- The American Hospital Association is urging the Justice Department to use its authority under the False Claims Act to create a fraud task force to investigate commercial insurers that routinely deny patients access to services.
- The hospital lobby cited what it called an "alarming" and "distressing" report from the HHS Office of the Inspector General showing that 13% of prior authorization denials and 18% of payment denials met Medicare coverage rules and should have been granted. According to the OIG report, the CMS' annual audits of Medicare Advantage organizations have uncovered "widespread and persistent problems" involving inappropriate denials of services and payment.
- "This problem has grown so large — and has lasted for so long — that only the prospect of civil and criminal penalties can adequately prevent the widespread fraud certain MAOs are perpetrating against sick and elderly patients across the country, as well as against the public," the AHA said in a letter to Acting Assistant Attorney General Brian Boynton.
The AHA wants the Justice Department to take more aggressive action to remedy a pattern of improper coverage denials that the OIG highlighted in its new report. With Medicare facing potential insolvency in just a few years, lawmakers are looking into increasing oversight of the privately administered Medicare Advantage plans.
As enrollment in the plans continues to grow, so too has fraud associated with the program, costing Medicare billions of dollars, noted Sen. Elizabeth Warren, D-Mass., who addressed a Senate finance subcommittee hearing on Medicare in February. More than 26 million Medicare beneficiaries were enrolled in MA plans last year, or about 42% of the total Medicare population.
The federal government has been cracking down on MA fraud. The DOJ said in February that a growing number of its fraud and false claims settlements in 2021 involved the program.
The OIG report found MAOs, in denying prior authorization and payment requests, used clinical criteria not contained in Medicare coverage rules, requested unnecessary documentation and made manual and system errors. For its report, the OIG reviewed case files for a random sample of 250 prior authorization denials and 250 payment denials issued by 15 of the largest MAOs during one week in June 2019.
The watchdog agency said denying requests that meet Medicare coverage rules may prevent or delay beneficiaries from receiving medically necessary care, such as advanced imaging services or stays in post-acute facilities. MAOs sometimes reversed prior authorization requests that met Medicare coverage rules and MAO billing rules, often prompted by an appeal from a beneficiary or provider.
To address the problem of improper denials, the OIG recommended the CMS issue new guidance on the appropriate use of clinical criteria in medical necessity reviews, update its audit protocols and direct MAOs to identify vulnerabilities that can lead to errors. The CMS agreed with the recommendations.
But the AHA argued those actions don't go far enough, noting the OIG identified similar problems with improper MAO denials in September 2018, yet the CMS had not acted on all of the recommendations in that report as of this March.
The government pays MAOs a capitation rate of about $1,000 per beneficiary, giving the organizations "every incentive to deny services to patients or payments to providers in order to boost their own profits," the AHA said in its letter to Boynton.
"It is time for the Department of Justice to exercise its False Claims Act authority to both punish those MAOs that have denied Medicare beneficiaries and their providers their rightful coverage and to deter future misdeeds," the AHA stated.