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In the preceding months, her father’s falls had quickly gone from an occasional scare to a far-too-often occurrence. G. M. Sollars, MD, a former emergency medicine physician and self-declared Star Trek nerd, had spent weeks in the hospital and the skilled nursing facility where he lived when the letter came. He’d been diagnosed with radiation-related neuropathy following treatment for a recently diagnosed cancer. It was going to be a long recovery.
So as Kendra read the Notice of Medicare Non-Coverage from G. M.’s Medicare Advantage plan, she was confused. Every physician she’d spoken with had told her that her 77-year-old father needed more time to recover before returning to his home near Scottsdale, Arizona. But the letter laid out the reality: “Medicare probably will not pay for your current skilled services after the effective date,” it read.
“He was getting kicked out and he couldn’t even walk,” Kendra said in a recent interview with JAMA Medical News. “It was either go home to absolutely nothing or pay out of pocket”—unless they could get a prior authorization approved.
The Sollars are not alone in facing obstacles to care under the Medicare Advantage program. A new analysis by KFF, formerly the Kaiser Family Foundation, found that Medicare Advantage insurance plans denied 3.4 million, or 7.4%, of 46 million prior authorization requests in 2022. Those actions often shut the door on care, since only about 1 in 10 patients appeal the decisions.
Similarly, a 2022 report from the Department of Health and Human Services Office of Inspector General (HHS OIG) estimated that in 2019, 15 of the largest Medicare Advantage organizations denied about 85 000 prior authorization requests for services that would have been covered under traditional Medicare. Since then, the number of US patients susceptible to service denial by Medicare Advantage plans has only increased as enrollment in these plans has ballooned by 50%, growing from 22 million beneficiaries in 2019 to 33 million this year. As of 2023, the majority of Medicare beneficiaries were enrolled in Advantage plans.
The organizations’ business tactics have affected medical professionals too. The same OIG report estimated that in 2019, Medicare Advantage plans denied 1.5 million payments to clinicians that met both Medicare coverage rules and Medicare Advantage billing rules. Today, in a post–COVID-19 era, when many medical practices—especially small and independent ones—struggle to maintain sufficient finances to cover rent, salaries, and other expenses, experts say such payment denials can push clinicians even further into the red.
A Grand Experiment
Medicare Advantage was established in 1997 as Medicare Part C. Under the program, whose origins can be traced back to the Health Maintenance Organization (HMO) Act of 1973, private health plans could take on risk through Medicare payments that were fixed rather than fee-for-service. If plans could achieve identical outcomes at lower costs, they could keep the portion of the fixed payment they’d saved.
These risk-based plans could also use the additional flexibility to pay for things that traditional Medicare wouldn’t, with the goal of keeping patients out of the hospital, explained Hannah Neprash, PhD, an associate professor of health policy and management at the University of Minnesota. Famously, that’s meant vision, hearing, and dental care. It also could mean reimbursements for necessities like electricity or clean drinking water.
To people like Troyen Brennan, MD, risk-based plans represent the only route forward to reducing skyrocketing health care costs. “We’re moving in the right direction,” said Brennan, former executive vice president and chief medical officer of CVS Health and former chief medical officer of Aetna, which operates several Medicare Advantage plans.
Quickly, though, Medicare Advantage plans have also gained notoriety for something else: care denials.
Whether such denials are justified depends on who is asked. Brennan and others say the ability to contest the need for services is critical for curbing the low-value care that’s inflating health care costs. On the other end of the spectrum are patients and clinicians who decry the health plans for rationing services.
To Brennan, the criticism from clinicians is unsurprising. “They want to be able to do what they want to do be able to do,” he said.
To medical professionals, though, many of these denials—which then trigger burdensome prior authorization requests that in turn can also be denied and require additional appeals—can seem obstructionist. That’s particularly true in cases involving the critically or acutely ill. In one example, UnitedHealthcare’s prior authorization rules note that adjuvant antinausea medications routinely used alongside chemotherapy are subject to prior authorization.
For Joanna Yang, MD, MPH, a radiation oncologist at Washington University in St Louis and a government relations committee member for the American Society of Clinical Oncology, prior authorization is now part of her daily practice. And it’s repeatedly caused her to send patients to the hospital—not for deterioration of their cancers, but for vomiting and pain that could have been controlled with medications.
“The total cost of the entire episode isn’t just about the cost of the medication,” Yang said. “If someone requires intravenous hydration or requires admission…in the long-term, that’s a much more expensive endeavor.”
“It’s frustrating when you can’t treat your patients in a timely way,” she added, “and honestly, it hurts the doctor-patient relationship, when you’re always delivering bad news.”
Postacute care denials related to skilled nursing facilities, subacute rehabilitation, and home health services are another source of controversy. Studies have found that Medicare Advantage enrollees are less likely to receive these services than those with traditional Medicare.
Chloe Slocum, MD, MPH, an assistant professor of physical medicine and rehabilitation at Harvard Medical School and a board member for the American Medical Rehabilitation Providers Association, said that such denials—financially pushing people out of facilities early or barring them from coming in in the first place—are leading to lots of “avoidable morbidity” among her patients. She cites pressure ulcers, urinary tract infections, and aspiration pneumonias as a few examples.
In these situations, “you may become a serial utilizer of urgent and emergent care,” Slocum added, “through no fault of your own.”
The frustration with prior authorization is particularly intense around denials of services that traditional Medicare covers—and that, under the letter of the law, Medicare Advantage plans are required to cover as well. Although the OIG report did not focus on the legality of these actions, it “certainly raises concerns” that such organizations may be out of step with the law, said Rosemary Bartholomew, the agency’s subject matter expert for health care quality, who led the 2022 report.
Savings for Whom?
In some cases, Medicare Advantage plans’ denials of care appear to successfully reduce costs without harming outcomes. This suggests that the foregone services are not adversely affecting patients, at least in the short run.
For example, a 2017 study showed that 90-day readmission rates after hospitalization for lower extremity joint replacement, stroke, and heart failure were lower under Medicare Advantage, despite patients receiving less postacute care under these plans than under traditional Medicare. Similarly, in a study published this February in JAMA Health Forum, patients who switched from Medicare Advantage to traditional Medicare after a hospitalization received more postacute care services but did not see improvements in hospital readmissions or mortality rates in the subsequent month. (The authors of the latter study added a caveat that short-term outcomes “do not fully capture postdischarge functional status.”)
Other data, however, suggest that care denials do adversely affect outcomes. A 2023 KFF survey found that patients who experienced issues with prior authorization were 3 times more likely to experience care delays and about twice as likely to experience a health decline. And about a fourth of 1000 physicians who responded to a December 2023 survey by the American Medical Association (the publisher of JAMA) reported a serious adverse event due to delays associated with prior authorizations. Of the respondents, 13% reported a life-threatening event and 7% reported that prior authorizations led to a permanent disability, birth defect, or death.
Moreover, health policy experts say the savings Medicare Advantage plans may generate through care denials don’t make their way back to taxpayers.
“All of these savings that the private plans are able to generate—and I do think they are able to generate them—are flowing to the plans, and not to [taxpayers],” said Josh Gordon, PhD, director of health policy at the Committee for a Responsible Federal Budget.
Through Medicare Advantage, “you may be able to save some money,” he added, “[but] save money for who—that’s a different question.”
Other experts are more skeptical as to whether Medicare Advantage plans save money at all. A 2022 study found that low-value care remains prevalent in Medicare Advantage, and a 2024 analysis from the Medicare Payment Advisory Commission, an independent and nonpartisan congressional agency, determined that Medicare Advantage plans cost 23% more than traditional Medicare. Those costs have been attributed in part to a widespread practice of inflating patients’ illness complexity to garner higher reimbursement rates—so-called upcoding. A July analysis by The Wall Street Journal found that such practices, which the Department of Justice has deemed fraudulent, garnered $50 billion in extra Medicare payments to insurers between 2018 and 2021. Additionally, a recent perspective in the New England Journal of Medicine raised concerns that still other costs may be hidden in the kinds of expansive, vertically integrated networks that are becoming increasingly common.
Medicare Advantage plans “have not ever achieved lower spending,” said Jeannie Fuglesten Biniek, associate director of Medicare Policy at KFF. “It’s hard to know exactly the value enrollees are getting.”
Burdening Patients and Clinicians
Patients who are denied coverage are entitled to recourse in 1 major way: appeals.
As the Medicare Advantage population has grown, the number of appeals has expanded. In 2023, patients appealed a record 184 693 care denial decisions, according to a search of the Centers for Medicare & Medicaid Services (CMS) site. Halfway through 2024, the number is on pace to exceed that by about 15 000 by year’s end.
Biniek’s group at KFF also found that the vast majority—83%—of care denials in 2022 were partially or fully overturned following appeal. “It begs the question, why were they denied in the first place?” she said.
There’s also considerable variation in which services are denied by different Medicare Advantage plans, an inconsistency that suggests the decisions aren’t being made in a uniform manner or based on universal criteria, said the University of Minnesota’s Neprash. It’s often “hard to get under the hood” to know what these decisions are premised on, she added, since plans’ criteria tend to be difficult to find.
A common reason Medicare Advantage plans cite for reversals following appeal is that they had insufficient information the first go around, said Miranda Yaver, PhD, an assistant professor of health policy and management at the University of Pittsburgh. Yet the OIG found in its review that often “beneficiary medical records already in the case file were sufficient” to cover the service outright.
“Human beings are fallible…it’s very possible for reviewers to overlook documents in a case file,” said Bartholomew, the OIG subject area lead.
What’s undeniable is the cost prior authorizations impose on physicians and patients.
“Appealing takes a lot out of you,” said Yaver, whose research focuses on the patient burden of prior authorization. “I don’t know anyone who’s ever had an easy and short conversation with their insurance company.”
As the health care workforce continues to experience unprecedented turnover following the COVID-19 pandemic, Surgeon General Vivek Murthy, MD, MBA, has pointed to prior authorization as a key driver of health care burnout because of the significant administrative burden it places on workers.
The hardship of appealing also raises questions about unequal care. For example, a 2020 study in JAMA Network Open found that qualified health plans in the US South were almost 16 times more likely to have prior authorizations for HIV preexposure prophylaxis than plans in the Northeast, despite the South having the most new HIV infections; a 2023 study demonstrated that Black patients who were recipients of organ transplants at an Illinois health system dealt with significantly more prior authorizations than other racial and ethnic groups.
To the extent that the patients fielding the most prior authorizations may also be the ones least likely to have the resources—time or financial flexibility, among others—to fight care denials, “these administrative burdens really deepen existing inequities,” Yaver said.
“The big sorting mechanism,” she added, “is who can afford to advocate for their rights to access care?”
Awaiting Government Action
This January, CMS released a final rule intended to streamline prior authorization processes. Among other requirements, the agency mandated numerous additional data reporting requirements to increase transparency in prior authorization decisions.
Advocates say, however, that these requirements—many of which don’t initiate until 2026—do not go far enough. An April analysis by Biniek’s team identified numerous gaps in the requirements that hold meaningful “implications for program oversight and beneficiary decision-making,” such as differences in denial rates and timeliness of responses for different services.
In May, Slocum’s organization sent a letter to CMS stating that it’s “imperative that enrollees, caregivers, and oversight entities have more specific information regarding the types of items and services for which payers may be unfairly restricting access or issuing erroneous prior authorization determinations.” And in July, the OIG announced that it is further investigating prior authorization in postacute care.
Seeking additional means of enforcement, advocates have turned to the law, pushing for the reintroduction of the Improving Seniors’ Timely Access to Care Act. This June, Congress brought the bipartisan reform bill back to the floor. The legislation promotes transparency in how Medicare Advantage plans use prior authorization, requiring them to share tightly-held data with HHS, including specifics about their rates of denials, appeals, and reversals. Additionally, the bill clarifies the authority of CMS to set timeframes for plans to review prior authorization requests. It also requires an electronic review process, rather than via fax or phone call, with the goal of making the process more efficient for patients and clinicians alike.
As of August, the bill remains under consideration in Congress. It’s the fifth time it’s been introduced. Even if it passes, its provisions also won’t take effect until 2026.
Meanwhile, private corporations are jumping into the fray. In July, The New York Times reported on an influx of start-ups harnessing artificial intelligence to assist clinicians with the prior authorization and appeal process. On August 20, Modern Healthcare reported that electronic health record giant Epic is partnering with Medicare Advantage plans to streamline prior authorizations and appeals made through its platform.
Despite these developments, for many clinicians, little has changed day-to-day.
For Yang, the radiation oncologist in St Louis, until the system gets fixed, the volume on her phone will stay turned all the way up to ensure she doesn’t miss a call from a patient’s insurance company. It also means that for the foreseeable future, she’ll have to keep hustling upstairs from playing with her kids in the basement to take those calls when they come.
And for Kendra and her father, the stakes are high—$12 000, to be exact.
After G. M.’s Medicare Advantage plan cut off coverage for his stay in the skilled nursing facility, Kendra and her family quickly came to a conclusion. Their home was poorly set up to make sure he didn’t fall again—and if he did, there wasn’t anyone in the house who would have been able to lift him. “There was no choice,” Kendra recalled her family’s thinking. “We have to pay for this…to keep him safe.” It’s a decision that families without the money available—or the time or know-how to fight the denial—might not have been able to make.
Night after night in the skilled nursing facility, G. M.’s bill climbed higher. But the Medicare Notice of Non-Coverage described the family’s right to an immediate appeal, and Kendra resolved to fight. “I’m not the kind of person who will let some people screw other people over,” she said. “I won’t give up.”
After weeks of back and forth—between June and July, Kendra estimates she spent more than 9 hours on the phone with her Medicare Advantage plan—a conclusion may be in sight. This month, an appeals judge will hear G. M.’s case.
And while Kendra is optimistic, she’s also scared.
“This is the last option,” Kendra said. “I’m worried that something might go wrong—because that’s $12,000 that my father may never get back.”
Article Information
Published Online: August 30, 2024. doi:10.1001/jama.2024.13383
Conflict of Interest Disclosures: Dr Neprash reported receiving grant funding from the Commonwealth Fund. Dr Brennan reported holding investments in CVS Health and being compensated as an advisor at Manatt Health. Dr Slocum reported receiving grant funding from the National Institutes of Health, Administration for Community Living, Department of Defense, Wings for Life, and the Craig H. Neilsen Foundation. Dr Gordon reported receiving grant funding from Arnold Ventures. No other disclosures were reported.
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