Washington Focus

Medicare Advantage Plans May Promise More but Deliver Less

May 2, 2022 – Although Medicare Advantage (MA) plans often are touted for delivering more benefits at a lower cost than traditional Medicare, some critics argue that MA organizations (MAOs) deny beneficiaries coverage that they would receive under Medicare rules – including MRIs and post-acute care – in order to increase profits.

As MA plan enrollment increases and lawmakers seek ways to reform healthcare for seniors, a recent report issued by the Department of Health and Human Services’ Office of Inspector General (OIG) highlights flaws in the MA paradigm that it recommends fixing.

OIG report examines MAO denials

In an April 2022 report, the OIG stated its concern that the capitated payment model used in MA is “the potential incentive” for MAOs to “deny beneficiary access to services and deny payments to providers in an attempt to increase profits.” Its review of MAO denials found that MAOs denied prior authorizations and payment requests that met Medicare coverage rules by:

  • Using MAO clinical criteria that are not contained in Medicare coverage rules;
  • Requesting unnecessary documentation; and
  • Making manual review errors and system errors.

Proponents of MA plans – which covered 42 percent of Medicare recipients in 2021 – cite savings in total healthcare spending for those enrolled in these programs in lieu of traditional fee-for-service Medicare. A recent study published by the advocacy group Better Medicare Alliance states that MA plans yielded a nearly $2,000 savings per beneficiary per year and also may offer benefits not provided under Medicare.

“Medicare Advantage plans have gained an increasing share of the Medicare ‘market’ in recent years, partly encouraged by government policy and partly by aggressive marketing,” said Coalition for Healthcare Communication Executive Director Jon Bigelow. “As the advocacy group’s study shows, seniors buying these plans may save on premiums and gain some services, such as coverage for hearing and vision care that is not eligible for Medicare reimbursement.”

MA plan model may need tweaking

However, the OIG report shows that MA plans “also may make it difficult for seniors to get medically-necessary care,” Bigelow explained. “Other recent reports suggest that MA plans may use upcoding or similar strategies to charge Medicare more than is appropriate.”

Sen. Elizabeth Warren (D-Mass.) has criticized MA’s direct contracting model and asserted that the model should not be applied to traditional Medicare, a proposal floated by the Biden administration earlier this year. She noted that this model, which gives capitated or partially capitated payments to providers, would incentivize plans to maximize profits over care. One tactic she called out as problematic is upcoding and boosting risk scores to achieve bonuses that add to the federal government’s bill but may not be benefitting patients.

Indeed, the OIG report stated that some MAOs’ denials of requests that meet Medicare coverage rules “may prevent or delay beneficiaries from receiving medically-necessary care and can burden providers” as well as “create friction in the program,” even when denial decisions are reversed (usually based on an appeal).

CMS agrees with OIG recommendations

Calling its findings “an opportunity for improvement to ensure that Medicare Advantage beneficiaries have timely access to all necessary health care services, and that providers are paid appropriately,” the OIG recommends that the Centers for Medicare and Medicaid Services (CMS):

  • Issue new guidance on the appropriate use of MAO clinical criteria in medical necessity reviews;
  • Update its audit protocols to address the issues identified in this report, such as MAO use of clinical criteria and/or examining particular service types; and
  • Direct MAOs to take steps to identify and address vulnerabilities that can lead to manual review errors and system errors.

The OIG states that CMS concurred with all three recommendations.

Bigelow: All healthcare costs should be considered

Taking a closer look at various healthcare levers that affect cost absolutely should include evaluation of how policies and practices impact patient care across the board, according to CHC’s Bigelow.

“As the nation’s healthcare spending continues to rise, most of the political debate revolves around reining in prescription drug prices,” he said. “These findings remind us that there are other factors that also increase overall health costs and should be addressed.”