Hospitals push back against Medicare Advantage plans

Hospitals say they are encountering more problems with denials of claims from Medicare Advantage plans.

Health systems are also saying they are worried that Medicare Advantage plans are going to skirt federal rules regarding inpatient admissions in the coming year. The American Hospital Association and the Federation of American Hospitals have both aired their concerns to the Centers for Medicare & Medicaid Services and are seeking action.

Both trade groups have asked CMS to ensure that Medicare Advantage plans follow new federal guidelines that they say are designed to ensure appropriate access to care. They both also said they are concerned that UnitedHealthcare plans to circumvent CMS rules that take effect in 2024.

Chip Kahn, president and CEO of the Federation of American Hospitals, issued a statement imploring CMS to ensure Medicare Advantage plans follow the rules, including United Healthcare.

“The test case to ensure all Medicare beneficiaries get the coverage they are entitled to are the MA plans provided by UnitedHealthcare,” Kahn said in a statement. “As the largest MA provider in the country, UnitedHealthcare recently released a new coverage policy for hospital services effective January 1, 2024, that blatantly violates Medicare’s revised coverage criteria for inpatient hospital care.”

Ashley Thompson, senior vice president of policy development for the American Hospital Association, wrote a letter to CMS saying that the group is concerned about UnitedHealthcare’s MA plans. Thompson said UnitedHealthcare is advising its network providers that they will evaluate inpatient admissions with its own criteria that go beyond the standards of traditional Medicare.

The hospital association feels that “circumvents CMS’ rules regarding the use of more restrictive coverage criteria and the requirement that plans adhere to certain public accessibility and evidentiary standards,” Thompson wrote.

Thompson adds that other plans are looking to apply higher standards regarding inpatient admissions.

“We are deeply concerned that these practices will result in the maintenance of the status quo where (Medicare Advantage Organizations) apply their own coverage criteria that is more restrictive than Traditional Medicare proliferating the very behavior that CMS sought to address in the final rule, resulting in inappropriate denials of medically necessary care and disparities in coverage between beneficiaries in MA and those in the Traditional Medicare program,” Thompson wrote.

A UnitedHealthcare spokesperson said in an email that the company’s policy adheres to federal regulations.

“The American Hospital Association and Federation of American Hospitals are advocating a position that is inconsistent with language in the CMS Final Rule for 2024. Our Medicare Advantage Hospital, Emergency, and Ambulance Services Coverage Policy complies with CMS Final Rule,” the UnitedHealthcare spokesperson said.

Hospitals and health systems say they have encountered more denials from payers, and it’s adding to their financial difficulties, according to a recent report from Kaufman Hall. Nearly 3 in 4 healthcare executives (73%) say they are seeing more claim denials, the report stated.

With the uptick in denials, hospitals say their cash reserves are dwindling, according to a separate report from Syntellis and the American Hospital Association.

While hospitals say they are facing more problems with denials across all payers, health system leaders say they are seeing more rejections from Medicare Advantage plans. Hospital leaders say the problems are more pronounced in areas where Medicare Advantage plans have a higher concentration in the market.

Mark Newton, a senior vice president for Kaufman Hall who heads the firm’s performance improvement practice, says the relationship hospitals have with payers has become more adversarial, particularly with Medicare Advantage plans.

“One of the big issues almost all our clients are addressing now is Medicare Advantage,” Newton told Chief Healthcare Executive® in a recent interview. He said they are seeing a higher denial rate with Medicare Advantage plans.

The AHA and the Federation are asking CMS to clarify the coverage criteria for inpatient admissions and assert that Medicare Advantage plans shouldn’t be utilizing their own standards in place of Medicare rules. The groups are also urging CMS to take action, including sanctions, against plans that aren’t complying with CMS rules.

“Medicare beneficiaries should not be shortchanged by UnitedHealthcare or any MA plan,” Kahn said in a statement.

Medicare Advantage plans continue to gain popularity, with half of all Medicare beneficiaries enrolled in those plans. More than 30 million Americans are enrolled in Medicare Advantage plans.

As the plans have grown, doctors and medical groups say they are seeing more prior authorization demands. A Medical Group Management Association survey this spring found that 84% of medical groups said prior authorization demands in Medicare Advantage plans have increased over the past 12 months.