Where Is the Advantage?

By Peter Galvin, MD

I’ve always said there is no advantage to Medicare Advantage plans. We only accepted a handful of them in my office because it was my experience that they denied almost all requests for prior authorization, and I wound up arguing the case over the phone with a clerk who had no medical training. It turns out that my experience was not unique. A new analysis by KFF, Kaiser Family Foundation, found that Medicare Advantage plans denied 3.4 million, or 7.4%, of 46 million prior authorization requests in 2022. That effectively shut the door on care for these patients because only one in 10 patients appeal these denials.

Similarly, a 2022 report from the Department of Health and Human Services Office of Inspector General (HHS OIG) estimated that in 2019, 15 of the largest Medicare Advantage organizations denied about 85,000 prior authorization requests for services that would have been covered under traditional Medicare. Since then, the number of U.S. patients susceptible to service denial by Medicare Advantage plans has only increased as enrollment in these plans has ballooned by 50%, growing from 22 million beneficiaries in 2019 to 33 million this year. As of 2023, the majority of Medicare beneficiaries were enrolled in Advantage plans. These organizations’ business tactics have affected medical professionals too. The same OIG report estimated that in 2019, Medicare Advantage plans denied 1.5 million payments to clinicians that met both Medicare coverage rules and Medicare Advantage billing rules, pushing clinicians further into the red.

These Advantage plans were established in 1997 as Medicare Part C. Under the program, whose origins can be traced back to the Health Maintenance Act (HMA) of 1973, private health plans could take on risk through Medicare payments that were fixed rather than fee-for-service (under traditional Medicare). If the plans could achieve identical outcomes at lower costs, they could keep the portion of the fixed payment they saved. What lawmakers didn’t realize though is that these organizations are in business to make money, so the more care they deny the more of that fixed payment they get to keep. Advantage plans make themselves attractive by covering things like vision, hearing, and dental care that traditional Medicare doesn’t cover. Quickly, however, Advantage plans have gained notoriety for something else: care denials.

The original purpose of allowing private organizations to administer Medicare, a public entity, was to decrease the cost of the Medicare program. Yet, like most things designed by politicians, the exact opposite has occurred – the cost of the Medicare program has skyrocketed to nearly double the pre-Advantage plan era. While that is probably partly due to our aging population causing Medicare enrollment to rise dramatically, lawmakers now realize that it is also due to the Advantage plans. A bipartisan reform bill called the Improving Seniors Timely Access to Care Act is awaiting passage. The bill requires transparency in how Advantage plans use prior authorization including specifics about their rates of denials, appeals, and reversals. It also requires an electronic review process, rather than via fax or phone call. Meanwhile, private companies have sprung up to help clinicians with the prior authorization and appeals process. Currently though, as clinicians struggle to properly treat their patients, it is those very patients who are at a disadvantage.

Please direct questions or comments to editor@rockawaytimes.com