Appealing Medicare Advantage Denials Can Pay Off

June 5, 2019

Dan Low
Director of Operations
Healthcare Financial Resources, LLC

Despite a high probability for success, just one percent of Medicare Advantage (MA) reimbursement and pre-authorization denials were appealed by providers and beneficiaries between 2014 and 2016, a recent federal report stated.

During that same time period, 75 percent of the denials that were appealed were overturned by payers themselves, according to a report produced by the U.S. Department of Health and Human Services’ Office of Inspector General (OIG) and released in September 2018.
“The high number of overturned denials raises concerns that some Medicare Advantage beneficiaries and providers were initially denied services and payments that should have been provided,” the report states.

To ensure providers receive every dollar they’re entitled to, hospitals and other organizations may wish to partner with a qualified accounts receivable (AR) recovery and resolution firm for assistance in pursuing the four-level MA appeal process.

Rapid growth of MA plans

MA plans have surged in popularity in recent years by offering relatively low-cost coverage that includes hospitalization and prescription drug benefits, as well as coverage options not provided with original Medicare, such as dental, fitness and vision.

About 34 percent of all Medicare beneficiaries, or about 20 million people, currently are enrolled in MA plans, nearly double the number enrolled 10 years ago, according to the Kaiser Family Foundation.[1] The Congressional Budget Office (CBO) projects that MA enrollment will exceed 40 percent of all Medicare beneficiaries by 2028.[2] At the state level, MA penetration currently is as high as 56 percent in Minnesota and 40 percent or more in five other states: California, Florida, Michigan, Pennsylvania and Oregon.[3]

According to the OIG report, “a central concern about the capitated payment model used in Medicare Advantage (also known as Medicare Part C) is the potential incentive for insurers to inappropriately deny access to services and payment in an attempt to increase their profits.”

Appeals confusion

The OIG examined 448 million requests to payers made in 2016: 24 million preauthorization requests and 424 million payment requests for service already provided. Of these, about one million preauthorization requests and 36 million payment requests were denied, equating to denial rates of four percent and eight percent, respectively.

“Because Medicare Advantage covers so many beneficiaries (more than 20 million in 2018), even low rates of inappropriately denied services or payments can create significant problems for many Medicare beneficiaries and their providers,” the report states.

The report noted that while beneficiaries receive notice with denials that they have a right to appeal and request that the denial be overturned, confusion often surrounds the process.

“Although there are resources available to help beneficiaries navigate the appeals process, advocacy groups report that the process is often confusing and overwhelming for beneficiaries, particularly those struggling with critical medical issues,” the report states.

Nor is it just beneficiaries that are evidently confused about appeals, given the low appeal rate by providers. The MA appeals procedure includes initial review by the managed care organization, then subsequent administrative reviews by independent review entities, administrative law judges and ultimately, the Medicare Appeals Council.

“When beneficiaries and providers chose not to appeal denials, the beneficiary may have gone without the requested service, the beneficiary may have paid for the service out of pocket, or the provider may not have been paid for the service,” the report notes.

Audits raise red flags

Of the 75 percent of denials overturned on appeal between 2014-16, 82 percent were for services already delivered and 18 percent were for preauthorizations, the report states.

“Although overturned denials do not necessarily mean that [Medicare Advantage organizations] inappropriately denied the initial request, each overturned denial represents a case in which beneficiaries or providers had to file an appeal to receive services or payment that are covered by Medicare,” the report states. “This extra step creates friction in the program and may create an administrative burden for beneficiaries, providers and [Medicare Advantage organizations].”

The findings of the OIG report dovetail with results from the Center for Medicare and Medicaid Services’ (CMS) annual program audits of Medicare Advantage plans. In 2015, CMS cited 56 percent of 140 audited Medicare Advantage organizations for two types of violations related to inappropriate denials of preauthorizations and/or payments. These included making the wrong clinical decision based on available information and/or not conducting appropriate outreach before making clinical decisions.

Additionally, nearly half of audited Medicare Advantage contracts were cited for sending incorrect or incomplete denial letters, which may inhibit the ability of beneficiaries and providers to appeal.
The OIG report recommended increased oversight of Medicare Advantage contracts, particularly those with high overturn rates and/or low appeal rates. They also suggested that CMS address persistent problems related to inappropriate denials and insufficient denial letters. Finally, the OIG recommended providing beneficiaries with clear, easily accessible information about serious violations by Medicare Advantage organizations.

HFRI can help you appeal MA denials

Although MA policies are structured and marketed differently than original Medicare, they must still follow Medicare rules and guidelines when it comes to minimum benefits, medical necessity, denials and appeals. Monitoring payer performance and making sure these rules are followed is essential to ensure providers are fully and properly reimbursed for the services they provide.

Partnering with a firm that that understands the MA payment, denial and appeals process can be enormously beneficial, not only to help address denials when they occur but equally important, to analyze the entire coding, claims and billing cycle to prevent denials in the first place.

HFRI has determined that most MA denials stem from coding and billing-related problems, such as crosswalks that haven’t been set up correctly to bill the appropriate codes. Other factors that trigger denials include incorrectly loaded contract details and failure to pre-certify patients across the care continuum. Incorrectly classifying patients as original Medicare beneficiaries and not MA enrollees also is a common source of denials.

Because MA accounts frequently represent a significant portion of a hospital’s Medicare volume, it is important to partner with a vendor that not only understands MA denials but also can process high numbers of claims quickly and consistently. Healthcare Financial Resources (HFRI) can help you in these areas by providing denial management assistance as well assistance with all your AR recovery and resolution needs.

Contact HFRI today to learn more about how we can help you defeat denials.

[1] Gretchen Jacobson, et al, “A Dozen Facts About Medicare Advantage,” Kaiser Family Foundation, Nov. 12, 2018

[2] Ibid.

[3] Ibid.

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