Outrage of the Month: To Maximize Profits, Medicare Advantage Companies Dangerously Deny Needed, Covered Care

Health Letter, June 2022

By Michael Carome, M.D.

outrage

If you’re not outraged,
you’re not paying attention!

Read what Public Citizen has to say about the biggest blunders and outrageous offenses in the world of public health, published monthly in Health Letter.

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Medicare Advantage plans — sometimes call Medicare “Part C” — are aggressively marketed by private, profit-driven insurance companies as an alternative to traditional Medicare Part A and Part B coverage. Television ads for these plans often tout a variety of benefits not provided by Medicare Part B, such as dental, vision and hearing coverage.

Over the past two decades, enrollment in Medicare Advantage plans has steadily increased from about six million Medicare beneficiaries in 2002 to 26 million in 2021, representing 42% of Medicare beneficiaries and $343 billion (46%) of total federal Medicare spending last year.

Many seniors who enroll in Medicare Advantage plans are unaware of these plans’ disadvantages. For example, most Medicare Advantage plans limit choice by requiring enrollees to use health care providers who participate in the plan’s network, whereas patients enrolled in traditional Medicare can choose to go to just about any doctor or hospital that accepts Medicare patients.

Additionally, individuals who switch from Medicare Advantage back to traditional Medicare may be denied enrollment in certain Medicare supplement (Medigap) plans because of preexisting conditions.

Perhaps the most troubling aspect of Medicare Advantage plans is their use of a payment model that provides an incentive for companies to deny beneficiaries access to medically needed care that is supposed to be covered by Medicare. Given that Medicare Advantage companies’ primary goal is to maximize profits, the financial incentive to deny care poses a direct threat to the health of Medicare beneficiaries.

In April 2022, the U.S. Department of Health and Humans Services Office of Inspector General (OIG) released an important report showing that Medicare Advantage plans inappropriately deny medically needed care that should be covered to tens of thousands of Medicare beneficiaries annually. The impetus for the report were annual audits conducted by the Centers for Medicare and Medicaid Services that “highlighted widespread and persistent problems related to inappropriate denials of services and payment” among the millions of denials issued by Medicare Advantage plans each year.

For its analysis, the OIG selected a random sample of denials from the one-week period of June 1-7, 2019, for 15 of the largest Medicare Advantage companies — ranging from 165,000 to six million enrolled beneficiaries — that together accounted for 80% of beneficiaries enrolled in Medicare Advantage as of June 2019. The OIG then estimated the rates at which these companies denied prior authorization requests that met Medicare coverage rules.

The OIG found that 13% of the denials for prior authorization were for medical services that met Medicare coverage rules, “likely preventing or delaying medically necessary care for Medicare Advantage beneficiaries.” The OIG projected from its random sample that for the 15 Medicare Advantage companies examined in its report, there would have been more than 84,800 denials in 2019 for medical services that met Medicare coverage rules.

The OIG emphasized that “these denials may be particularly harmful for beneficiaries who cannot afford to pay for services directly and for critically ill beneficiaries who may suffer negative health consequences from delayed or denied care.”

Eagan Kemp, health care policy advocate for Public Citizen, hit the nail on the head when he offered the following perspective on the OIG’s findings:

Today’s staggering report highlights just how dangerous Medicare Advantage is for seniors when it comes to accessing needed care…

We cannot continue to allow Medicare Advantage to be a source of profit for greedy companies and a source of suffering for seniors. In the short term, the Biden administration must immediately step up oversight of the companies. In the long run, we must improve traditional Medicare and expand it to everyone in the country. We need Medicare for All.