The Department of Health and Human Services Office of Inspector General (OIG) released a report stating that Medicare Advantage Organizations (MAOs) inappropriately denied prior authorization requests that impacted beneficiaries’ access to medically necessary care. Among the payment requests the MAOs denied, 18 percent met Medicare coverage rules and MAO billing rules.
Of the 12,273 denials of requests for services (prior authorization denials) issued by the 15 selected MAOs during the first week of June 2019, an estimated 13 percent met Medicare coverage rules. For an annual context, if the MAOs denied the same number of prior authorization requests each week of 2019, they would have denied 84,812 beneficiary requests for services that met Medicare coverage rules that year.
The MAO’s incorrectly denied prior authorization and payment requests by:
- using MAO clinical criteria that are not contained in Medicare coverage rules;
- requesting unnecessary documentation; and
- making manual review errors and system errors.
The OIG had selected a stratified random sample of 250 denials of prior authorization requests and 250 payment denials issued by 15 of the largest MAOs occurring June 1-7, 2019. Healthcare coding experts reviewed case files for all cases, and physician reviewers examined medical records for a subset of cases. From the results, the OIG estimated the rates at which MAOs denied prior authorization and payment requests that met Medicare coverage rules and MAO billing rules and examined the reasons for these denials and the types of services associated with the denials.
The report said that most of the denials in the 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). MAOs reversed some of the denials that met Medicare coverage rules and MAO billing rules, often when a beneficiary or provider appealed or disputed the denial. In some cases, MAOs identified their own errors.
Although some denials were ultimately reversed, the report pointed out that “avoidable delays and extra steps create friction in the program and may create an administrative burden for beneficiaries, providers, and MAOs.”
Examples of healthcare services involved in denials that met Medicare coverage rules included advanced imaging services (e.g., MRIs) and stays in post-acute facilities (e.g., inpatient rehabilitation facilities). No O&P denials were identified in the report.
As a result of its investigation, the OIG made the following three recommendations to the Centers for Medicare & Medicaid Services (CMS), which concurred.
- 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.
To read the report, “Some Medicare Advantage Organization Denials of Prior Authorization Requests Raise Concerns About Beneficiary Access to Medically Necessary Care,” visit the OIG website.
