Private Medicare Advantage insurance plans are growing rapidly in popularity and are expected to cover a majority of Medicare beneficiaries within just a few years, but according to a report by a federal watchdog released Thursday, the plans have a bad track record of denying needed medical care that should be covered under the terms of the federal insurance program for those 65 and older.
In a 61-page report, a team of investigators from the inspector general's office of the U.S. Department of Health and Human Services found that tens of thousands of seniors with Medicare Advantage insurance plans had been denied or faced delays for necessary medical for which they were eligible. Medical care frequently involved in the delays and denials includes imaging services such as MRIs and CT scans, as well as stays in rehabilitation facilities – all of which could jeopardize the health of those who need the prescribed medical care.
“Although MAOs [Medicare Advantage Organizations] approve the vast majority of requests for services and payment, they issue millions of denials each year, and CMS’s annual audits of MAOs have highlighted widespread and persistent problems related to inappropriate denials of services and payment,” the report says, referring to audits made by The Centers for Medicare & Medicaid Services, which runs Medicare.
The analysis: The investigators reviewed a sample of 430 denials issued by 15 large Medicare Advantage insurers in June of 2019 and found that 13% were made improperly for medical services that should have been approved. Based on that rate, the investigators estimate that 85,000 requests were improperly denied that year.
Questionable denials are nothing new in Medicare Advantage plans. A 2018 report found that about 75% of all appeals of denials are overturned, suggesting that insurers are being too aggressive, and The New York Times’s Reed Abelson says that “hospitals and doctors have long complained about the insurance company tactics” within the program. Private insurers are paid a flat fee per patient by the federal government and may be motivated to deny services in order to increase profits.
The recommendation: About 29 million Americans are covered by Medicare Advantage plans, and the investigators said the program needs more oversight. They called on CMS to issue new guidelines for insurers to clarify what qualifies as necessary medical services, and to update the audit system to focus on problems revealed in the report.
Still, some critics say that the problems are unavoidable given the nature of the Medicare Advantage program, which relies on profit-seeking firms to control costs. In a piece at The American Prospect Friday, Ryan Cooper argues that insurers inevitably seek to game the system in the pursuit of profit by doing things likes denying claims and rigging the risk pool, moves that produce less care but higher cost. “All this (plus a bunch of other complicated scams) means that Advantage enrollees receive something like 10 to 25 percent less in health care spending, but the program costs the government about 3 percent more per person than traditional Medicare,” Cooper says. “The results have been exactly the opposite of free-market nostrums: worse coverage that costs more.”