OIG Suggests Changes to MA Prior Authorizations, Payment Requests

Medicare Advantage plans have incorrectly denied or delayed prior authorizations or payment requests and, in doing so, have accrued unwarranted revenues, according to a report from the Office of Inspector General (OIG).

OIG conducted the investigation because there was a possibility that Medicare Advantage plans might use the capitated payment model to boost revenue by denying access to coverage. The office acknowledged that most payment requests receive approval, but referenced data from CMS indicating that Medicare Advantage plans may issue inappropriate denials.

To test whether Medicare Advantage plans were misusing the payment denial process, OIG relied on data from 15 of the largest Medicare Advantage organizations. They took a sample of 250 denied prior authorizations in addition to the same number of payment denials. The requests and denials occurred between June 1 and June 7, 2019.

Using these data points, OIG assessed the denial rate for both prior authorizations and payment requests, the cited reason for denials, and the types of services that were often denied.

Upon reviewing the sample, OIG confirmed that Medicare Advantage organizations were inappropriately rejecting or prolonging prior authorizations. Some of the decisions were reversed.

Whether or not the decisions were reversed, these actions had an impact on both providers and members, preventing members from accessing medically necessary care and creating administrative overload for providers.

OIG found that 13 percent of the denied prior authorization requests would have been approved under fee-for-service Medicare coverage. For payment requests, 18 percent of those that were rejected would have been approved under fee-for-service Medicare.

For the prior authorization rejections, there were two primary causes for denials. Medicare Advantage plans might assess prior authorizations using criteria that differ from fee-for-service Medicare criteria. This could lead to a different definition of what is “medically necessary.”

Additionally, health plans argued that prior authorization requests lacked the appropriate amount of evidence. However, OIG’s reviewers disagreed.

For payment requests that were denied, OIG found that the most common cause for denial was human error or a system processing error. For instance, individuals reviewing the request may have failed to note certain documents or the Medicare Advantage’s system may not have been properly programmed or up-to-date.

Given these findings, OIG recommended that CMS offer guidance on Medicare Advantage clinical criteria for medical necessity, audit the relevant protocols, and instruct Medicare Advantage plans to take steps to prevent human errors or system errors when reviewing payment requests.

CMS agreed with all of OIG’s proposed actions.

The American Medical Association (AMA) expressed its affirmation for the report’s findings.

“Surveys of physicians have consistently found that excessive authorization controls required by health insurers are persistently responsible for serious harm when necessary medical care is delayed, denied, or disrupted,” AMA shared in a statement on the organization’s website.

“The American Medical Association agrees with the federal investigators’ recommendations for preventing inappropriate use of authorization controls to delay, deny and disrupt patient care, but more needs to be done to reform prior authorization.”

AMA supported The Improving Seniors’ Timely Access to Care Act—also known as HR 3173 or S 3018.

Other experts have advised remedying the issue by standardizing Medicare Advantage prior authorizations through Medicare Advantage Star Ratings.

There are pros and cons to prior authorization utilization. While prior authorizations have beneficial uses supporting value-based care efforts and helping enforce quality goals, they also have been criticized for increasing providers’ administrative burdens, lack of affordability, and even supporting discriminatory practices.