Medicare Advantage (MA or Part C of Medicare) has been in the news a lot lately—and not in the best light. Senator Ron Wyden (D-OR) issued a report last November highlighting deceptive marketing practices that private insurance companies and third-party brokers are using to get seniors to enroll in specific MA plans. Further, the Centers for Medicare & Medicaid Services (CMS) has highlighted some data from its own audits as well as findings from the Office of the Inspector General (OIG) within the U.S. Department of Health and Human Services (HHS). In fiscal year (FY) 2021 (based on calendar year 2019 payments), CMS made over $15 billion in Medicare Part C overpayments, a figure representing nearly 7 percent of total Part C payments. The HHS-OIG has also released several reports over the past few years that demonstrate a high risk of improper payments in the MA program.
Another major issue within MA, discussed in a previous Regs and Eggs blog post, is MA plans’ use of prior authorization. Unfortunately, prior authorization in MA is being frequently utilized, but in many cases, it is not being used appropriately to avoid unnecessary care. Instead, it is delaying necessary care, which negatively impacts the health of Medicare beneficiaries. According to the Kaiser Family Foundation, there were 35 million MA prior authorization requests in 2021. Over 2 million prior authorization requests were fully or partially denied by MA plans, and 11 percent of those denials were appealed. The vast majority (82 percent) of appeals resulted in fully or partially overturning the initial prior authorization denial. Since MA plans are not required to indicate the reason a denial was issued in the reporting to CMS, it is unclear why claims are being denied. However, regardless of the reason, the fact that the majority of prior authorization denials that are appealed are fully or partially overturned gives credence to the argument that prior authorization is simply a delay tactic.
Prior authorization also affects emergency department (ED) boarding. ACEP has heard from many of our members that MA and other health plans are requiring prior authorization before a patient can be transferred from the hospital to a post-acute facility, like a skilled nursing facility. This tactic has caused longer ED wait times and more boarding in the ED, as individuals have to wait for extended periods (multiple days or even longer) for inpatient beds to become available.
To CMS’ credit, CMS has tried to address these concerns by including targeted proposals in recent annual MA and Medicare Part D regulations. ACEP has just issued formal responses to two MA regs.
First, last week, ACEP responded to a proposed reg that makes policy updates to MA and Part D health plans, which, once finalized, become effective in 2024. One of the major set of proposals that we respond in the reg relates to prior authorization. CMS introduces a bunch of common-sense proposals, such as prohibiting MA plans from making up their own coverage rules and denying coverage for services that are covered by Traditional Medicare. We support these proposals, and actually signed onto a separate letter from the American Medical Association on this issue as well.
However, it is important to note that CMS is still allowing prior authorization as a means to ensure that services meet Medicare coverage rules. Therefore, there could still be delays in care. With respect to the issue of transferring patients from hospitals to post-acute facilities I mentioned above, CMS states that MA plans cannot deny a transfer if the post-acute services a patient would receive align with Traditional Medicare coverage criteria. However, CMS still says that prior authorization is allowed in these circumstances to “ensure items and services meet Medicare coverage rules; it simply limits the coverage criteria that an MA organization can apply to deny an item or service during those reviews.” ACEP feels that this proposal does not go far enough and that CMS should in fact prohibit MA plans from requiring prior authorization in order to transfer patients to post-acute facilities. We believe that policy could be one short-term solution that could help address the boarding crisis.
Along with the prior authorization proposals, CMS also addresses medical necessity, the definition of an emergency medical condition, false marketing practices of MA plans, network adequacy for behavioral services, equitable access to MA services, and telehealth literacy. There are many other issues in the reg as well, but these are the main ones that impact you as emergency physicians and your patients.
- Medical Necessity: The issue of whether a service is “medically necessary” is often a sticking point in many physician and insurer disputes about medical claim payments. CMS proposes to codify the regulatory requirement that MA organizations must make medical necessity determinations based on coverage and benefit criteria included in Traditional Medicare. In our comments, ACEP asserts that care delivered in the ED is inherently medically necessary—specifically due to two existing and long-standing federal laws pertaining to emergency care that require the delivery of diagnostic services and stabilizing care: the Emergency Medical Treatment & Labor Act (EMTALA) and the Prudent Layperson Standard. We argue that EMTALA's requirements for hospitals to provide a medical screening examination to every individual who “comes to the emergency department” seeking examination or treatment fundamentally establishes medical necessity. Further, if the Prudent Layperson Standard applies (which happens almost all the time), we believe that the care provided to patients meets the requirements of medical necessity and therefore, should be covered by MA plans and other insurers.
- Definition of an Emergency Medical Condition: CMS modifies current regulations to clarify that an emergency medical condition can include both physical and mentalconditions. We STRONGLY SUPPORT this modification to the regulation and agrees wholeheartedly with CMS that an emergency medical condition includes both physical and mental health emergencies and that the prudent layperson standard protection should be attributable to all types of emergencies.
- False Marketing Practices: In the proposed reg, CMS lays out numerous ways in which MA plans are engaging in misleading and false advertising practices, resulting in seniors enrolling in plans that do not meet their health care needs and/or were more costly than they had been led to believe. ACEP applauds CMS’ efforts to crack down on these fraudulent practices and supports all the proposals in the rule meant to address this issue. It is critical that seniors receive accurate information and fully understand their coverage options. If individuals enroll in a more expensive plan than they can afford, they may wind up delaying necessary care and, after their disease has progressed, be forced to go to the ED to seek treatment. MA plans must therefore be held fully accountable for such behavior.
- Network Adequacy: CMS proposes policies to strengthen network adequacy requirements and reaffirm MA organizations’ responsibilities to provide behavioral health services. ACEP strongly supports these proposals to enhance access to behavioral health services. In general, we have long advocated for CMS to enforce strong network adequacy standards across both Medicare and Medicaid as a way to ensure that all Medicare beneficiaries and Medicaid enrollees have access a full range of health care services.
- Equitable Access to MA Services: Currently, MA organizations that offer coordinated care plans are required to ensure that services are provided in a culturally competent manner to all enrollees, including those with limited English proficiency or reading skills, and diverse cultural and ethnic backgrounds. CMS is proposing to expand this list include (i) people with limited English proficiency or reading skills; (ii) people of ethnic, cultural, racial, or religious minorities; (iii) people with disabilities; (iv) people who identify as lesbian, gay, bisexual, or other diverse sexual orientations; (v) people who identify as transgender, nonbinary, and other diverse gender identities, or people who were born intersex; (vi) people who live in rural areas and other areas with high levels of deprivation; and (vii) people otherwise adversely affected by persistent poverty or inequality. ACEP strongly supports this proposal and agrees with CMS that this expansion will help promote health equity within the Medicare program.
- Telehealth Literacy: CMS identifies significant barriers to the use of telehealth, especially in rural and low-income communities. ACEP definitely agrees with CMS that the existence of communities with low digital health literacy who in turn cannot access telehealth represents a significant obstacle in achieving health equity in telehealth. Therefore, we strongly support CMS’ proposal to add requirements for MA organizations to develop and maintain procedures to identify and offer digital health education to enrollees with low digital health literacy to assist them with accessing any medically necessary covered telehealth benefits.
Beyond this comprehensive response to a major MA and Part reg, ACEP also just responded to another, smaller annual proposed reg, called the “Advance Notice,” which includes more technical payment policies. In that response, we express concern about the overpayments that MA plans are receiving. Despite proof that these plans have been overpaid billions of dollars, they are set to receive another pay increase next year in 2024 (on top of an 8.5 percent bump up this year in 2023!). We oppose this pay increase, not only because of the documented overpayments to these plans, but also because at the same time, physicians (who actually deliver health care services) are set to receive a pay cut. Instead of just paying private health plans more, CMS should make it a top priority to work with Congress on creating a sustainable payment system for physicians that keeps pace with the increased costs of providing care.
Thus, in all, CMS has made some progress in terms of tackling the major issues with MA, but the agency still has a long way to go. In my view, CMS still hasn’t dealt with the long-term repercussions of the explosion in growth in MA enrollment. According to the HHS Budget in Brief, in 2023, Medicare Advantage enrollment is expected to total about 32 million beneficiaries, or 53 percent of all Medicare beneficiaries. Between 2013 and 2022, private plan enrollment grew by 15.3 million, or 103 percent. MA plans have historically been paid around 104 percent of what it costs to provide Medicare coverage under the traditional program. And, as I mentioned earlier, those payments keep on getting higher each year.
The pay increases and astronomical growth in MA enrollment will have significant, long-term effects on the Medicare program and the insurers, clinicians, and beneficiaries that participate in it. First, since costs are increasing so much, the growth in MA may affect the solvency of the Medicare Part A Trust Fund (i.e., move up the date when the Trust Fund may go bankrupt). Second, the trend will lead to increased health insurance consolidation as the larger insurance companies become more dominant in a very attractive and popular market. Third, it will lead to more and more administratively burdensome and harmful practices that we’ve been witnessing in the private insurance market (that CMS is now just trying to curb): prior authorization and narrower networks. And fourth, it will affect the payments that are calculated for clinicians and facilities in Medicare. Currently, CMS uses data from the Traditional Medicare program (fee-for-service) to set payment rates for the physician fee schedule and the other Medicare payment systems. These fee-for-service payment rates in turn are used in MA and by many private health plans as well. As MA becomes the dominant Medicare option, there will be less and less data available on which to base payment rates. This could lead to inaccurate payment rates (even more than they are now!) that are not reflective of the cost of providing care.
CMS needs to start addressing these long-term issues, but for the moment, I guess we can at least appreciate CMS’ recent attempt to make some incremental reform.
Until next week, this is Jeffrey saying, enjoy reading regs with your eggs!