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Medicare Advantage denial challenges [PODCAST]

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The Hospital Finance Podcast

In this episode, we are joined by Laura Legg, Director of Revenue Integrity Solutions at BESLER, to discuss challenges with Medicare Advantage denials.    

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Highlights of this episode include:

  • Background on why Medicare Advantage denials stand out as a concern with revenue cycle leaders.
  • How successful are first-level Medicare Advantage appeals? 
  • What other levels of appeals are related to Medicare Advantage denials?
  • What providers can do to get ahead of Medicare Advantage denials.
  • And more…

Laura Legg presented a webinar on Medicare Advantage denial challenges. Tune in to learn how providers stay ahead of these denials. Come away with an action plan!


Mike Passanante: Hi, this is Mike Passanante. And welcome back to the award-winning Hospital Finance Podcast®. On today’s show, we’re going to be talking about some of the challenges regarding Medicare Advantage denials, and to help us understand more about that, I’m joined by BESLER’s Director of Revenue Integrity Solutions, Laura Legg. Laura, welcome back to the show.

Laura: Thank you, Mike. I’m happy to be here.

Mike: So Laura, in an earlier podcast, you shared with us that payer denials are one of the top three challenges that is of the greatest concern to revenue cycle leaders. What makes Medicare Advantage denials stand out?

Laura: Well, Mike, as I work with clients and as I go across the nation speaking about denials and revenue integrity, I find that Medicare Advantage denials stand out because I’m often asked about how to navigate them. I think revenue cycle leaders find that Medicare Advantage denial appeal process to be very burdensome, confusing, and lacking in clear rules and definition, so that’s really what makes it stand out. Also, the MA’s time-consuming and complex appeal process. And so really, there’s not a lot of staff out there, perhaps in hospitals, that are experienced with negotiating Medicare Advantage. So a lot of organizations don’t even try to appeal. They just accept the decreased reimbursement. In 2018, the OIG did a thorough research and audit of MA plans, and they discovered that providers and Medicare beneficiaries only file appeals 1% of the time. So that is really low and really concerning, because most denials are overturned at the first level of appeal.

Mike: Laura, can you share some more information about the first level of Medicare Advantage appeal success rates?

Laura: I can, Mike. And the success rate is phenomenal. According to the OIG report, Medicare Advantage overturned 75% of their own denials at the first level of appeal. And not only that, but additional denials were overturned by independent reviewers at a higher appeal level. So this, of course, raises concern that Medicare Advantage plans are denying payment and authorization for services that should have been provided. Even more concerning is that beneficiaries and providers, as I said earlier, are only appealing 1% of the time. So that really is pointing to us that the process of appeal is just too burdensome.

Mike: So Laura, why don’t we take a quick step back and describe for the audience the different levels of appeals related to Medicare Advantage denials.

Laura: I can do that, Mike, and it’s important for people to know that these appeal levels should be very well-described within their contracts with Medicare Advantage plans, but let’s quickly review them because I think that might be helpful. There are actually four levels of administrative review, and they include several different entities. At each level of review, the denial can be overturned, partially overturned, or upheld. If the denial’s overturned, Mike, then the Medicare Advantage plan must authorize or pay for the service. If the denial is not fully overturned, the beneficiary or provider can appeal the decision to the next level of review. So let’s start with the very first level, Mike, which is deemed in your contract as first-level appeals

Medicare Advantage plan and their quality improvement organization will reconsider their decision to deny authorization or payment for the service. So the Medicare Advantage plan is required to review the evidence that led to the original decision and any additional evidence of the beneficiary or provider can submit as part of the appeal. And any additional evidence, Mike, usually means documentation from the patient’s record. So that’s the first level of appeal.

Now, if you go on to the second level of appeal, that’s done by an independent review entity. So this is a really important part of the process, Mike, because this person is going to review the appeal denial by the MA to determine whether the MA made the correct decision. And this is someone who should be impartial. It’s usually a CMS contractor that employs physicians and other consultants to review the appeal and determine whether the MA complied with the Medicare requirements. If the independent review entity upholds or partially overturned the denial, beneficiaries and providers may choose to appeal at the next level.

So let’s go on into the third level of appeal. So this is a well-known level of appeal and known across the industry as a successful level in part, mostly. Administrative law judges are the third level of appeal and they’re within the Office of Medicare hearings and appeals. They will review both the independent review entity and the quality improvement organizations decisions. Now, this is where hospitals are very successful at winning appeals. Most often the administrative law judge does side with the hospital. If a beneficiary, provider, or MA is dissatisfied with the decision of the administrative law judge, they can choose to appeal to the next level. What can stop some people from moving on, Mike, to the third level of appeal with the administrative law judge is the time to wait as well as the cost. But that is the third level of appeal.

And on that, I’ll just speak briefly, Mike, about the fourth level of appeal. So this is where you’ve exhausted all of their efforts. You’ve gone through the first three levels. So now you’re going to go to the Medicare Appeals Council. And they’re within a departmental appeals board. They will review the beneficiary the provider and the appeals of decisions, as well as administrative law judges’ decision. Then the Medicare Appeals Council, which is the last level of review within the Department of Health and Human Services, will make a decision. If beneficiaries, providers or MA’s are dissatisfied with this decision, then they can appeal at the federal district court level by filing a civil action. But real honestly, Mike, most MA appeals don’t ever reach, denials don’t ever reach those higher levels of appeal.

Mike: So, Laura, what are some of the other concerns surrounding the high level of Medicare Advantage denials that concern OIG? and CMS?

Laura: Well, I think the biggest concern, really, Mike, is for the beneficiaries themselves and the care they’re receiving. The OIG presented the central concern in their report about capitated payment model that the MA’s are functioning under as a potential incentive for insurers to deny access to services and payment to increase their own profit. So this is where MI’s are under a lot of scrutiny by the OIG as well as CMS. Under their capitated payment model, beneficiaries enroll in a managed care plan. And Medicare pays the insurance. The insurer, which is called the Medicare Advantage organization, a risk-adjusted payment each month for as long as the beneficiaries enrolled. So that risk-adjusted payment, Mike, is determined by how ill the patient is including their chronic diagnoses and really how much risk the MA is going to go through throughout the year to pay for their care. And exchange for that monthly payment, the Medicare Advantage plan agrees to authorize and pay for all medically necessary services for the beneficiary that fall within Medicare’s benefit package.

Now, Medicare Advantage plans can inappropriately deny authorization of services or payments to health care providers who care for beneficiaries. And this can contribute to physical or financial harm. They also may misuse Medicare program dollars that CMS pays for beneficiary healthcare. And this is a big and growing problem, Mike, because Medicare Advantage covers so many beneficiaries. More than 20 million in 2019. So even lower rates of inappropriately denied services or payment can create significant problems for many Medicare beneficiaries and their providers. And MA programs are very popular among beneficiaries, and that isn’t going away anytime soon. And, Mike, some of the reasons that those plans are so attractive to Medicare beneficiaries is Medicare Advantage plans offer some extra benefits that original Medicare doesn’t cover such as vision, hearing and dental. So those are very attractive to retiring seniors. Also, the Medicare Advantage plans out of pocket costs can be lower, which is also attractive. Also, Medicare Advantage plans are available even if you have a pre-existing condition. So these are attractive to seniors and they are definitely growing and not going away anytime soon. The thing that’s important for us to remember is that each plan is different, and each plan can have its own rules.

Mike: Are there any recommendations made or actions taken by CMS to protect providers and Medicare beneficiaries after the Medicare Advantage audit?

Laura: They were, Mike. In fact, the OIG have three major recommendations to CMS. The first one they’d like to see more oversight of Medicare Advantage contracts. So that just means those with really high overturn rates and low appeal rates, CMS would like to see– OIG would like to see CMS taking more corrective action. And those would include more oversight, more auditing, initiating corrective action plans with MA’s that seem to be doing these things inappropriately. So that’s the first recommendation.

The second recommendation, Mike, is that they address the persistent problems related to the inappropriate denials and insufficient denial letters in the Medicare Advantage that were found in the Medicare Advantage CMS audit. They really saw a lot of insufficient denial letters issued to beneficiary providers. So in other words, they weren’t clear and concise and maybe the beneficiary especially, but even perhaps provider couldn’t understand why the service was being denied. The second thing that CMS audit pointed out was an insufficient outreach before issuing denial. So is the MA reaching out for additional documentation or explanation before just issuing a denial?

And then, third of all, Mike, which is probably the most important and affects beneficiaries the most is incorrect clinical decisions. So this brings us to the question of is the MA receiving all the clinical documentation? Is the appropriate person reviewing it then? And are those clinical decisions sound and in alignment with standard practice? So those really are the three recommendations made by OIG to CMS.

And last of all, they’re really wanting to provide beneficiaries with clear, easily accessible information about the violations for Medicare Advantage. And because these results no longer impact the star ratings for the Medicare Advantage plans, that’s a problem, because beneficiaries logging in to see those star ratings don’t realize really what’s going on behind the scenes. So that kind of information should be clear, meaningful and easily accessible to beneficiaries in areas where beneficiaries can typically access that kind of information such as the Medicare plan finder website.

Mike: Laura, what can providers do to get ahead of the Medicare Advantage denials?

Laura: Mike, there’s a couple of things they can do. And probably the most important is getting really familiar with those Medicare Advantage contracts. Really, the provider’s success may well depend upon the hospital’s contract with the Medicare Advantage organization. Although the Medicare Advantage organization should cover all Medicare Part and Part B benefits, the contract terms can include varying criteria. So certain organizations within their contract, may have established definitions and criteria for clinical validity for diagnosis as one example. If you signed a contract and you’re bound of those definitions and criteria, so then information really has to go all the way back to your clinical documenters. But a robust denial program really is necessary to manage those MA denials. Denials, management staff should work with clinicians. That’s very important. Not only providing feedback back to clinicians about their documentation, but tracking, reporting and monitoring those Medicare Advantage denials and looking for opportunities to improve and establish more effective processes.

And really important, this is really a team sport, Mike. You have to go all the way from tracing back to who receives the denial notifications. Do they go to a centralized area? Lots of questions to ask yourself. It’s best if providers organize those denial issues by plan and by their dollar impact and volume. And of course, some of the issues will repeat across many different Medicare Advantage plans, but I always recommend, Mike, that they create a tracking spreadsheet and a database to monitor. Track the data and the outcomes. It’s really important. And I can’t stress enough that providers take the time to learn and understand the CMS guidelines for inpatient care, such as the 2-midnight rule, the observation rules and those kinds of things. But most of all, Mike, it’s really a matter of knowing your contracts and using them to reduce or counter these denials.

Mike: Laura, great content. Appreciate you coming by the podcast today to help everyone understand a little bit more about how they can handle Medicare Advantage denials at their facilities.

Laura: Thank you, Mike.


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