Medical/Legal

Fixing prior authorization in Medicare Advantage

By Jarrod Fowler, MHA, FMA Director of Health Care Policy and Innovation | Updated May 5, 2022

Last week, the U.S. Department of Health and Human Services Office of Inspector General (OIG) released a report showing that Medicare Advantage plans often inappropriately delayed or denied care. The report found that, among the prior authorization requests that Medicare Advantage (MA) plans denied, 13% actually met Medicare coverage rules. In other words, these services would have been approved for beneficiaries enrolled in Traditional Medicare.

As the OIG put it, “Medicare Advantage Organizations denied prior authorization requests for services that were medically necessary by applying clinical criteria that are not contained in Medicare coverage rules.” Further, “Medicare Advantage organizations indicated that some prior authorization requests did not have enough documentation to support approval, yet our reviewers found that the beneficiary medical records already in the case file were sufficient to support the medical necessity of the services.” Supposing MA plans regularly deny valid prior authorizations at the frequency found in this study, that indicates inappropriate denial of 84,812 prior authorizations in 2019 alone.

In addition, among payments that were denied by Medicare Advantage, 18% met traditional Medicare’s coverage and billing rules. As stated by the OIG, “Eighteen percent of payment denials were for claims that met Medicare coverage rules and Medicare Advantage billing rules, which delayed or prevented payments for services that providers had already delivered.” If MA plans regularly denied medically necessary services at the frequency reported in this study, that means 1.5 million payment requests were inappropriately denied in 2019. In response to these findings, the OIG recommended the following:

1. Issuing new guidance on the appropriate use of MA organization clinical criteria in medical necessity reviews; 2. Updating audit protocols to address the issues identified in this report, such as

MA organization use of clinical criteria and/or examining particular service types; and 3. Directing MA organizations to take steps toward identifying and addressing vulnerabilities that can lead to manual review errors and system error.

The use of inappropriate and harmful prior authorization (PA) requirements is why the FMA supports HR 3173, the federal Improving Seniors’ Timely Access to Care Act of 2021. This legislation would help reduce physicians’ administrative burdens and improve health outcomes for Medicare beneficiaries by modernizing the PA process in the context of the MA program. Specifically, it contains five improvements to the PA process that the FMA strongly supports and hopes to see included in any final legislative package:

1. The legislation establishes an electronic prior authorization (ePA) program and requires MA plans to adopt ePA capabilities that meet specified standards. The adoption of appropriate ePA standards would reduce the administrative burden associated with PA requirements and support the advancement of interoperability. 2. The legislation requires the Secretary of the Department of Health and Human

Services (HHS) to establish and routinely update a list of items and services eligible for real-time decisions under the MA ePA program, taking into consideration current medical practice and technology, healthcare industry standards, and other relevant factors. Standardizing and streamlining the prior authorization process for routinely approved items and services would significantly reduce the amount of unnecessary time and effort spent on PA requests. 3. The legislation requires PA requests to be reviewed by qualified medical personnel. Approval or denial of PA requests can greatly affect the health and well-being of vulnerable Medicare beneficiaries, and such determinations should be made only by those with appropriate training and expertise. 4. The legislation contains provisions that increase transparency around the PA process by requiring MA plans to provide certain data and information to the

Centers for Medicare & Medicaid Services, providers, and beneficiaries. For instance, the transparency provisions require MA plans to provide detailed data on the applicability of PA requirements for covered items and services, the rate at which PA requests are approved, how PA appeals and denials are adjudicated, and other relevant data that will help government officials and stakeholders evaluate the benefits and drawbacks of PA requirements with greater precision. 5. The legislation requires HHS to engage in rulemaking to protect beneficiaries from care disruptions caused by PA requirements as they transition between MA plans. Such protections will prevent Medicare beneficiaries from experiencing treatment delays when they exercise their right to change MA plans in accordance with current law.

Evidence suggests that targeted, meaningful improvements to the MA prior authorization process could improve administrative efficiency and patient health outcomes. Physicians routinely cite prior authorization as both a top administrative

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burden and a top barrier to providing patients with timely medical care. For instance, survey data has found that 94% of physicians experience at least some delays in delivering treatments to their patients because of PA requirements. Additionally, 79% of physicians report that PA requirements have caused patients under their care to abandon their recommended courses of treatment. Moreover, 30% report that PA requirements have caused a patient under their care to experience a serious adverse medical event, such as being hospitalized or requiring emergency medical intervention. Finally, PA requirements consume 16 hours per week of physician time on average, and 85% of physicians describe the burden of PA requirements as “high” or “extremely high.”i The FMA believes HR 3173, through the provisions outlined above, would reduce this kind of harm and waste within the MA program and help ensure that the 26 million Medicare beneficiariesii enrolled in MA plans receive the prompt, appropriate medical care they are entitled to.

HR 3173 would have an especially significant impact in Florida. Our state is home to more than 4.6. million Medicare beneficiaries, just over 50% of whom are enrolled in an MA planiii. Additionally, the impact of this legislation will almost certainly grow over time. According to research conducted by Florida officials, people ages 65 and above are projected to represent 24.3% of the state population in 2030, compared to 20.4% todayiv. Moreover, the proportion of Medicare beneficiaries enrolled in MA plans has grown steadily over the past 16 years, and the Congressional Budget Office projects continuation of this trendv .

The Improving Seniors’ Timely Access to Care Act of 2021 represents an opportunity to enact significant, urgently needed reforms that will reduce unnecessary administrative waste and improve care for the majority of Medicare beneficiaries in Florida and nationwide.

i 2020 AMA prior authorization (PA) physician survey, American Medical Association ii Medicare Advantage in 2021: Enrollment Update and Key Trends, Kaiser Family Foundation

iii Id iv Florida: An Economic Overview, Dec. 30, 2020, The Florida Legislative Office of Economic and Demographic Research v Medicare Advantage in 2021: Enrollment Update and Key Trends, Kaiser Family Foundation