Analyzing the Medicare Advantage Terminations: Concerns, Drivers, and Solutions

Every week, there is yet another updated list of healthcare systems severing relations with Medicare Advantage (MA) plans. This news is certainly striking, but is it truly alarming?

There are nearly 4000 Medicare Advantage plans nationwide, and beneficiaries typically can choose from an average of 43 plans in their area, with 36 of those plans typically including Part D medication coverage. These healthcare systems are not dropping all Medicare Advantage plans either; the MA plans most commonly identified are Humana and UnitedHealthcare. It’s worth noting that Humana is also leaving many markets although it’s not clear if there is overlap with the systems dropping them. That said, MA terminations are still a cause for concern – and underscore the deeper problem of payer-provider friction that holds both sides back from collaborating successfully. 

Unpacking payer and provider challenges

Payers and providers are facing financial pressures in every aspect of their complex and highly regulated businesses. Providers, specifically institutional providers, must manage not only their claims processes but also expenses related to staffing, supply chain, pharmaceuticals, and construction of new brick and mortar facilities. Whether or not attention was intentionally shifted from some of these issues, the current focus of debate is decidedly on MA plans’ prior authorization (PA) and claims payment processes – and the tone of these conversations is concerning. Healthcare systems, as well as the American Hospital Association, have made strongly worded statements expressing their opinions, while individual providers are often far more emotional and accusatory in their statements. Providers have been severing their relationships with these plans in a decidedly aggressive and retaliatory manner. MA payers have also vigorously defended their positions. Yet, as the percentage of Medicare-eligible beneficiaries and the percentage of those individuals enrolled in MA plans increases, so does providers’ dependence on this revenue stream – so severing these relationships is counterproductive.

Misunderstandings fuel issues 

Misunderstanding around the utilization management (UM) and claims payment processes in MA, including the full accountability required of all the stakeholders, seems to be an underlying issue. MA is highly regulated by CMS. The voluminous Medicare Managed Care Manual spells out in detail what MA plans must and must not do in virtually every aspect of their businesses, including specifics regarding timely and informational responses to prior authorization requests and prompt payment and interest on late payments. MA plans are not permitted to be more restrictive in the benefits they cover than traditional Medicare, and they are subject to many publicly available coverage guidelines including National and Local Coverage Determinations and the FDA. Other commonly used guidelines are based on extensively researched, evidence-based, peer-reviewed and published research and recommendations — frequently from the national societies of these providers. 

Providers’ prior authorization denial rates have increased 25% — and while technically accurate, this represents an increase from less than 6% to 7.4%, and adverse determinations are overturned and approved 83.2% of the time. Ultimately, 90% or more of these requests are approved. The key word here is “ultimately.” The process can be drawn out for several reasons, the most common being a lack of sufficient information submitted by the provider to substantiate the request. MA plans are required by regulation to provide a determination in response to a request within a prescribed time period and are subject to penalties — from civil monetary penalties up to and including loss of their contract with the CMS — if they do not meet these turnaround time requirements. Subsequently, there is a limited amount of time to go back and forth requesting additional documentation to satisfy the evidence-based requirements or support an exception. 

Providers make these requests multiple times each day; there should be no lack of understanding of the information required. In fact, if the appropriate documentation is provided with the initial request, the approval should follow rapidly. The recent CMS rules for prior authorization, in addition to shortening the turnaround times imposed on MA plans, require electronic methods of performing prior authorization. Concerns the American Hospital Association (AHA) expressed over artificial intelligence (AI) playing a role in increased denials should not be an issue; the CMS regulations are clear that only a physician can make an adverse determination.

Similarly, the claims payment process is highly regulated, with strict guidelines on reimbursement timeframes for “clean claims” and interest payments for late payments. Providers are clearly not enthralled with UM, but frankly, neither are payers. For all stakeholders, UM is a costly and time-consuming process fraught with regulatory risk. Yet, it serves a number of purposes:

• Helping to avoid wasteful, low-value care
• Assisting with preventing fraud, waste, and abuse 
• Assuring evidence-based care is provided
• Limiting the number of potential false-positive findings and subsequent interventions, and harm to patients from unnecessary additional testing and procedures
• Providing a leading indicator of cost of care (IBNR – Incurred But Not Reported)
• Identifying trends in care
• Highlighting high-performing providers for privileges and identifying low-performing providers for additional assistance

Ways to lessen the abrasion causing MA divorces 

Given the needs and benefits of UM, providers and MA payers must take steps to improve the relationship. Some approaches to accomplish this successfully are: 

• Maintain an updated list of procedures – Payers routinely review the list of procedures for which they require prior authorization. This list should be updated quarterly with the intent of keeping only those procedures on the list that are prone to mis-/over-utilization; potential fraud, waste, and abuse; high cost or high volume; areas of evolving care and technology; and potentially other areas of specific interest or indications of quality care in the network. The list should be prominently displayed on the payers’ websites. Providers who consistently demonstrate appropriate use of evidence-based care can be exempted from prior authorization requirements. It is unlikely these providers are going to change their behaviors simply because the requirement is lifted. Payers must update their systems so they comply with CMS rules; electronic PA systems can often render a determination while the patient is still in the providers’ offices or institutions.
• Document appropriately – Providers have the responsibility to document appropriately and provide that documentation in support of the PA request. Claiming ignorance of the requirements for requests made on a regular and frequent basis is not sincere.
• Adhere to best practices – Providers must be aware of best practices and the evidence-basis in the treatment of the conditions for which they are requesting services. Resources abound in the public domain, including the American Board of Internal Medicine’s Choosing Wisely. This information is also readily available from specialty society guidelines (which are often the basis for national guidelines) and the peer-reviewed published literature.
• Follow coding guidelines – While coders are permitted to document the most intense conditions identified in the medical record, coding guidelines should be followed. For example, conditions that had no bearing on treatment should not be used to substantiate complication/comorbidity or major complication/comorbidity.
• Be transparent – Particularly in the outpatient setting, providers need to be upfront with their patients that PA requests may not be submitted on the same day as the appointment. Providers should also be familiar with the payers’ provider manuals, distributed upon participation and available on the payers’ websites on request.

Providers and payers are in this together

In summary, both providers and payers face challenges in the prior authorization process. Understanding the requirements and needs of each stakeholder has the potential to lower the temperature of the current rhetoric. There is no question there are opportunities to create efficiencies and reduce abrasion, and it is unrealistic to expect UM will be abolished. Providers and payers alike have a fiduciary responsibility to shepherd the limited resources of our healthcare system. Striving to provide quality, high-value care while remaining intellectually and academically honest should be the touchstone for all.

Photo: Rudzhan Nagiev, Getty Images

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