:
AHIP claimed that the report’s stated denial rate of 13% was misleading and limited in scope by noting that the overwhelming majority (95%) of prior authorization requests in 2018 were approved.
they placed some of the blame on CMS by saying that more guidance was needed, stating that “The main concern about many of those cases was not that they were improper, but rather that more guidance from the government was needed on criteria that plans can use to make coverage determinations.”
finally, AHIP defended their preauthorization requirements by arguing that the extra measures can keep patients from getting dangerous, unnecessarily expensive or unnecessary care.
Our Conclusion
When public and private sectors intersect, there’s bound to be some conflict of objectives. Public entities such as CMS have the capacity to provide great services without the need for profitablity or efficiency, while private insurers make money by maximizing efficiences.
Advantage plans may be more strict on approving coverage, but they shouldn’t be denying necessary coverage. If you have ever had an employer PPO insurance plan, it undoubtedly required prior authorization for many procedures on a routine basis - that’s the nature of the industry.
An Observation
One of my policyholders recently called me about a denial from his Advantage plan. The good news is that we were able to work through the issue, and he received the care his doctor had recommended. The downside was the delayed response and the repeated phone calls he had to make on his own behalf. I’ve said it many times and will repeat here: you must be your own best advocate!
Another perspective is that Advantage plans, due to the fact that they are managed care, are incentivized to produce good health outcomes. Wouldn’t you rather have more professionals reviewing a complex case and trying to collaborate and solve it together, rather than trusting a fee-for-service system to deliver results?
Ultimately, I always defer to my policyholder on what they believe is best for their situation. I never try to convince someone that I know what’s best better than they do!
In summary, Medicare has been popular since it was introduced back in the 1960’s, and Advantage plans are gaining in popularity because they do bring excellent value to Medicare recipients. The report found some problems, but we believe improvements to the system will be made and Medicare Advantage plans will continue to be an attractive option for millions of Americans.