Medicare Advantage Plans are Aggressively Denying Claims – Administrative Appeals are Growing

/ Medicare, Medicaid & Private Payor Updates / By
Medicare Advantage plans are increasing their audit of provider claims - Liles Parker

(May 25, 2023): According to the latest data released by the Centers for Medicare and Medicaid Services (CMS), beneficiaries participating in Medicare Advantage[1] plans now surpass those enrolled in original Medicare plans. Slightly more than one-half[2] of the 59.82 million Medicare beneficiaries now eligible for coverage have signed up for one of the 5,261 Medicare Advantage payor plan options offered by 182[3] private plans around the country.[4] There are a number of reasons why Medicare Advantage plans have consistently grown 2-4% every year for the past 15 years, rising from 22% in 2008 to almost 51% in 2023.[5] Several of these reasons include:

  • Coverage: Beneficiaries enrolling in Medicare Part C typically have the same benefits as those offered under original Medicare (Parts A and B), PLUS a variety of other benefits such as vision and dental.
  • Cost Savings: Medicare Advantage plans often have predictable out-of-pocket costs compared to original (traditional) Medicare. They may also offer lower deductibles and copayments. Ultimately, the potential cost savings are quite attractive to seniors living on a fixed income.
  • Coordination of Care: Medicare Advantage plans often have networks of doctors, hospitals, and other healthcare providers. Beneficiaries enrolled in Medicare Advantage may prefer the convenience of having a primary care physician who coordinates their care and can help manage referrals to specialists within the network.

For these and other reasons, Medicare beneficiaries are steadily moving over from original Medicare to a Medicare Advantage. Many of these converts later regret their decision not to enroll in original Medicare. Unfortunately, beneficiaries aren’t the only ones with significant problems dealing with Medicare Advantage payors. Health care providers participating in Medicare Advantage plans are increasingly dissatisfied when having to contest the denial of Part C claims. This article reviews the history behind the rise and expansion of the Medicare Advantage program, examines the post-service[6] (as opposed to pre-service) administrative appeals process, and discusses a number of challenges inherent in the current system.

I. What is a Medicare Advantage Plan?

While private health plans have played a role in the Medicare program since its inception in 1965,[7] it wasn’t until 1972[8] that Congress introduced an option to permit Medicare beneficiaries to enroll in a Health Maintenance Organization (HMO) where the private insurance company managing the plan would be paid by the government on a “capitation” basis, for each enrolled beneficiary.[9] The current Medicare Advantage program is just the latest iteration of the government’s efforts to utilize HMO payment models that have been designed to reduce spending, improve health care, or both. Congress essentially went “all in” with respect to the HMO payment model when it passed the Tax Equity and Fiscal Responsibility Act (TEFRA) in 1982.[10] TEFRA authorized Medicare to contract with risk-based private health plans. In exchange for covering the costs of their case, these risk-based health plans would be paid a prospective, monthly fee per enrolled beneficiary. From its very inception, the Medicare Advantage program has pursued two goals:

  • Goal #1: Expand Medicare beneficiaries’ choices to include private plans with coordinated care and more comprehensive benefit than those offered under original Medicare.[11]
  • Goal #2: Take advantage of efficiencies obtained under a managed care payment model and save Medicare money.[12]

As expected, there are a number of Federal agencies and watchdog groups monitoring the private insurance plans contracted to offer Medicare Advantage plans to Medicare beneficiaries. One of these groups is the Medicare Payment Advisory Commission (MedPAC). MedPAC [13] is perhaps the most influential entity tasked with advising Congress on issues affecting Medicare, including the Medicare Advantage program. As the organization has recently noted in its March 2023 Report to Congress, “The Commission strongly supports the inclusion of private plans in the Medicare program.”[14] While MedPAC’s support of the Medicare Advantage program remains unwavering, MedPAC acknowledges in its most recent report to Congress:

“[T]he total Medicare payments to MA plans in 2023 (including rebates that finance extra benefits) are projected to be $27 billion higher than if MA enrollees were enrolled in FFS Medicare.” [15]

Regrettably, 2023 is not an anomaly. Medicare Advantage costs have regularly surpassed those associated with original Medicare. From a fiscal perspective, it just doesn’t work.

Medicare Advantage plans were paid - Liles Parker

Make no mistake, the Medicare Advantage program is big business. In 2022, Medicare Advantage plans were paid approximately $403 billion (not including Part D[16] drug payments), despite the fact that it is costing CMS far more than it would if all of the enrolled beneficiaries were participating in original Medicare. It is also worth noting that nationally, claims denials have increased from 9% in 2016 to as much as 17% in 2022, thereby potentially further raising the profits of Medicare Advantage plans.[17]

Unfortunately, the Medicare Advantage payment model is fundamentally flawed. In fact, we would argue that neither of the two “goals” outlined above are being met. While the Medicare Advantage plans will disagree, the current payment model (where plans are paid a capitation amount for each enrollee, each month) incentivizes private plans to reduce costs and minimize the amounts paid to participating providers and suppliers. This can result in overly aggressive claims audits and denials by both private payor Special Investigation Units (SIUs) and by program integrity contractors working for CMS.[18]

II. Medicare Advantage Claims Appeal Basics:

  • Pre-Service vs. Post-Service Appeals.

    Under the original Medicare program, the coverage and payment of services or procedures may only be appealed after the service has been performed and the claim has been denied by the payor.[19] In contrast, under the Medicare Advantage program, private payor plans may require that prior authorization must be obtained for certain services and / or procedures before the service or the procedure is performed. These are often referred to as “Pre-Service Organization Determinations.” Authorized providers can appeal the denial of a request for pre-authorization on behalf of the enrolled Medicare Advantage beneficiary. It is worth noting that pre-service denial appeals can be either “Standard” or “Urgent.”[20] Depending on the nature and acuity of the pre-service claim appeal, different response deadlines apply for the affected Medicare Advantage plan. This article does not cover the appeal of denied pre-service claims by providers and beneficiaries.[21]

    In contrast to pre-service claims which have yet to be performed, post-service claims have already been performed by a provider. When a post-service claim is not approved for coverage and payment by the Medicare Advantage plan, an authorized provider (or the enrolled beneficiary) may file an administrative appeal of the denied claim. An overview of the Medicare Advantage administrative appeals process is set out below.

  • Information to be Submitted with an Appeal of Post-Service Denied Medicare Advantage Claims:
    It is important to keep in mind that when filing an appeal of denied post-service Medicare Advantage claims, a participating provider will be required to submit either:

    1. A completed “Waiver of Liability” form, or
    2. A completed “Appointment of Representative” form (appealing on behalf of the enrolled beneficiary).

    Should you fail to submit the above information, a Medicare Advantage plan is likely to dismiss the appeal of an otherwise timely filed action. In addition to the information above, a provider should review the payor’s guidance setting out their specific requirements for contesting the denial of a post-service claim.

    When appealing a post-service claim that has been denied, be sure and carefully review the payor’s denial letter. In addition to setting out the basis for denial, a payor may also provide a list of specific documents to be submitted if a provider intends to appeal the initial determination. Most Medicare Advantage plans require that a copy of the original claims, the remittance notification showing that the post-service claim has been denied, a complete copy of the patient’s relevant medical records, and any further documentation which supports the coverage and payment of the claim at issue.

III. Overview of the Post-Service Denied Claims Appeal Process:

  • Level 1: Reconsideration
    Upon receiving notice of a denial, an authorized provider must submit a timely written Request for Reconsideration within 60 days of the date of the denial notice. When submitting an appeal, it is essential that a complete appeals package be submitted for the consideration of the reviewer. While the Request for Reconsideration must be submitted to the same Medicare Advantage plan that denied payment in the first place, the plan is supposed to have the appeal reviewed by someone who was not involved in the initial denial of the claim.[22] Good luck with that.

    Once submitted, there are two possible outcomes – either the claim will be found to be payable OR the reviewer will again deny payment for the claim. Depending on the Medicare Advantage plan, the Reconsideration decision letter should state that a denied claim is automatically forwarded to the second level of administrative appeal for review by an Independent Review Entity (IRE).[23] After handling the administrative appeal of denied Medicare claims for decades, we would argue that the best practice would be for a provider to file its own appeal to the IRE.

  • Level 2: Independent Review Entity (IRE) Review
    The second level of administrative appeal is known as an Independent Review Entity (IRE) review. What exactly is an IRE? Great question. In the context of a Medicare Advantage claims appeal, an IRE is an organization that is tasked with conducting independent reviews of Medicare Advantage health plan decisions. Its purpose is to provide an impartial evaluation of the decision and ensure that beneficiaries receive a fair and thorough review of their case. At this time, MAXIMUS Federal Services (MAXIMUS) has been contracted by CMS to serve as the Part C IRE. MAXIMUS has a long, profitable business history with CMS and there is at least an argument that it isn’t as “Independent” as one would wish.

    When a Medicare Advantage plan issues an adverse Reconsideration decision, which means they uphold their initial adverse determination, it is supposed to automatically submit the case file and decision to the Medicare Advantage IRE for review. If you receive a notice stating that your case file has been sent to the IRE, you have the option to provide additional information about your case to the IRE within 10 days of the date of the notice.

    Once again, the most prudent approach would be to either verify that a denied claim has automatically been sent to the IRE for review (you should also verify receipt by the IRE) OR submit the second level appeal yourself. When filing a request for review by the IRE, the request must be made within 60 calendar days from the date of the plan sponsor's Reconsideration decision notice.

    Once submitted, there are two possible outcomes – either the claim will be found to be payable by the IRE OR the IRE will deny payment for the claim. If the IRE denies payment, a provider may appeal the denial to an Administrative Law Judge (ALJ) with the Office of Medicare Hearing and Appeals (OMHA).

  • Level 3: Administrative Law Judge (ALJ) Hearing
    When appealing a denial (or dismissal) of your claims by the IRE, the appeal to an ALJ must be filed within 60 calendar days of receipt. Importantly, the claim amount in dispute meets the minimum jurisdictional threshold (the claims must be worth at $180 in 2023), in order for a provider to seek an ALJ hearing. An ALJ, who is an employee of OMHA, will conduct a hearing de novo to evaluate the case based on the evidence presented by both parties.
  • Level 4: Medicare Appeals Council Review
    If you disagree with the ALJ decision, you can request a review by the Medicare Appeals Council (“Appeals Council”). The request must be submitted within 60 days of receiving the ALJ decision. The Appeals Council will review the case and issue a decision. If the Appeals Council declines review or affirms the ALJ decision, then you can proceed to the final level of appeal.
  • Level 5: Judicial Review
    If the amount in dispute meets the required threshold (for 2023 the minimum amount in controversy is $1,850[24]), and the Appeals Council declines review or issues an unfavorable decision, then you have the option to pursue judicial review by filing a lawsuit in a federal district court. It is advisable to consult an attorney experienced in Medicare appeals to navigate this complex legal process.

Medicare Advantage Appeal Deadlines Summary

Level of Appeal Stage Reviewing Entity Filing Deadlines
1st Reconsideration Appeal Medicare Advantage Plan 60 days from the date of the Medicare Advantage plan’s initial decision not to pay.
2nd Independent Review Entity (IRE) Reconsideration Appeal Independent Review Entity (IRE) (Currently, MAXIMUS) 60 days from the date of the Reconsideration decision denial.
3rd OMHA Level Appeal Administrative Law judge (ALJ) or adjudicating attorney 60 days from receipt of the IRE’s denial decision
4th Administrative Review Medicare Appeals Council (Council) 60 days from receipt of the ALJ’s decision
5th Judicial Review Federal District Court 60 days from receipt of the Council’s decision

IV. Conclusion:

Appealing a Medicare Advantage claims denial requires patience, understanding the process, and adherence to deadlines. If you are a health care provider or supplier seeking representation in the appeal of denied Medicare Advantage claims, hiring an experienced law firm can provide you with several advantages. First and foremost, an experienced health lawyer will have an understanding of the intricacies of Medicare Advantage claims, and the unique requirements of the Medicare Advantage administrative appeals process. Liles Parker attorneys have a deep knowledge of the relevant laws and regulations that govern Medicare Advantage claims and can leverage this knowledge to build a strong case on your behalf. Additionally, we have experience working with medical professionals and understanding the specific challenges they face, both professionally and personally.

Give us a call. Our legal team will work diligently to review and analyze your denied claims, identify any potential errors or discrepancies made by the plan’s reviewers, and develop a compelling appeal strategy that maximizes your chances of a favorable outcome. With Liles Parker at your side, you can focus on providing quality healthcare to your patients while we handle the legal complexities of the Medicare Advantage administrative appeal process.

Robert W. Liles represents health care providers in connection with appeals of Medicare Advantage claims denials - Liles Parker

Robert W. Liles, J.D. is an experienced health lawyer and a former Federal prosecutor. He represents healthcare providers and suppliers around the country in Medicare administrative appeals. Liles Parker attorneys have represented Home Health and Hospice, Ambulance Companies, Chiropractic Clinics, Physical / Occupational / Speech Therapy Clinics, Nursing Homes, Physician Practices (E/M Claims), Psychology Practices, DME Companies and a wide variety of other providers in the Medicare Advantage appeals process. Should your practice or clinic be audited by a Medicare Advantage SIU or CMS program integrity contractor, give us a call for a free consultation. We can be reached at: 1 (800) 475-1906.