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Medicare Benefit: OIG Report Finds Improper Denials | Blogs | Well being Care Regulation Right now

On April 27,2022, the Workplace of Inspector Basic of the Division of Well being and Human Providers (OIG), Workplace of Evaluations and Inspections, issued a report on the efficiency of Medicare Benefit Organizations (MAOs) in approving care and cost constantly with Medicare protection guidelines. In its assessment, OIG discovered that 13% of MAO denials of prior authorization requests ought to have been authorized and that 18% of cost requests from suppliers have been improperly denied. OIG additionally made quite a few suggestions to the Middle of Medicare and Medicaid Providers (CMS) with respect to its oversight of MAOs.

Objective and Methodology of the Examine

OIG undertook the examine to evaluate whether or not MAOs are appropriately offering entry to medically vital companies and making cost to suppliers constantly with Medicare protection guidelines. Since CMS pays MAOs principally by capitation, MAOs have a possible incentive to extend their earnings by denying entry to care of beneficiaries or by denying funds to suppliers. CMS’s annual audits of MAOs have indicated some persistent issues associated to inappropriate denials of service and cost. As enrollment in Medicare Benefit continues to develop, OIG considered it as necessary to make sure that medically vital care is supplied and that suppliers are paid appropriately.

OIG carried out the assessment by randomly choosing 250 denials of prior authorization requests and 250 cost request denials by 15 of the most important MAOs throughout every week in June of 2019. OIG had coding consultants assessment the circumstances and had doctor reviewers look at the medical data. Primarily based on these opinions, OIG estimated the charges at which MAOs issued denials of companies or cost that met Medicare protection guidelines and MAO billing guidelines. OIG additionally examined the explanations for the inappropriate denials and the sorts of companies concerned.


MAOs should cowl objects and companies included in fee-for-service Medicare, and may additionally elect to incorporate extra objects and companies. MAOs are required to observe Medicare protection guidelines that outline what objects and companies are coated and underneath what circumstances. Because the OIG states within the Report, MAOs “could not impose limitations – akin to ready durations or exclusions from protection on account of pre-existing circumstances — that aren’t current in unique Medicare.” In following Medicare protection guidelines, MAOs are permitted to make use of extra denial standards that weren’t developed by Medicare when they’re deciding to authorize or pay for a service, supplied the medical standards are “no extra restrictive than unique Medicare nationwide and native protection insurance policies.” MAOs may additionally have their very own billing and cost procedures, supplied all suppliers are paid precisely, well timed, and with an audit trial.

MAOs make the most of prior authorization requests earlier than care is furnished to handle care and cost requests from suppliers to approve cost for companies supplied. Beneficiaries and suppliers could attraction such selections, and beneficiaries and suppliers are profitable in most of the appeals (for a one-time interval, as many as 75% of the appeals have been granted).


Prior Authorization Denials

Within the examine, OIG discovered that 13% of prior authorization denials have been for companies that met Medicare protection guidelines, thus delaying or denying care that seemingly ought to have been authorized. MAOs made most of the denials by making use of MAO medical standards that aren’t a part of Medicare protection guidelines. For instance, a follow-up MRI was denied for a beneficiary who had an adrenal lesion that was 1.5 cm in measurement, as a result of the MAO required the beneficiary to attend one yr for such lesions which are underneath 2 cm in measurement. OIG’s consultants discovered such a requirement was not contained in Medicare protection guidelines and was subsequently inappropriate. Relatively, the MRI was medically vital to find out if the lesion was malignant.

OIG additionally discovered cases the place MAOs requested additional documentation that led to a denial of care when it was not furnished, as such extra documentation was not required to find out medical necessity. OIG’s reviewers discovered that both enough medical info was within the medical file to authorize the care or the documentation requested was already contained within the medical file.             

Cost Denials

OIG discovered within the examine that 18% of cost denials absolutely met Medicare protection guidelines and MAO cost insurance policies. Because of these denials, cost was delayed or precluded for companies that ought to have been paid.

OIG discovered that widespread causes for these inappropriate cost denials have been human error in conducting guide opinions (for instance, the reviewer not recognizing {that a} expert nursing facility (SNF) was an in-network supplier), and inaccurate programming.

OIG additionally discovered that superior imaging companies (together with MRIs and CT scans), stays in post-acute amenities (together with SNFs and inpatient rehabilitation amenities), and injections have been the companies that have been most distinguished within the inappropriate denials that ought to have been licensed for care and cost in accordance with Medicare protection guidelines.

OIG Suggestions

Primarily based on the examine, OIG advisable that:

  • CMS ought to situation new steerage on each the suitable and inappropriate use of MAO medical standards that aren’t contained in Medicare protection guidelines. Specifically, OIG advisable that CMS ought to extra clearly outline what it means when it states that MAO medical standards is probably not “extra restrictive” than Medicare protection guidelines.
  • CMS ought to replace its audit protocols to handle points recognized within the report akin to MAO use of medical standards and/or look at specific service varieties that led to extra denials. OIG suggests CMS ought to take into account enforcement actions for MAOs that display a sample of inappropriate cost denials.
  • CMS ought to direct MAOs to determine and tackle the explanations that led to human errors.

CMS reviewed the OIG report and concurred with every of OIG’s suggestions. These suggestions can have an effect on future protection selections in addition to utilization of prior authorization instruments. AHIP, a nationwide affiliation of well being care insurers, challenged the OIG’s pattern measurement as inappropriate to help the company’s conclusions, and defended prior authorization instruments.


Given CMS’s concurrence with the report’s findings, we suggest that MAOs monitor these points over the following a number of months prematurely of CMS’s Closing Charge Announcement for CY 2024.

MAOs must also concentrate on potential False Claims Act (FCA) publicity on this space. FCA publicity can come up when an organization seeks and receives funds regardless of being out of compliance with the essential phrases for its participation. If an MAO knew it was denying claims that ought to be paid as a result of they might be coated underneath conventional Medicare, however the MAO was nonetheless gathering full capitation, it’s attainable {that a} whistleblower or the federal government could pursue FCA legal responsibility. This danger warrants consideration as a result of whistleblowers can carry qui tam fits underneath the FCA, with ensuing excessive prices for protection and doubtlessly excessive penalties if a violation is confirmed (or settled to keep away from additional litigation). That stated, an FCA swimsuit primarily based on this idea would increase critical questions, together with whether or not any non-payment really met the FCA’s “knowingly” customary (which incorporates reckless disregard), or whether or not any non-payment met the materiality threshold essential to display a violation of the FCA.



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