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More Disturbing Trends On Medicare Advantage Prior Authorization

In these pages I have bemoaned the fact that the Centers for Medicare and Medicaid Services (CMS) and Capitol Hill are taking the managed care out of Medicare Advantage (MA).

MA’s value proposition is based on the plans’ ability to save dollars in furnishing traditional Medicare fee-for-service (FFS) benefits and passing on the savings in the form of reduced cost-sharing, filling in gaps in the traditional benefit, and adding additional benefits. But when CMS reins in the ability to save these dollars, it will have a direct impact on the benefits American seniors and people with disabilities see. What’s more, the antiquated FFS system is fraud-ridden and of poor quality. We need innovation not mimicking the old way of delivering care.

But by hobbling MA plans’ innovation, CMS and Capitol Hill are setting MA and the overall healthcare system back. Driven by some strange need to ingratiate themselves to provider groups, both parties have instituted measures that essentially take us back in time.

While I support the interoperability measure overall, strict new timeframes to process medical service prior authorizations (PA) will add dramatically to administrative costs, even with positive new electronic submission requirements (which will take time to mature). The 2024 MA and Part D rule puts harsh restrictions on the use of PA by plans, having them follow the FFS guidelines for service provision. MA plans will no longer be able to restrict the use of expensive inpatient and follow-up care (skilled nursing facility, step-down, etc.). The latest news show that inpatient days are up in Q1 2024 in part related to the new rule. As well, health plans are reporting the same and higher medical expenses because of it. And as you will read below, it does not appear that regulators are yet heavily enforcing this new rule.

There are some new potential land mines on the PA horizon that have come out recently. Whether all of these become law is beside the point. They continue the trend of reining in plans’ reasonable ability to save. It drives the nation further down the road of unfettered utilization – exactly what the large hospital systems and private-equity-backed hospitals and provider groups want. Along with terrible price trends, it is a recipe for raising not lowering costs. A politically motivated CMS leadership (sorry to say this) and Capitol Hill (on a bipartisan basis mind you) fail to see beyond the next election to understand the damage they are doing. I am not sure even the MA plans or advocates see it, judging from the Better Medicare Alliance’s previous endorsement of at least one of the measures below. But I do have to hand it to the provider lobbies. They own CMS and Congress now. The health plan lobby has failed at pretty much every pass the past few years.

An update on the effect of the program and ad hoc 2024 rule audits

Not too long ago, I told you that there would be new ad hoc audits for implementation of the 2024 MA and Part D rule’s changes on utilization management (UM) and PA. I contacted some of my health plan friends for information on how 2024 program audit and ad hoc audits are going. They tell of a grim picture. What I am hearing represents a sea change in CMS’ approach to audits generally. While plans have seen audit scrutiny in the past, many report to me they are seeing the most diligence by auditors ever. Of course, there can still be differences among plans. Often the scrutiny is tied to both the tenure and sophistication of outside audit firms and CMS personnel. Early audits may be easier than those that occur later in the year.

True to CMS’ word, part of the ad hoc audit centers on CMS reviewing the requirements of the 2024 UM and PA rule, including policies and procedures to ensure compliance. On the program audit side, MA plans are reporting a rigorous deep dive into PA and appeals cases. In the past several years, CMS and auditors have been reviewing every aspect of cases for the full life cycle, from evidence as to the receipt of the case all the way to when a correspondence was fulfilled. Particular attention has being paid to the application of review criteria, qualifications of clinical decision-makers, the explicit logic and rationale for the decision, and the clarity of the communication to the member and the provider. While scrutiny has increased over the years, this year represents the greatest attention plans have seen yet to cases. As one person told me, this year it is “scrutiny on steroids!” I have been a big supporter of CMS when it comes to their audit protocols. I may disagree with the agency at points (including on the new 2024 PA rule), but CMS is holding plans accountable and overall that is a good thing. It gives MA plans credibility in the market.

Surprisingly, however, it does not appear there is a major criteria review of the 2024 PA rule’s impact on inpatient care or even follow-up care. That is, CMS does not appear yet to be challenging MA plans systematically on criteria used to approve or deny inpatient care under the so-called two-midnight rule or provider requests for follow-up services such as skilled nursing, stepdown, or home care post discharge. It is likely CMS was not yet ready to audit here or did not want to directly challenge plans on this right now, but providers will in time turn up the heat on CMS to enforce the new rules.

What are the new threats?

Improving Seniors’ Timely Access to Care Act – Despite all of the changes noted above, Capitol Hill has doggedly tried to pass over the past few years what I think is a bad piece of legislation in the Improving Seniors’ Timely Access to Care Act. The bipartisan bill has been out there in several forms, but failed to gain final approval due to costs. But with many of the major administrative measures proposed in the bill already in place per the above regulatory changes (effectively costing the government millions now rather than if the bill passes), the Congressional Budget Office (CBO) has now said the bill can be implemented at no cost. This now should lead to passage of the bill when re-introduced.

Previous versions of the bill were focused on:

  • Ensuring the use of evidenced-base criteria
  • Ensuring qualified medical personnel review PAs
  • Mandating electronic PA processes
  • Reducing authorization timeframes
  • Providing transitions of care between plans
  • Ensuring disclosure of the criteria and PA policies to members and providers
  • Engaging in consultation with providers before adopting criteria and deciding what requires PA
  • Mandating real-time approval for certain services
  • Adopting a range of new reporting transparency on authorizations and appeals

Now, as I noted, many of these provisions have already been adopted by CMS. In my view the disclosure, consultation, real-time approval, and transparency would be net new costs to plans and outlays considerable.  I think CBO, thus, is playing some politics (internal to Congress) here too. More important, while some major provisions may be in place now, it continues to lay the foundation for the erosion of the application of proven managed care tenets.

Sen. Whitehouse’s fanciful ACO approach — Anti-MA sentiment is getting so big on Capitol Hill that lawmakers are proposing some of the most extreme solutions. Senate Budget Committee Chair Sheldon Whitehouse may propose new legislation that requires CMS to approve any MA PA requirements placed on network doctors who also serve accountable care organizations (ACOs) in the Medicare FFS system. Whitehouse argues that these doctors have a proven track record of providing efficient patient care.

But that is straight from the provider lobby’s talking points. There is little evidence yet that ACOs are indeed a success. True value-based reimbursement has only been recently introduced. While CMS touts savings, these have been negligible at best. Some studies question whether ACOs save (especially when adding the administrative costs of the program). A CBO study did say that larger savings are derived from ACOs led by independent physicians rather than hospital-led ones. CBO indicated that the hospital-led groups do not have incentives to save as hospitals earn more money with admissions.

And therein lies the problem. More and more physicians are now owned by hospital systems and private equity firms.  These doctors are directed to shift practice patterns to more expensive hospital settings or practice in a way that maximizes short-term return. So Whitehouse’s bill would further drive utilization by freeing physicians from any oversight for their choice to render services as well as the location of the service. The fox watching the hen house!

Whitehouse also would require CMS to identify the worst PA ractices and set standards for PA that would apply to all MA plans. I don’t doubt we should have more standardization in the pricing, claims, and even the PA world. But not on providers’ terms.

How badly have regulators become politicized?

How bad has politics in healthcare gotten? Look no further than a March 2024 glitzy infographic created by the Department of Health and Human Services’ Office of Inspector General (HHS OIG) — the last item under additional reading. For the first time (at least in my memory) we have what is supposed to be an impartial watchdog hyping its analyses and sensationalizing some of its findings. It retells some of its dubious and unbalanced assessments and findings from an April 2022 study and how this has led to congressional and CMS action to rein in bad payer behavior.

More than anything, this should put plans on notice how difficult the regulatory world will get regardless of who is president come 2025.

Additional reading:

#medicareadvantage #congress #cms #priorauthorization #interoperability #acos #hhsoig

— Marc S. Ryan

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