OIG: MAO prior authorization denials raise concerns

The Office of Inspector General (OIG) recently released an audit report on prior authorization and payment denials by Medicare Advantage Organizations (MAO). The result raised OIG concerns about certain MAO denial practices impacting beneficiary access to medically necessary care.

The OIG reviewed denials issued by 15 of the largest MAOs during the first week of June 2019 to determine whether they met Medicare coverage and MAO billing rules. The agency selected a stratified random sample of 250 prior authorization denials and 250 payment denials.

An estimated 13% of the 12,273 prior authorization denials issued by these organizations during the audit period met Medicare coverage rules. Many of these denials stemmed from MAOs applying MAO clinical criteria that are not required by Medicare, according to the audit report. However, the OIG had several cases in which it was unable to determine whether these prior authorization denials would be allowed by CMS due to insufficient guidance on the issue.

In some of the audited prior authorization cases that met Medicare coverage rules, MAOs denied requests for medically necessary services when providers did not respond to requests for additional documentation that was not needed to make the authorization decision.

An estimated 18% of the 160,378 payment denials issued during the audit period met Medicare coverage and MAO billing rules and should have been approved by the MAOs. “Denying payment requests that meet these rules delays or prevents providers from receiving payment for services that they have already delivered to beneficiaries, which can burden providers,” said the report.

The OIG determined that these denials were caused by human error during manual reviews and/or inaccurate programming of claims processing systems.

Advanced imaging services, post-acute care in skilled nursing and inpatient rehabilitation facilities, and injections were three prominent service types among the audited denials that met coverage rules. “To reduce their costs, MAOs may have an incentive to deny more expensive services,” according to the report.

Denied requests that meet Medicare coverage rules can prevent or delay access to medically necessary care, lead patients to pay out of pocket for covered services, and create administrative burden from related appeals, according to the report. “Even when denials are reversed, avoidable delays and extra steps create friction in the program and may create an administrative burden for beneficiaries, providers, and MAOs,” said the report.

CMS concurred with the OIG’s following recommendations:

• Issue new guidance on the appropriate use of MAO clinical criteria in medical necessity reviews
• Update its audit protocols to address the issues identified in the report, such as MAO use of clinical criteria and/or examining particular service types
• Direct MAOs to take steps to identify and address vulnerabilities that can lead to manual review error and system errors

Editor’s note: Find additional NAHRI coverage on prior authorization here.