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Medicare Advantage Program Slammed for High Costs and Lack of Efficiency

June 29, 2022 by Alexa Hornbeck
Photo of seniors enrolled in Medicare courtesy of the Radin Group Flickr.

WASHINGTON —A series of reports have revealed continued issues with Medicare Advantage Plans, a private-plan alternative to traditional Medicare, and now members from the House Committee on Energy and Commerce are focused on how to establish better protections for America’s seniors. 

“One of the promises of Medicare Advantage is that the government can save taxpayer dollars by giving private plans the flexibility to find efficiencies and coordinate care. However, I’m concerned that these efficiencies are not translated in Medicare savings,” said Rep. Frank Pallone, D-N.J., who serves as chairman of the Committee on Energy and Commerce, during a hearing on June 28.

Medicare Advantage plans offer alternative delivery systems with a more limited provider network than traditional Medicare. Often called Part C the plans are offered by Medicare-approved private companies.

MA plans offer a range of benefits to enrollees such as care coordination, disease management programs, out-of-pocket spending limits, access to community-based programs and supplemental benefits such as vision and dental.

Enrollment in MA plans has doubled in the last 10 years, and currently, 27 million beneficiaries are enrolled, or 46% of all the Medicare beneficiaries in both Parts A and B at a cost of $350 billion, according to a 2022 report from the Medicare Payment Advisory Commission.

Pallone said recent reports have raised a red flag on the MA enrollees’ access to medically necessary care and the fiscal sustainability of the program.

A report released in April by the Department of Health and Human Services Office of Inspector General finds that MA plans were sometimes delayed or denied to Medicare beneficiaries’ to access medically necessary services, such as advanced imaging services, radiation therapy, and stays in post-acute facilities, despite the requests meeting coverage rules. 

In fact, 13% of MA plans’ prior authorization denials met Medicare coverage rules and would have been approved under traditional Medicare. 

The OIG also examined payment denials and found that 18% of the provider payment requests denied by MA plans met both Medicare coverage rules and MA plan billing rules.

An audit from the Centers for Medicare & Medicaid Services in 2015 previously confirmed the findings from the OIG report, as 56% of MA contracts were cited for inappropriate denials. 

“We have recommended that CMS require Medicare Advantage organizations to implement best practices for coordinating the care of beneficiaries who receive risk assessments. Right now, CMS recommends but does not require best practices,” said Erin Bliss, assistant inspector general for Evaluation and Inspections at HHS Office of Inspector General, during the hearing.

MA plans have several mechanisms that do not exist under traditional Medicare to document diagnoses for their enrollees, such as chart reviews of previous provider encounters and health risk assessments.

CMS also increases the risk adjusted benchmarks for MA plans with a higher star rating, which is a score calculated using more than 40 measures of clinical quality, patient experience, and administrative performance.

Bliss said that three and half million beneficiaries had health risk assessments with no evidence of any follow-up care. Still, CMS did not agree with some of OIG recommendations, including the best practices for care coordination. 

“CMS did agree with our three recommendations from our most recent report. Their final action plans detailing how they’re going to implement those are due to us in October,” said Bliss. 

Rebates which fund extra benefits under MA plans also reached record high levels in 2022. 

“There is a downside to this robust growth. The average plan bid to provide the Medicare benefit in 2022 was 85% of fee-for-service spending. However, Medicare currently pays plans 104% of fee for service, more than the program would have paid had MA enrollees remained in traditional Medicare,” said James Mathews, executive director at the Medicare Payment Advisory Commission, during the hearing. 

The MedPac report shows that Medicare spent 4% more for MA enrollees than it would have spent if those enrollees remained in traditional Medicare. 

Another issue with MA plans is that MA contracts with higher star ratings had larger racial and ethnic disparities than did those with lower star ratings, according to a 2021 report published in JAMA.

“We must continue to support the availability of programs like these for seniors,” said Rep. Larry Bucshon, R-Ill., during the hearing.

According to Bucshon, the Improving Seniors Timely Access to Care Act is needed to facilitate the adoption of an electronic prior authorization process that is far quicker and more efficient than what doctors and patients currently endure. 

The act would require HHS to establish a process to facilitate real time decisions on items and services that are routinely approved, and would require MA plans to report their use of prior authorization and the rate of approvals and denials, and encourage plans to use evidence-based guidelines in their authorization process.

The act has been introduced in both the Senate and House and has support from over 320 national and state organizations representing patients, health care providers, medical device manufacturers, and health IT companies across the country.

“The result will be less administrative burden for providers, and more information in the hands of patients,” said Bucshon.

Alexa can be reached at alexa@thewellnews.com 

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