Humana Files Lawsuit Over HHS's Recent Medicare Advantage Audit Rules
September 1st, 2023
Humana is contesting a newly imposed CMS regulation which aims to tighten audit procedures for Medicare Advantage (MA) plans.
On September 1st, Humana, the second-largest MA insurer in the country, presented its case to the U.S District Court in the Northern District of Texas. The insurer requests that CMS reconsider and withdraw the newly finalized rule, emphasizing potential negative impacts on both Medicare Advantage providers and the senior citizens who rely on the MA program for their health services.
At the start of the year, CMS announced its intention to omit the fee-for-service adjuster during the risk adjustment data validation audits. This adjuster previously served to determine acceptable payment error margins, ensuring that only errors surpassing this threshold would be pursued in recoveries. This rule modification is set to be implemented for contracts originating in 2018 and later.
With the introduction of this revised audit process, CMS anticipates the possibility of recouping around $4.7 billion from MA plans over the next ten years due to overpayments. It's worth noting that various major insurance companies have, in the past, faced accusations related to Medicare Advantage discrepancies, though the industry has consistently refuted these claims.
In their lawsuit, Humana argues that CMS's updated audit process infringes upon the stipulations of the Administrative Procedure Act. Humana has pointed out that, "The CMS failed to substantiate their newly introduced auditing procedures with either empirical evidence or actuarial assessments. Instead, they relied on legal arguments that don’t appear robust upon close examination."
The broader insurance sector had reservations about this rule when CMS initially introduced it in 2018. Many insurers, Humana included, had expressed intentions of pursuing legal routes if the rule excluded the critical fee-for-service adjuster.
Earlier this year, Bruce Broussard, CEO of Humana, articulated his concerns about CMS's decision to remove the fee-for-service adjuster from MA plan audits.
A report from Bloomberg in January underscored Humana's potential vulnerability due to these clawbacks. The report suggested that up to 17% of Humana's earnings in 2023, equivalent to approximately $900 million, could be subjected to these new rules. As of June 30, Humana reported nearly 5.8 million members enrolled in Medicare Advantage, with aims of enrolling an additional 825,000 by year's end.
A spokesperson from CMS has chosen not to comment, citing the ongoing litigation.
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Prior Authorization is a pre-approval or precertification process, where healthcare providers must obtain approval from a patient's insurance company for coverage of a specific medication, procedure, or service. It is a cost containment measure that ensures medical necessity, avoiding unnecessary or potentially harmful treatments. Moreover, it’s a crucial part of the revenue cycle management, impacting the bottom-line profitability of a healthcare provider and facilities.
Incorrect or incomplete Prior Authorization can lead to claim denials, increasing the financial burden on healthcare providers. However, by outsourcing Prior Authorization services, healthcare organizations can eliminate these risks, enhance revenue, and streamline their operations.
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Furthermore, outsourcing provides access to skilled professionals who understand complex Prior Authorization requirements, ensuring compliance and reducing the risk of denials. They work closely with healthcare providers to gather necessary medical records, submit requests, follow up with insurance companies, and manage the entire process efficiently.
Understanding the Importance of Prior Authorization in Different Healthcare Services
Certain services and specialties may have stricter Prior Authorization requirements. Here's why it becomes indispensable in these situations:
Outsourcing the prior authorization process work in the healthcare industry, including medical practices, providers, hospitals, and surgery centers, can offer several benefits. Here are some key advantages:
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Senate Subcommittee Probes Medicare Advantage Insurers Over Coverage Denials and Profits: Demanding Transparency and Better Patient Care
Explore the Senate subcommittee's deep dive into Medicare Advantage insurers' practices, their profit motives, and the impact on beneficiaries. Learn about the concerns over the use of algorithms for coverage decisions and the calls for transparency and patient-focused reform in the healthcare industry.
On Wednesday, a Senate subcommittee asked top Medicare Advantage insurers to disclose internal documents that reveal their decision-making process for healthcare coverage. The request was made during a hearing on healthcare delays and denials under the Medicare Advantage program.
The committee is concerned about the detrimental effects of these decisions on patients needing skilled nursing care. The chairman, Richard Blumenthal, said there's increasing evidence that insurers are using algorithms, instead of medical professionals, to make care denial decisions. These decisions often affect seriously ill patients who require specialized or rehabilitation care before going home.
Blumenthal said that while these algorithms are described as mere tools by insurers, the repeated denials they cause cannot be ignored. He emphasized the need for transparency around these algorithms, which the insurers often label as proprietary.
Blumenthal also linked the continual need for prior authorizations or premature ending of certain healthcare coverages to insurers' profit motives. He shared data indicating that Medicare Advantage plans have higher profit margins per insured person compared to other insurance markets.
Letters have been sent to CVS-Aetna, United Heath, and Humana—companies that collectively cover more than half of all Medicare Advantage beneficiaries—requesting more details on their operational practices.
The Department of Health and Human Services’ Office of Inspector General testified that Medicare Advantage plans' criteria should align with original Medicare. However, she pointed out the potential incentive for insurers to deny services due to the fixed payment system in Medicare Advantage.
A report from last year highlighted the frequent denial of skilled nursing stays by Medicare Advantage plans, causing a decrease in stays and the length of such stays for skilled nursing providers.
Witnesses discussed the issues surrounding denial of skilled nursing care, highlighting that Medicare Advantage plan holders often face a complicated process to appeal their denied coverage. Patients caught in this system often have to choose between paying out of pocket or leaving the facility against medical advice. Appeals that are eventually approved can take up to a year to be reimbursed.
The hearing also examined the difficulty in controlling insurers' practices that help them manage risk. Changing these practices could lead to higher costs for the government. However, the focus of the subcommittee members seemed to be on the personal hardships caused by coverage concerns.
Personal stories shared included that of a widow from Connecticut, who detailed her struggles to secure intensive therapy for her husband following the removal of a brain lesion. The emotional and financial strain of navigating the healthcare system added to the distress of dealing with her husband's health crisis.
The committee's examination of Medicare Advantage's internal workings underscores the larger concerns about private insurance companies' role in managing public health benefits. It also draws attention to the long-debated issue of transparency in how these companies operate, particularly in their decision-making process for providing coverage.
Given the fixed payment system in Medicare Advantage, insurance companies may have financial incentives to limit services provided to beneficiaries, leading to a conflict of interest between ensuring quality care and maintaining profitability.
Testimonies and personal stories shared during the hearing highlighted this concern. They also underscored the need for reform, particularly in areas such as skilled nursing care and rehabilitation services. While these services are often crucial in recovery, they are also costly, leading to frequent denials that can delay or impede necessary treatment.
The committee expressed interest in potentially legislating to improve the situation if necessary. However, the potential for increased governmental costs presents a significant obstacle, suggesting the need for a balanced approach that ensures both adequate patient care and sustainable cost management.
An additional point of concern is the use of artificial intelligence and algorithms in decision-making. There's growing evidence that these tools may be contributing to systematic denials of care. While they may increase efficiency, there's a risk that they could lead to arbitrary or inappropriate denial of services, particularly if they are not overseen or understood adequately.
The shift to more transparency in the Medicare Advantage plans, which now cover more than half of all Medicare beneficiaries, could result in significant changes to how these plans operate and provide coverage. However, the details of these potential changes and their impact on beneficiaries, insurance companies, and overall healthcare costs remain to be seen.
As of now, the committee has put the major insurance companies on notice, seeking more information on their practices and signaling their intent to improve the system for patients who depend on Medicare Advantage for their healthcare needs.
More on this news. Read here - https://www.mcknights.com/news/impossible-medicare-advantage-denials-decried-during-senate-hearing/
ABOUT THE AUTHOR:
Ms. Pinky Maniri-Pescasio is the Founder of GoHealthcare Consulting. She is a National Speaker on Practice Reimbursement and a Physician Advocate. She has served the Medical Practice Industry for more than 25 years as a Professional Medical Practice Consultant.