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Medicare Benefit: OIG Report Finds Improper Denials | Blogs | Well being Care Regulation As we speak

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

Objective and Technique of the Examine

OIG undertook the examine to evaluate whether or not MAOs are appropriately offering entry to medically crucial companies and making fee 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 fee. As enrollment in Medicare Benefit continues to develop, OIG seen it as vital to make sure that medically crucial care is offered and that suppliers are paid appropriately.

OIG carried out the overview by randomly deciding on 250 denials of prior authorization requests and 250 fee request denials by 15 of the biggest MAOs throughout every week in June of 2019. OIG had coding specialists overview the circumstances and had doctor reviewers study the medical data. Based mostly on these opinions, OIG estimated the charges at which MAOs issued denials of companies or fee that met Medicare protection guidelines and MAO billing guidelines. OIG additionally examined the explanations for the inappropriate denials and the kinds of companies concerned.


MAOs should cowl gadgets and companies included in fee-for-service Medicare, and might also elect to incorporate extra gadgets and companies. MAOs are required to comply with Medicare protection guidelines that outline what gadgets and companies are coated and underneath what circumstances. Because the OIG states within the Report, MAOs “could not impose limitations – reminiscent of ready durations or exclusions from protection resulting from pre-existing circumstances — that aren’t current in authentic 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, offered the medical standards are “no extra restrictive than authentic Medicare nationwide and native protection insurance policies.” MAOs might also have their very own billing and fee procedures, offered 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 fee requests from suppliers to approve fee for companies offered. Beneficiaries and suppliers could attraction such choices, and beneficiaries and suppliers are profitable in lots of the appeals (for a one-time interval, as many as 75% of the appeals had been granted).


Prior Authorization Denials

Within the examine, OIG discovered that 13% of prior authorization denials had been for companies that met Medicare protection guidelines, thus delaying or denying care that possible ought to have been accredited. MAOs made lots of the denials by making use of MAO medical standards that aren’t a part of Medicare protection guidelines. For example, a follow-up MRI was denied for a beneficiary who had an adrenal lesion that was 1.5 cm in dimension, as a result of the MAO required the beneficiary to attend one 12 months for such lesions which might be underneath 2 cm in dimension. OIG’s specialists discovered such a requirement was not contained in Medicare protection guidelines and was subsequently inappropriate. Fairly, the MRI was medically crucial to find out if the lesion was malignant.

OIG additionally discovered situations 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 adequate medical info was within the medical document to authorize the care or the documentation requested was already contained within the medical document.             

Fee Denials

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

OIG discovered that widespread causes for these inappropriate fee denials had 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 services (together with SNFs and inpatient rehabilitation services), and injections had been the companies that had been most outstanding within the inappropriate denials that ought to have been licensed for care and fee in accordance with Medicare protection guidelines.

OIG Suggestions

Based mostly on the examine, OIG advisable that:

  • CMS ought to situation new steering on each the suitable and inappropriate use of MAO medical standards that aren’t contained in Medicare protection guidelines. Particularly, OIG advisable that CMS ought to extra clearly outline what it means when it states that MAO medical standards might not be “extra restrictive” than Medicare protection guidelines.
  • CMS ought to replace its audit protocols to deal with points recognized within the report reminiscent of MAO use of medical standards and/or study specific service varieties that led to extra denials. OIG suggests CMS ought to take into account enforcement actions for MAOs that show a sample of inappropriate fee denials.
  • CMS ought to direct MAOs to determine and handle 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 choices in addition to utilization of prior authorization instruments. AHIP, a nationwide affiliation of well being care insurers, challenged the OIG’s pattern dimension as inappropriate to help the company’s conclusions, and defended prior authorization instruments.


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

MAOs also needs to pay attention to 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 fundamental 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 accumulating 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 deliver 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 mentioned, an FCA swimsuit based mostly on this concept would increase critical questions, together with whether or not any non-payment really met the FCA’s “knowingly” commonplace (which incorporates reckless disregard), or whether or not any non-payment met the materiality threshold essential to show a violation of the FCA.



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