U.S. Department of Health and Human Services Office of Inspector General Medicare Advantage Appeal Outcomes and Audit Findings Raise Concerns About Service and Payment Denials OEI-09-16-00410 September 2018 OEI-00-00-00000 Month 201Y Daniel R. Levinson Inspector General oig.hhs.gov Report in Brief U.S. Department of Health and Human Services September 2018 OEI-09-16-00410 Office of Inspector General Why OIG Did This Review Medicare Advantage Appeal Outcomes and A central concern about the Audit Findings Raise Concerns About Service capitated payment model used in Medicare Advantage is the and Payment Denials potential incentive for MAOs to inappropriately deny access to What OIG Found services and payment in an Key Takeaway When beneficiaries and providers appealed attempt to increase their profits. High numbers of overturned preauthorization and payment denials, Medicare An MAO that inappropriately denials upon appeal, and Advantage Organizations (MAOs) overturned denies authorization of services persistent performance 75 percent of their own denials during for beneficiaries, or payments to problems identified by CMS 2014–16, overturning approximately healthcare providers, may audits, raise concerns that 216,000 denials each year. During the same contribute to physical or financial some beneficiaries and period, independent reviewers at higher levels of harm and also misuses Medicare providers may not be getting the appeals process overturned additional Program dollars that CMS paid services and payment that denials in favor of beneficiaries and providers. for beneficiary healthcare. MAOs are required to provide. The high number of overturned denials raises Because Medicare Advantage concerns that some Medicare Advantage covers so many beneficiaries beneficiaries and providers were initially denied services and payments that (more than 20 million in 2018), should have been provided. This is especially concerning because beneficiaries even low rates of inappropriately and providers rarely used the appeals process, which is designed to ensure denied services or payment can access to care and payment. During 201416, beneficiaries and providers create significant problems for appealed only 1 percent of denials to the first level of appeal. many Medicare beneficiaries and Centers for Medicare & Medicaid Services (CMS) audits highlight widespread their providers. and persistent MAO performance problems related to denials of care and payment. For example, in 2015, CMS cited 56 percent of audited contracts for How OIG Did This Review making inappropriate denials. CMS also cited 45 percent of contracts for We collected data on denials, sending denial letters with incomplete or incorrect information, which may appeals, and appeal outcomes inhibit beneficiaries’ and providers’ ability to file a successful appeal. In for 201416 at each level of the response to these audit findings, CMS took enforcement actions against MAOs, Medicare Advantage appeals including issuing penalties and imposing sanctions. Because CMS continues to process. We calculated the see the same types of violations in its audits of different MAOs every year, volume and rate of appeals and however, more action is needed to address these critical issues. overturned denials at each level. To examine CMS oversight, we What OIG Recommends and How the Agency Responded analyzed CMS’s 2015 audit results We recommend that CMS (1) enhance its oversight of MAO contracts, including and the resulting enforcement those with extremely high overturn rates and/or low appeal rates, and take actions, including Star Ratings corrective action as appropriate; (2) address persistent problems related to data from 2016 to 2018. inappropriate denials and insufficient denial letters in Medicare Advantage; and (3) provide beneficiaries with clear, easily accessible information about serious violations by MAOs. CMS concurred with all three recommendations. Full report can be found at oig.hhs.gov/oei/reports/oei-09-16-00410.asp TABLE OF CONTENTS BACKGROUND 1 Methodology 5 FINDINGS When Medicare Advantage beneficiaries and providers appealed, they were usually successful 7 in getting denials overturned Medicare Advantage beneficiaries and providers rarely used the appeals process designed to 10 ensure access to services and payment CMS audits found widespread and persistent problems related to denials of care and payment 11 in Medicare Advantage CMS has taken action to try to address MAO performance problems 12 MAO audit violations will no longer affect their contracts’ quality ratings 14 CONCLUSION AND RECOMMENDATIONS Enhance its oversight of MAO contracts, including those with extremely high overturn rates 17 and/or low appeal rates, and take corrective action as appropriate Address persistent problems related to inappropriate denials and insufficient denial letters in 18 Medicare Advantage Provide beneficiaries with clear, easily accessible information about serious violations by MAOs 18 CMS COMMENTS AND OIG RESPONSE 19 APPENDICES A: Medicare Advantage Appeals Process 20 B: Detailed Methodology 22 C: Volumes and Rates of MAO Appeal Outcomes, 201416 26 D: Volumes and Rates of Overturned Denials by Independent Reviewers, 201416 27 E: Volume and Rate of First-Level Appeals, 201416 28 F: CMS Comments 29 ACKNOWLEDGEMENTS 31 BACKGROUND Objectives 1. To determine the extent of appeals and overturns of Medicare Advantage service and payment denials at each level of the appeals process during 201416. 2. To assess the Centers for Medicare & Medicaid Services’ (CMS’s) 2015 audit findings and enforcement actions related to denials and appeals. A central concern about the capitated payment model used in Medicare Advantage (also known as Medicare Part C) is the potential incentive for insurers to inappropriately deny access to services and payment in an attempt to increase their profits. Under the capitated payment model, beneficiaries enroll in a managed care plan and Medicare pays the insurer (called a Medicare Advantage Organization, or MAO) a risk-adjusted payment each month for as long as the beneficiary is enrolled. In exchange for the monthly payment, the MAO agrees to authorize, and pay for, all medically necessary care for the beneficiary that falls within Medicare’s benefits package.1 MAOs that inappropriately deny the authorization of services for beneficiaries, or payments to healthcare providers who care for beneficiaries, may not only contribute to physical or financial harm, but they also misuse Medicare Program dollars that CMS pays for beneficiary healthcare. Because Medicare Advantage covers so many beneficiaries (more than 20 million in 2018),2 even low rates of inappropriately denied services or payment can create significant problems for many Medicare beneficiaries and their providers. Medicare Advantage Appeals Process Under managed care, MAOs need to balance managing healthcare costs and utilization while ensuring beneficiary access to quality care. MAOs must make millions of decisions each year about which requests for healthcare services and payment meet Medicare coverage criteria and, therefore, 1 Ata minimum, MAOs must cover the same services as in fee-for-service Medicare, although they may offer supplemental benefits. 42 CFR §§ 422.101(a) and (b); 422.102. MAOs are not responsible for paying hospice care costs for their beneficiaries—these costs are paid by Medicare fee-for-service. 2 CMS, Medicare Part C Contract and Enrollment Data, Monthly Contract and Enrollment Summary Report, June 2018. Medicare Advantage Appeal Outcomes and Audit Findings Raise Concerns About Service and Payment Denials 1 OEI-09-16-00410 should be authorized and paid for.3 The MAOs that we examined for this report collectively received 448 million requests in 2016: 24 million preauthorization requests for services that beneficiaries had not yet received, and 424 million payment requests for services already provided to beneficiaries. Although they approved the vast majority of these requests, the MAOs denied about 1 million preauthorization requests and 36 million payment requests, for denial rates of 4 percent and 8 percent, respectively.4 When beneficiaries or providers receive a notice that their request has been denied, they have the right to file an appeal to request that the denial be overturned.5 Beneficiaries may submit the appeal themselves, or a designated representative may submit the appeal on their behalf. Although there are resources available to help beneficiaries navigate the appeals process, advocacy groups report that the process is often confusing and overwhelming for beneficiaries, particularly those struggling with critical medical issues.6 The Medicare Advantage appeals process includes four levels of administrative review by several entities. At the first level, most appeals are reviewed by the MAO that issued the denial, while appeals for certain types of services are independently reviewed by Quality Improvement Organizations. When appeals continue to the higher levels, they are reviewed by the Independent Review Entity, administrative law judges, and finally, the Medicare Appeals Council. Exhibit 1 on page 3 shows an overview of the Medicare Advantage appeals process. See appendix A for a detailed description of the process and the entities involved. At each level of appeal, the denial may be overturned, partially overturned, or upheld. If the denial is overturned, then the MAO must authorize or pay for the service. If the denial is not fully overturned—either upheld or only partially overturned—the beneficiary or provider may appeal the decision to the next higher level. 3 MAOs may require that certain services receive approval before they are provided (called preauthorization). 4 The numbers in this paragraph are based on our analysis of Medicare Advantage data for the 422 contracts that reported validated data for calendar year 2016. It does not include requests or denials processed by the 86 contracts whose data did not meet CMS’s validation standards. See the methodology section for more information about our analysis and CMS’s data validation process. 5 MAOs review and resolve appeals from in-network and out-of-network providers through separate processes. Appeals from in-network providers are considered contractual disputes that are handled by the MAO directly and cannot be appealed to the higher levels of review. Appeals from out-of-network providers go through the same appeals process as beneficiary appeals. 6 Medicare Rights Center, 2017 Transformation Ideas for the Medicare Advantage (MA) and Part D programs, April 24, 2017. Kaiser Family Foundation, Medical Debt among People with Health Insurance, January 2014. Office of Inspector General (OIG) interview with the Center for Medicare Advocacy, 2016. Medicare Advantage Appeal Outcomes and Audit Findings Raise Concerns About Service and Payment Denials 2 OEI-09-16-00410 CMS Oversight of Denials and Appeals CMS uses several tools to oversee the denial and appeal process in Medicare Advantage and to incentivize MAOs to improve their performance. These tools include program audits, compliance and enforcement actions, and quality ratings. CMS also assigns an account manager and lead caseworker for each MAO contract.7 Among other duties, account managers monitor complaints from beneficiaries and work with MAOs to promote compliance with Medicare Program requirements. 7MAOs may enter into one or more contracts with CMS, and each contract may include multiple plans. Medicare Advantage Appeal Outcomes and Audit Findings Raise Concerns About Service and Payment Denials 3 OEI-09-16-00410 Program audits. Each year, CMS audits a sample of MAOs.8 During the audits, CMS evaluates MAOs’ compliance with requirements related to delivery of services and other beneficiary protections required by Medicare. CMS requires MAOs to implement corrective action plans to address any audit violations and to demonstrate that they have substantially corrected deficiencies before the audit is officially closed. Enforcement actions. When CMS identifies noncompliance related to an MAO’s healthcare delivery, it may take enforcement actions against the MAO.9 Such actions may include issuing civil money penalties, imposing intermediate sanctions (i.e., suspension of marketing, enrollment, or payment), or terminating a contract. Quality ratings. Every year, CMS publishes a quality rating, called a Star Rating, for each MAO contract. CMS bases the ratings on various quality measures related to MAOs’ processes and patient health outcomes, experiences, and access to care. Star Ratings can affect MAOs’ revenues—CMS awards bonus payments for high Star Ratings, while low Star Ratings may reduce MAO rebate payments and may deter beneficiaries from enrolling with an MAO. Related Work A previous OIG study examined the rates of denial, appeal, and appeal outcomes for Medicare Advantage preauthorization requests filed in 2007.10 It also examined CMS audit findings from 2007 and 2008. OIG found that, at the time, beneficiaries appealed very few denials and that, upon appeal, MAOs overturned their own denial decisions more than half the time. The report did not contain recommendations. Over the last decade, the number of beneficiaries enrolled in Medicare Advantage has increased dramatically from 8 million in 2007 to 21 million in 2018. In light of the increase in the number of beneficiaries participating in Medicare Advantage, this report revisits similar issues. In a more recent report, OIG examined CMS’s validation and use of MAO performance data, which CMS collects annually.11 Among other things, the annual performance data includes the volume of denials, appeals, and appeal outcomes (including overturned denials) that each MAO contract issued during the previous year. OIG recommended that CMS take steps to 8 CMS selects the sample of MAOs based on several factors, including a yearly risk assessment, significant changes in enrollment, and whether the MAO has been recently audited. CMS, 2016 Part C and Part D Program Audit and Enforcement Report, p. 5. 9 42 CFR § 422.752. 10 OIG, Beneficiary Appeals in Medicare Advantage (OEI-01-08-00280), October 2009. Although the report was published in 2009, it analyzed data from October 1 to December 31, 2007. 11 OIG, CMS Regularly Reviews Part C Reporting Requirements Data, But Its Followup and Use of the Data Are Limited (OEI-03-11-00720), March 2014. Medicare Advantage Appeal Outcomes and Audit Findings Raise Concerns About Service and Payment Denials 4 OEI-09-16-00410 ensure the accuracy of the data, make better use of the data in its oversight of MAO performance, and publicly release the data. As of October 2017, CMS had implemented one of OIG’s three recommendations—to publicly release the data. Methodology To meet the objectives of this study, we analyzed data and documentation from CMS, the Office of Medicare Hearings and Appeals, and the Departmental Appeals Board. To ensure our understanding of the submitted data and documentation, we followed up in writing with officials knowledgeable about the program. This section provides a brief overview of the methodology. See appendix B for a detailed methodology. Determining Volumes and Rates of Appeals and Overturned Denials During 201416 To determine the volumes and calculate the rates of appeals and denials overturned upon appeal at the MAO level, we analyzed annual performance data that MAOs reported to CMS for each of their contracts for 201416. We were unable to include in our analysis contracts that did not meet CMS’s data validation standards in any one of the fields that we used in our calculations in a given year. Using the annual performance data for contracts that met CMS’s data validation standards, we determined the total number of appealed denials that MAOs fully and partially overturned during the 3 years. To calculate the denial overturn rate, we divided the total number of overturned and partially overturned appealed denials by the total number of overturned, partially overturned, and upheld appealed denials. To calculate the national first-level appeal rate for the contracts with validated data, we divided the number of appeals received by the MAOs and the Quality Improvement Organization by the number of denials issued by those contracts during the 3 years. Using the 2016 performance data, we calculated contract-specific appeal and overturned denial rates. To determine the volumes and calculate the rates of appeals and denials overturned upon appeal during 201416 for the independent reviewers, we analyzed Quality Improvement Organization and Independent Review Entity data from CMS, administrative law judge data from the Office of Medicare Hearings and Appeals, and Medicare Appeals Council data from the Departmental Appeals Board. To calculate the volume of denials overturned by each reviewer during 201416, we added the number of overturned denials to the number of partially overturned denials. To calculate the denial overturn rates for each reviewer, we divided the total number of overturned and partially overturned appealed denials by the total number of overturned, partially overturned, and upheld appealed denials. Medicare Advantage Appeal Outcomes and Audit Findings Raise Concerns About Service and Payment Denials 5 OEI-09-16-00410 Assessing CMS’s 2015 Audit Findings and Enforcement Actions To determine the number of contracts that CMS cited for each type of violation, we analyzed the final audit reports that CMS issued to MAOs that were audited for Part C Organization Determinations, Appeals, and Grievances during 2015. We reviewed the reports for the 19 audited MAOs that collectively administered 140 contracts. To determine the amount of civil money penalties that were issued in response to the 2015 Medicare Advantage audit findings, and to examine the reasons for the penalties, we reviewed agency documentation for the nine MAOs that received a penalty. To describe the violations that led to sanctions for two MAOs, we reviewed the Notices of Imposition of Immediate Intermediate Sanctions that CMS issued to the MAOs. To examine the impact of the civil money penalties and sanctions on MAOs’ Star Ratings, we reviewed Star Ratings data from 2016 to 2018 and requested clarifications from CMS about their process. Limitations For this study, we examined aggregate MAO data on denials, appeals, and appealed denials that were overturned. We did not conduct a medical record review to determine whether denials were appropriate according to medical or Medicare coverage standards. Because CMS does not require MAOs to report denials or appeals data by appellant type, we were unable to examine denial, appeal, or appeal overturn rates for in-network versus out-of-network providers. Additionally, because not all MAO contracts’ data met CMS’s data validation standards, we were unable to include some MAO contracts in our analysis of appeals and overturned denials at the MAO level. Therefore, the number of MAO denials overturned upon appeal presented in this report likely under-represents the actual number of overturned denials in the Medicare Advantage program. Standards This study was conducted in accordance with the Quality Standards for Inspection and Evaluation issued by the Council of the Inspectors General on Integrity and Efficiency. Medicare Advantage Appeal Outcomes and Audit Findings Raise Concerns About Service and Payment Denials 6 OEI-09-16-00410 FINDINGS High overturn rates of appealed denials, and widespread and persistent CMS audit findings about inappropriate denials, raise concerns that some Medicare Advantage beneficiaries and providers were denied services and payments that should have been provided. This is especially concerning because beneficiaries and providers rarely used the appeals process designed to ensure access to care and payment, appealing only 1 percent of denials during 201416. Although CMS takes a variety of compliance and enforcement actions against MAOs when it identifies problems, more action is needed to address these critical issues. When Medicare When beneficiaries and providers appealed denials for preauthorization or payment requests, they were usually successful in getting the denials Advantage overturned. During 201416, beneficiaries and providers appealed more beneficiaries and than 863,000 denials to their MAOs.12 Among the first-level appeals in this providers appealed, 3-year period, beneficiaries and providers were fully or partially successful in about 649,000 cases, getting approximately 216,000 denials overturned per they were usually year. The total number of overturned denials was even higher, as successful in getting independent reviewers overturned additional denials in favor of denials overturned beneficiaries and providers when they continued to appeal upheld denials to the higher levels of review. MAOs overturned more than a half million preauthorization and payment denials at the first level of appeal For the contracts we reviewed for 201416, beneficiaries and providers filed about 607,000 appeals for which denials were fully overturned and 42,000 appeals for which denials were partially overturned at the first level of appeal. This represents a 75 percent success rate (see exhibit 2). Most of these overturned denials (82 percent) were for payment to providers for services that the beneficiary already received.13 The remaining overturned denials (18 percent) were for the preauthorization of services that the beneficiary had not yet received. See appendix C for the volumes and rates of MAO appeal outcomes by year. 12The appeal numbers on this page are rounded to the nearest thousand. 13Among all initial requests filed with MAOs during 201416, about 94 percent were requests for payment and 6 percent were for preauthorization of services. Medicare Advantage Appeal Outcomes and Audit Findings Raise Concerns About Service and Payment Denials 7 OEI-09-16-00410 An MAO may overturn its initial denial upon appeal for several reasons. In some cases, the MAO may determine that its original decision was incorrect, and therefore overturn the denial. In other cases, the MAO may determine that it made the correct initial denial decision based on the information available at the time, but find that the provider or beneficiary added new information in an appeal that demonstrates the denial should be overturned. For example, some MAOs do not pay for care provided out of network unless the beneficiary was referred by an in-network provider. In those cases, the MAO may deny the initial request if it did not include documentation of the referral, but then overturn the denial upon appeal after it receives additional documentation. Although overturned denials do not necessarily mean that MAOs inappropriately denied the initial request, each overturned denial represents a case in which beneficiaries or providers had to file an appeal to receive services or payment that are covered by Medicare. This extra step creates friction in the program and may create an administrative burden for beneficiaries, providers, and MAOs. This may be especially burdensome for beneficiaries with urgent health conditions.14 Further, although overturned payment denials do not affect access to services for the associated beneficiaries, the denials may impact future access. Providers may be discouraged from ordering services that are frequently denied—even when medically necessary—to avoid the appeals process. In 2016, MAO contract-specific overturn rates varied widely, ranging from 0 to 100 percent, with a median of 77 percent (see exhibit 3 on page 9).15 On the high end, 76 MAO contracts overturned more than 90 percent of their own denials upon appeal, including 7 contracts that overturned more than 98 percent. Although data analysis alone is not sufficient to determine the reasons for this variation, extremely high overturn rates may indicate differences in MAO behavior and performance. 14 Beneficiaries and providers may request an expedited review of appeals for urgently needed services. The required timeframes for MAOs to process appeals range from 72 hours to 60 days depending on whether the request is expedited or standard and whether it is for preauthorization or payment. 42 CFR § 422.590. 15 We calculated the range and median of contract-specific appealed denial overturn rates for the 320 MAO contracts that reported validated data in 2016 and received at least 50 appeals. Medicare Advantage Appeal Outcomes and Audit Findings Raise Concerns About Service and Payment Denials 8 OEI-09-16-00410 Independent reviewers overturned additional denials in favor of beneficiaries and providers at four levels of appeal During 201416, independent reviewers overturned an additional 80,000 denials in favor of beneficiaries and providers, or approximately 27,000 per year (see exhibit 4). There are two ways that appeals can get Medicare Advantage Appeal Outcomes and Audit Findings Raise Concerns About Service and Payment Denials 9 OEI-09-16-00410 routed to independent reviewers: some first-level appeals are reviewed by Quality Improvement Organizations rather than by MAOs, 16 and some first-level appeals that MAOs uphold are automatically forwarded to the Independent Review Entity for second-level review. If beneficiaries or providers decide to continue appealing to the higher levels of administrative review, the cases then go to administrative law judges and, finally, the Medicare Appeals Council. These independent reviewers overturned between 10 and 27 percent of the appealed denials that they reviewed. See appendix D for the volumes and rates of overturned denials for each of the independent reviewers by year. Medicare Advantage High rates of overturned denials upon appeal are especially concerning because beneficiaries and providers appealed relatively few of the total beneficiaries and number of denials issued each year. The appeals process is one of the providers rarely safeguards against inappropriate denials in Medicare Advantage and gives used the appeals beneficiaries and providers the ability to appeal denials that they believe should be overturned. However, patient advocates have raised concerns process designed to that the appeals process can be confusing and overwhelming, particularly ensure access to for critically ill beneficiaries. This may be one reason why beneficiaries and services and providers appealed only 1 percent of denials to the first level of payment appeal—reconsideration by their MAO or the Quality Improvement Organization—during 2014−16. 17 (See appendix E for the volume and rate of first-level appeals by year.) When beneficiaries and providers chose not to appeal denials, the beneficiary may have gone without the requested service, the beneficiary may have paid for the service out of pocket, or the provider may not have been paid for the service. 18 In 2016, contract-specific appeal rates varied widely, ranging from 0 to 40.5 percent, with a median of 0.9 percent.19 On the low end, 18 contracts had appeal rates lower than 0.1 percent. Those 18 contracts denied a combined 2.4 million preauthorization or payment requests in 2016, yet received only 1,838 appeals. Although data analysis alone is not sufficient to determine the reasons for variation in appeal rates, extremely low appeal rates may indicate differences in MAO behavior and performance, or 16 Quality Improvement Organizations review and determine the outcome of appeals related to discharge and discontinuation notices from inpatient acute care, comprehensive outpatient rehab, home health, or skilled nursing facilities. 17 During 2014−16, among the contracts in our review, beneficiaries and providers appealed 1.1 million out of the 101.1 million denials made by MAOs for a 1.1 percent appeal rate. 18 In-network providers typically cannot bill beneficiaries when an MAO denies a payment request, but out-of-network providers can. However, if an out-of-network provider appeals the payment denial, they must agree to waive their right to bill the beneficiary. 19 We calculated the range and median of contract-specific appeal rates for the 417 MAO contracts that reported validated data in 2016 and issued at least 50 denials. Medicare Advantage Appeal Outcomes and Audit Findings Raise Concerns About Service and Payment Denials 10 OEI-09-16-00410 differences in communication with beneficiaries and providers about the appeals process. CMS audits found Despite CMS efforts to educate MAOs about persistent problems in Medicare Advantage, each year during its audits of different MAOs, CMS widespread and finds many of the same violations as in previous years. Among these persistent problems violations, CMS audits have identified persistent problems related to denials related to denials of of care and payment. Exhibit 5 shows three types of audit violations related care and payment in to denials and the number of times they were among the five most common audit violations that CMS cited each year during 2012−16. 20 In Medicare Advantage 2015, the year we examined, of the 140 MAO contracts that CMS audited, it cited 56 percent for inappropriately denying requests and 45 percent for sending insufficient denial letters. CMS cited more than half of audited MAO contracts for inappropriately denying requests for services or payment In 2015, CMS cited 79 of the 140 audited MAO contracts (56 percent) for two types of violations related to inappropriately denying requests for preauthorization of services and/or payment. CMS cited some contracts for making the wrong clinical decision based on the information submitted by the provider or beneficiary. CMS also cited contracts for not conducting appropriate outreach before making clinical decisions, meaning that the MAO did not have all of the information needed to make a decision and did not take appropriate steps to gather information from the provider or 20 Exhibit 5 presents the number of times that three types of audit violations were among the five most common for the Organization Determinations, Appeals, and Grievances audit program area, which is one of five program areas that CMS audits in Medicare Parts C and D. Medicare Advantage Appeal Outcomes and Audit Findings Raise Concerns About Service and Payment Denials 11 OEI-09-16-00410 beneficiary.21 Failure by an MAO to make correct clinical decisions based on the information that it has, or failure to reach out to providers and beneficiaries for more information when needed, can result in beneficiary harm, financial hardship for beneficiaries and/or providers, and unnecessary use of the appeals process. CMS cited nearly half of audited MAO contracts for sending incorrect or incomplete denial letters, which may inhibit beneficiaries’ and providers’ ability to appeal In 2015, CMS cited 63 of the 140 audited MAO contracts (45 percent) for sending denial letters that did not contain important required information. MAOs must issue denial letters that clearly explain why requests were denied and how the beneficiary or provider can file an appeal. However, CMS found that some MAO denial letters did not clearly explain why a request was denied, contained incorrect or incomplete information, did not use approved language, and/or were written in a manner not easily understandable to beneficiaries. Failure to issue sufficient denial letters can impair a beneficiary’s or provider’s ability to mount a successful appeal and can result in delayed access to care, and/or financial hardship. Insufficient denial letters may be one reason that the appeal rate is so low in Medicare Advantage, especially when these letters go to beneficiaries who may be overwhelmed with medical issues or out-of-network providers who may be unfamiliar with the MAO’s appeals process. CMS has taken When CMS identifies that an MAO has performance problems, it uses several compliance and enforcement tools to address the problems. As part action to try to of these efforts, CMS requires every MAO cited for an audit violation to address MAO develop and implement a corrective action plan. CMS does not officially performance close audits until MAOs demonstrate that violations are substantially problems corrected. CMS may also impose enforcement actions on MAOs that significantly fail to comply with program requirements. CMS has continued to make changes to its compliance and enforcement actions. Since 2014, CMS has fined MAOs additional penalty amounts for “aggravating factors” such as a history of prior offense, or if a violation had been previously identified in public audit reports as a common problem. For the 2017 audits, CMS raised the maximum possible penalty for a single violation for MAOs with more than 500,000 beneficiaries enrolled in their contracts.22 21 Of the 79 contracts, 12 were cited for making the wrong clinical decision, 21 for not conducting appropriate outreach, and 46 for both violations. 22 CMS, Medicare Parts C and D Oversight and Enforcement Group, Civil Money Penalty Methodology, December 15, 2016. Medicare Advantage Appeal Outcomes and Audit Findings Raise Concerns About Service and Payment Denials 12 OEI-09-16-00410 CMS suspended new enrollment for two MAOs because of serious threats to the health and safety of their beneficiaries; one of the MAOs had a longstanding history of noncompliance After the 2015 audits, CMS imposed intermediate sanctions against two MAOs for violations that it deemed so systemic and harmful to beneficiaries that the MAOs should not market to or enroll any new beneficiaries until the problems were corrected.23 CMS may impose sanctions when it identifies a “substantial failure” to comply with CMS requirements to provide medically necessary services, and it is the most serious enforcement action before contract termination.24 CMS stated that the conduct of the MAOs, with a combined 22 contracts and nearly a half million beneficiaries, posed a “serious threat” to the health and safety of Medicare beneficiaries. Among other problems, CMS stated that MAO violations led to inappropriate delay and denial of services and increased out-of-pocket costs for beneficiaries.25 CMS noted that one of the MAOs had a longstanding history of not meeting program requirements. In the several years leading up to the audit, CMS issued numerous notices of noncompliance, warning letters, and corrective action plans to the MAO. A number of the notices were for the same violations discovered during the audit, indicating that the MAO had not made changes to address the violations. CMS fined nine MAOs a total of $1.9 million for violations related to denials and appeals; CMS had previously identified some of the violations as common problems After the 2015 audits, CMS issued $1.9 million in civil money penalties to nine MAOs for violations related to processing requests for services and payment, appeals, and grievances.26 CMS determined that these violations may have led to unnecessary delay or denial of services for beneficiaries, financial harm to beneficiaries, or preventing beneficiaries and providers from appealing. CMS determines penalty amounts for each violation using a formula that takes into account the number of beneficiaries or contracts affected, and adjusts the amount for any aggravating or mitigating factors related to the violation.27 For example, CMS fined one MAO $314,100 for inappropriately 23 The sanctions for the two MAOs remained in place for 717 months until the MAOs submitted the results of an independent audit demonstrating that the violations were corrected. 24 See 42 CFR § 422.752(a)(1). 25 CMS also cited these MAOs for violations related to their delivery of the Medicare prescription drug benefit (Medicare Part D). 26 This total does not include penalties issued to these MAOs for any Part D violations identified during the 2015 audits. 27 CMS, Medicare Parts C and D Oversight and Enforcement Group, Civil Money Penalty Methodology, December 15, 2016. Medicare Advantage Appeal Outcomes and Audit Findings Raise Concerns About Service and Payment Denials 13 OEI-09-16-00410 denying 2,094 payment requests. CMS noted that because the MAO issued these inappropriate payment denials to out-of-network providers, the providers may have billed the beneficiaries for services that should have been paid by the MAO. Five MAOs each had one violation that CMS had previously warned MAOs about in its public audit reports, and so received an “aggravating factor” penalty for not correcting the problem. Including these added penalties, total civil money penalties for Medicare Advantage audit violations for the nine MAOs ranged from $3,300 to $1 million each.28 MAO audit Although Medicare Advantage program audits are one of CMS’s most direct methods for oversight of MAOs, at the time of our review, they had only a violations will no minimal and delayed impact on MAO quality ratings, called Star Ratings. longer affect their Additionally, beginning in 2019, audit violations will no longer directly contracts’ quality impact MAO Star Ratings. CMS posts MAOs’ Star Ratings on the Medicare ratings Plan Finder website, which allows beneficiaries to evaluate differences in MAO performance when deciding which plan to enroll in. Star Ratings are also intended to incentivize good MAO performance—MAOs that receive high Star Ratings receive bonus payments and higher rebates from CMS and may increase the number of beneficiaries enrolled in their plans. The lack of a strong relationship between performance problems revealed by CMS audits and MAO Star Ratings may diminish the usefulness of the Star Ratings system as a tool for beneficiaries to compare MAOs and a tool to incentivize good MAO performance. At the time of our review, audit violations had only a minimal and delayed impact on Star Ratings The 2015 MAO audit violations discussed in this report had very little, if any, impact on their contracts’ 2017 and 2018 Star Ratings.29 MAOs that received civil money penalties or sanctions following the 2015 audits also received a deduction on the Beneficiary Access and Performance Problems measure that fed into the Star Ratings for each of their contracts.30 The measure was worth only about 3 percent of the Medicare Advantage (Part C) summary Star Rating, so even MAOs that received the maximum deduction were unlikely to see a change in their contracts’ Star Ratings. Another weakness of the Star Ratings deductions was a significant delay between when CMS discovered violations during an audit and any change in the Star Ratings (see exhibit 6 on page 15). Because there was not an 28 The amounts of the nine MAO civil money penalties for Part C violations found during the 2015 audits, from lowest to highest, were $3,300, $15,000, $22,400, $30,000, $120,950, $125,450, $258,550, $329,350, and $1,000,000. 29 Of the 11 MAOs that received an enforcement action following the 2015 audits, 3 received a deduction on their 2017 Star Ratings and 8 received a deduction on their 2018 Star Ratings. 30 At the time, the Beneficiary Access and Performance Problems measure was 1 of 34 quality measures that made up the Medicare Advantage (Part C) summary Star Rating. Medicare Advantage Appeal Outcomes and Audit Findings Raise Concerns About Service and Payment Denials 14 OEI-09-16-00410 immediate impact on MAOs’ Star Ratings, by the time the Star Ratings deductions went into effect, one-third of the contracts operated by MAOs that received an enforcement action because of 2015 audit results were no longer operational. Therefore, these contracts never received a Star Ratings deduction in response to the audit violations. Exhibit 6: MAO violations discovered during program audits did not impact their Star Ratings until an average of 2 years later. Beginning in 2019, audit violations will no longer directly impact MAOs’ Star Ratings CMS will remove the direct link between audit results and Star Ratings beginning in 2019. CMS stated that it received mixed reactions to the removal of the Beneficiary Access and Performance Problem measure from the Star Ratings.31 Beneficiary advocates strongly opposed the removal of the measure, stating that it will mask MAO behaviors that could pose a serious threat to the health and safety of beneficiaries. On the other hand, most MAOs supported the removal of the measure, in part because CMS does not have audit information for each contract each year. Instead of having audits directly impact Star Ratings, CMS added an indicator on the Medicare Plan Finder website to alert beneficiaries if contracts are under sanction. The indicator links to the MAO’s sanction notice, which outlines the violations that CMS identified. Contracts under sanction are also unable to enroll new beneficiaries. However, other performance problems revealed by CMS audits will not be reflected in the Star Rating of an MAO, which diminishes the usefulness of the Star Ratings system as a tool for beneficiaries to compare MAO performance. The lack of a strong link between audit results and Star Ratings also means that MAOs that receive serious enforcement actions (including sanctions) CMS, Announcement of Calendar Year (CY) 2019 Medicare Advantage Capitation Rates and 31 Medicare Advantage and Part D Payment Policies and Final Call Letter, p. 127, April 2, 2018. Medicare Advantage Appeal Outcomes and Audit Findings Raise Concerns About Service and Payment Denials 15 OEI-09-16-00410 can still receive high Star Ratings—and quality bonus payments—in the same year. Of the 22 contracts that were sanctioned in 2016 for 2015 audit violations, 6 contracts received overall Star Ratings of 4 or higher for 2016. Medicare Advantage Appeal Outcomes and Audit Findings Raise Concerns About Service and Payment Denials 16 OEI-09-16-00410 CONCLUSION AND RECOMMENDATIONS MAOs may have an incentive to deny preauthorization of services for beneficiaries, and payments to providers, in order to increase profits. High overturn rates when beneficiaries and providers appeal denials, and CMS audit findings about inappropriate denials, raise concerns that some beneficiaries and providers may not be getting services and payment that MAOs are required to provide. These findings are particularly concerning because beneficiaries and providers rarely use the appeals process designed to ensure access to care and payment, and CMS has repeatedly cited MAOs for issuing incorrect or incomplete denials letters, which can impair a beneficiary’s or provider’s ability to mount a successful appeal. Additionally, because audit violations will no longer be reflected in Star Ratings, beneficiaries may be unaware of MAO performance problems when selecting a plan. Although CMS uses several compliance and enforcement tools to address MAO performance problems, more action is needed to address these widespread and persistent problems in Medicare Advantage. We recommend that CMS: Enhance its oversight of MAO contracts, including those with extremely high overturn rates and/or low appeal rates, and take corrective action as appropriate Given the persistent audit findings related to inappropriate denials and insufficient denial letters, CMS should conduct additional oversight of MAOs, including those with extremely high overturn rates or extremely low appeal rates. This report identified such MAO contracts for 2016, which we will provide to CMS in a separate memorandum. CMS should conduct a similar analysis for the 2017 annual performance data to identify additional MAOs that warrant enhanced oversight. In addition, CMS may want to analyze the annual performance data to identify other indicators of potential problems that go beyond this analysis, such as high denial rates or low rates of preauthorization requests. Because there may be many reasons why these MAOs had extreme rates, CMS should engage with the MAOs to determine whether they are meeting program requirements and take corrective action as appropriate. Engagement could include having account managers meet with MAOs to determine why they had extreme rates, conducting a small probe review of denial or appeal cases, or other steps to determine the root causes of the rates. If through these efforts CMS identifies that an MAO is not meeting program requirements, it should take appropriate corrective action to improve compliance. These actions could include providing technical assistance, ongoing monitoring, or conducting additional audits. If this Medicare Advantage Appeal Outcomes and Audit Findings Raise Concerns About Service and Payment Denials 17 OEI-09-16-00410 analysis and enhanced oversight achieves positive results, CMS should continue it in future years. Address persistent problems related to inappropriate denials and insufficient denial letters in Medicare Advantage CMS audit results demonstrate that there are persistent problems related to denials of care and payment in Medicare Advantage, including (1) insufficient denial letters issued to beneficiaries and providers, (2) insufficient outreach before issuing denials, and (3) incorrect clinical decisions. Although CMS takes steps to address individual poor-performing MAOs, CMS should take program-level action to address these persistent problems. Actions could include a combination of technical assistance, training, education, and increased monitoring or enforcement actions for MAOs that exhibit these persistent problems. For example, CMS could apply additional aggravating factors to civil money penalties for these violations on top of the existing factors. CMS also could require individual MAOs with repeated violations to hire independent auditors to perform program audits more frequently than CMS is able to. Provide beneficiaries with clear, easily accessible information about serious violations by MAOs Because audit results no longer impact Star Ratings, CMS should develop another method for informing beneficiaries of serious violations identified by audits, including those that lead to civil money penalties. This information should be clear, meaningful, and easily accessible to beneficiaries in places where beneficiaries typically access information, such as on the Medicare Plan Finder website. CMS already includes information about MAO sanctions on the Medicare Plan Finder website, and could expand this effort to include civil money penalties, as it proposed in the 2019 draft call letter.32 CMS could also consider including information about audit violations in addition to enforcement actions. CMS could also revisit policy options for adjusting Star Ratings in response to audits and enforcement actions, such as adding a new Star Ratings measure that takes enforcement actions into account, or by directly adjusting an MAO’s overall and summary Star Ratings in response to enforcement actions. This would help to ensure that Star Ratings serve as a “one-stop shop” for beneficiaries to evaluate differences in performance among MAOs. 32CMS, Advance Notice of Methodological Changes for Calendar Year (CY) 2019 for Medicare Advantage (MA) Capitation Rates, Part C and Part D Payment Policies and 2019 draft Call Letter, February 1, 2018. Medicare Advantage Appeal Outcomes and Audit Findings Raise Concerns About Service and Payment Denials 18 OEI-09-16-00410 CMS COMMENTS AND OIG RESPONSE In response to the draft report, CMS stated that it is strongly committed to oversight and enforcement of the Medicare Advantage program and it concurred with all three recommendations. CMS concurred with the first recommendation to enhance its oversight of MAO contracts, including those with extremely high overturn rates and/or low appeal rates, and take corrective action as appropriate. Although CMS noted that its current oversight and audit process already applies many of the oversight elements that we mentioned, it did not indicate how it planned to enhance oversight of MAOs with extremely high overturn rates or extremely low appeal rates. CMS also concurred with the second recommendation to address persistent problems related to inappropriate denials and insufficient denial letters in Medicare Advantage. CMS noted that its audit process addresses individual poor-performing MAOs, but it did not indicate the actions that it plans at the program-level to address these persistent problems. Lastly, CMS concurred with the third recommendation to provide beneficiaries with clear, easily accessible information about serious violations by MAOs. CMS noted that it is testing options to provide beneficiaries with clear, meaningful, and accessible information on MAO performance that will help them make the best decisions about their care. For the full text of CMS’s comments, see appendix F. Medicare Advantage Appeal Outcomes and Audit Findings Raise Concerns About Service and Payment Denials 19 OEI-09-16-00410 APPENDIX A: Medicare Advantage Appeals Process The Medicare Advantage appeals process includes four levels of administrative review by several entities. At each level of review, the denial may be overturned, partially overturned, or upheld. If the denial is overturned, then the MAO must authorize or pay for the service.33 If the denial is not fully overturned—either upheld or partially overturned—the beneficiary or provider may appeal the decision to the next higher level of review. First-level appeals: MAO and Quality Improvement Organization. For most first-level appeals, the MAO itself must reconsider its decision to deny authorization or payment for a service. The MAO must review the evidence that led to the original decision and any additional evidence the beneficiary or provider may submit as part of the appeal. MAOs maintain separate processes to review and resolve appeals from in-network and out-of-network providers. Appeals from in-network providers generally are considered contractual disputes that are handled by the MAO directly and cannot be appealed to the higher levels of administrative review. Appeals from out-of-network providers who formally waive their right to bill a beneficiary for the service under appeal may go through the same appeal process as beneficiaries. If the MAO upholds its denial for appeals filed by beneficiaries, in-network providers filing on behalf of a beneficiary, or out-of-network providers, it must forward the appeal to the Independent Review Entity for review. Beneficiary and Family Centered Care Quality Improvement Organizations review first-level appeals of discharge from a hospital or the discontinuation of certain types of services.34 These Quality Improvement Organizations work under the direction of CMS and are staffed by doctors and other healthcare professionals trained to review medical care and help beneficiaries with complaints about the quality of care. If the Quality Improvement Organization upholds the MAO’s decision to discharge the beneficiary or to discontinue services, beneficiaries may request that the Quality Improvement Organization reconsider its decision. If the Quality 33MAOs may also appeal overturned denials at the third and fourth levels of appeal. 34Beneficiary and Family Centered Care Quality Improvement Organizations review and determine the outcome of appeals related to discharge and discontinuation notices from inpatient acute care, comprehensive outpatient rehab, home health, or skilled nursing facilities. Medicare Advantage Appeal Outcomes and Audit Findings Raise Concerns About Service and Payment Denials 20 OEI-09-16-00410 Improvement Organization upholds its decision again, the beneficiary may appeal to administrative law judges at the third level of appeal.35 Second-level appeals: Independent Review Entity. The Independent Review Entity reviews appealed denials that MAOs uphold to determine whether MAOs made the correct decision. The Independent Review Entity is a CMS contractor that employs physicians and other consultants to review the denials and determine whether MAOs complied with relevant Medicare requirements. If the Independent Review Entity upholds or partially overturns the MAO’s denial, beneficiaries and providers may choose to appeal to the next level. Third-level appeals: administrative law judge. Administrative law judges, within the Office of Medicare Hearings and Appeals, review appeals of Independent Review Entity or Quality Improvement Organization decisions.36 If the beneficiary, provider, or MAO is dissatisfied with the decision of the administrative law judge, they may choose to appeal to the next level. Fourth-level appeals: Medicare Appeals Council. The Medicare Appeals Council, within the Departmental Appeals Board, reviews beneficiary, provider, and MAO appeals of decisions by an administrative law judge. The Council provides the last level of review within the Department of Health and Human Services’ Medicare Advantage appeals process. If beneficiaries, providers, or MAOs are dissatisfied with the decision of the Council, they may appeal to Federal district court by filing a civil action. 35 Under some circumstances, beneficiaries may appeal directly to administrative law judges when the Quality Improvement Organization upholds an MAO’s decision. For additional details on Quality Improvement Organization appeals, see 42 CFR § 422.622 and CMS, Medicare Managed Care Manual, Chapter 13, sections 90.2 and 160. 36 Beginning in March 2017, appeals at the third level of the administrative appeals process may be decided by an administrative law judge or, if a hearing is not necessary, by an attorney adjudicator. See 82 Fed. Reg. 4974, 4981-92 (2017). Medicare Advantage Appeal Outcomes and Audit Findings Raise Concerns About Service and Payment Denials 21 OEI-09-16-00410 APPENDIX B: Detailed Methodology For this study, we analyzed data to examine (1) the volumes and rates of denied services and payments that were appealed and overturned at each level of review in Medicare Advantage during 201416, and (2) CMS’s 2015 audit findings and enforcement actions related to denials and appeals in Medicare Advantage. To ensure our understanding of the submitted data and documentation, we followed up in writing with officials knowledgeable about the program. Determining Volumes and Rates of Appeals and Overturned Denials During 201416 To determine the volumes and calculate the rates of appeals and overturned denials at each level of the Medicare Advantage appeals process for 2014–16, we analyzed data from CMS, the Office of Medicare Hearings and Appeals, and the Departmental Appeals Board. MAOs. To calculate the volumes and rates of appeals and denials overturned upon appeal at the MAO level, we collected annual performance data from CMS for each MAO contract for 201416. CMS requires MAOs to report annual performance-related data for each contract that they administer.37 Among other data, MAOs must report the numbers of determinations and their outcomes (i.e., the numbers of requests for preauthorization of services and payment that the MAO approved and denied) and the numbers of appeals and their outcomes.38 These data go through two external reviews to verify the validity of the reported data.39 In the data sets that CMS provided to OIG, contract-specific data was missing from fields where the contract did not meet CMS’s data validation standards. For example, some contracts passed data validation standards for the number of preauthorization denials overturned upon appeal, but not for the number of preauthorization denials upheld. This prevented us from calculating an overturn rate for those contracts. Therefore, we could not include in our analyses any contracts that had missing values in any fields that we used in our calculations in a given year. We analyzed data from a total of 581 contracts that submitted validated data in 1 or more of the 3 years. The numbers of contracts that were and were not included in our analysis for each year, and the numbers of beneficiaries associated with those contracts, are outlined in exhibit 7 on page 21. The contracts that we 37 42 CFR § 422.516(a). 38 These data include requests and appeals received from in-network and out-of-network providers. 39 For more information on CMS’s data validation process, see CMS’s Part C and Part D data validation website. Medicare Advantage Appeal Outcomes and Audit Findings Raise Concerns About Service and Payment Denials 22 OEI-09-16-00410 included in our analysis covered between 83 and 89 percent of beneficiaries each year. Exhibit 7: OIG could not include between 86 and 106 contracts in each year of analysis because some of the data for those contracts did not meet CMS’s validation standards. Year Contracts Beneficiaries enrolled Contracts not included Beneficiaries enrolled included in in contracts included because of data in contracts not OIG analysis in analysis validation issues included in analysis 2014 409 12,612,173 106 1,992,547 2015 419 12,831,596 95 2,627,704 2016 422 15,083,075 86 1,825,944 Source: OIG analysis of 201416 Medicare Advantage annual performance data, 2018. Using the annual performance data for contracts with validated data, we examined the outcomes of the 1.3 billion initial preauthorization and payment decisions and the 863,217 appeal decisions that MAOs issued during 201416. We calculated the total number of initial requests that MAOs denied during the 3 years. We also calculated the total number of appealed denials that MAOs fully and partially overturned during the 3 years. To calculate the overall overturn rate, we divided the total number of fully and partially overturned appealed denials by the total number of overturned, partially overturned, and upheld denials. See appendix C for the volumes and rates of MAO appeal outcomes by year. Because first-level appeals are filed with either the MAO or the Quality Improvement Organization, to calculate the total number of first-level appeals and the overall appeal rate for the contracts with validated data, we analyzed appeals data from both sources. To calculate the total number of first-level appeals for contracts with validated data, we added the 863,217 first-level appeals filed with MAOs to the 257,852 appeals filed with the Quality Improvement Organization for those same contracts during 201416. To calculate the first-level appeal rate for the contracts in our analysis, we divided the total number of first-level appeals by the total number of denials issued by the contracts during 201416. This calculation did not include dismissed appeals because CMS did not require MAOs to report that data during 201415. See appendix E for the volume and rate of first-level appeals by year. In the annual performance data, MAOs report the number of appeal decisions that they issued in each year, but not the dates the appeals were filed or denials were issued. Therefore, some of the appeal decisions made early in 2014 were likely for denials issued in 2013, which were not captured in our data. Similarly, some of the denials issued at the end of 2016 were likely not appealed until 2017, so those appeal decisions were also not captured in our data. We could not adjust the appeal rate based on when Medicare Advantage Appeal Outcomes and Audit Findings Raise Concerns About Service and Payment Denials 23 OEI-09-16-00410 denials were issued and appeals filed, so we calculated the first-level appeal rate by dividing the total number of appeal decisions issued during the 3 years by the number of denials issued during the same period. To examine the contract-specific first-level appeal rates and the contract-specific MAO denial overturn rates, we analyzed the 2016 annual performance data for the 422 contracts that reported validated data. We calculated the ranges and medians and reviewed the distributions of the contract-specific rates. Because contract-specific rates can be skewed by low volumes, we did not include low-volume contracts in this analysis. For the contract-specific appeal rate, we analyzed data only for the 417 contracts that issued at least 50 denials. Similarly, for the contract-specific MAO overturn rate, we analyzed data only for the 320 contracts that received at least 50 MAO appeals. Independent Reviewers. To calculate the volumes and rates of overturned denials for the independent reviewers, we collected data on appeals received by each entity during 201416 from CMS, the Office of Medicare Hearings and Appeals, or the Departmental Appeals Board. Because independent reviewers reported their own appeals data, we were able to examine higher level appeals for all MAO contracts, including contracts that we could not examine at the MAO-level because of data validation issues. To calculate the volume of denials overturned by each reviewer during 201416, we added the number of overturned denials to the number of partially overturned denials. To calculate the denial overturn rates, we divided the number of overturned and partially overturned denials by the number of denials that were overturned, partially overturned, or upheld by the reviewer. We did not examine appeals for which the entity did not issue a decision based on the merits of the case, such as appeals that were dismissed, withdrawn, or still pending a decision. For appeals to the Medicare Appeals Council, we calculated the volumes and rates of overturned denials for cases filed by beneficiaries and providers only, and did not examine cases filed by MAOs. See appendix D for the volume and rate of overturned denials for each independent reviewer by year. Assessing CMS’s 2015 Audit Findings and Enforcement Actions To determine the number of contracts that CMS cited for each type of violation, we analyzed the final audit reports that CMS issued to MAOs that were audited for Medicare Advantage Organization Determinations, Appeals, and Grievances during 2015. We reviewed the reports for the 19 audited MAOs that collectively administered 140 contracts. To determine the amount of civil money penalties that were issued in response to the 2015 Medicare Advantage audit findings, and to examine the reasons for the penalties, we reviewed agency documentation for the nine MAOs that received a penalty. To describe the violations that led to Medicare Advantage Appeal Outcomes and Audit Findings Raise Concerns About Service and Payment Denials 24 OEI-09-16-00410 sanctions for two MAOs, we reviewed the Notices of Imposition of Immediate Intermediate Sanctions that CMS issued to the MAOs. To examine the impact of the civil money penalties and sanctions on MAOs’ Star Ratings, we reviewed Star Ratings data from 2016 to 2018 and requested clarifications from CMS about their process. Medicare Advantage Appeal Outcomes and Audit Findings Raise Concerns About Service and Payment Denials 25 OEI-09-16-00410 APPENDIX C: Volumes and Rates of MAO Appeal Outcomes, 201416 2014 2015 2016 Total MAO contracts included in this analysis 409 419 422 581* Number of appeals filed with MAOs 277,098 279,824 306,295 863,217 Number of fully overturned denials 186,883 192,041 228,031 606,955 Number of partially overturned denials 20,495 18,858 2,594 41,947 Number of denials upheld 69,720 68,925 75,670 214,315 Rate of successful appeal (fully or partially 74.84% 75.37% 75.30% 75.17% overturned denials) Rate of fully overturned denials 67.44% 68.63% 74.45% 70.31% Rate of partially overturned denials 7.40% 6.74% 0.85% 4.86% Rate of upheld denials 25.16% 24.63% 24.70% 24.83% This represents the total number of unique contracts included in our analyses. * Source: OIG analysis of 201416 annual performance data for contracts that reported validated data, 2018. Medicare Advantage Appeal Outcomes and Audit Findings Raise Concerns About Service and Payment Denials 26 OEI-09-16-00410 APPENDIX D: Volumes and Rates of Overturned Denials by Independent Reviewers, 201416 2014 2015 2016 Total Level 1: Quality Improvement Organization Number of appeal decisions issued 77,023 88,423 94,480 259,926 Number of denials overturned or 23,339 22,334 21,356 67,029 partially overturned Rate of denials overturned 30.30% 25.26% 22.60% 25.79% Level 2: Independent Review Entity Number of appeal decisions issued 33,734 36,457 45,796 115,987 Number of denials overturned or 3,718 3,530 4,208 11,456 partially overturned Rate of denials overturned 11.02% 9.68% 9.19% 9.88% Level 3: Administrative Law Judge Number of appeal decisions issued 1,145 1,515 1,632 4,292 Number of denials overturned or 251 481 430 1,162 partially overturned Rate of denials overturned 21.92% 31.75% 26.35% 27.07% Level 4: Medicare Appeals Council Number of appeal decisions issued 139 97 30 266 for cases brought by beneficiaries and providers Number of denials overturned or 38 18 6 62 partially overturned for these cases Rate of denials overturned in 27.34% 18.56% 20.00% 23.31% favor of beneficiaries and providers Source: OIG analysis of 201416 data from CMS, the Office of Medicare Hearings and Appeals, and the Departmental Appeals Board, 2018. Medicare Advantage Appeal Outcomes and Audit Findings Raise Concerns About Service and Payment Denials 27 OEI-09-16-00410 APPENDIX E: Volume and Rate of FirstLevel Appeals, 201416 2014 2015 2016 Total MAO contracts included in this analysis 409 419 422 581* Number of denials issued (full and partial) 28,907,329 35,662,934 36,565,990 101,136,253 Total number of first-level appeals 348,058 365,016 407,995 1,121,069 Number of appeals filed with MAOs for these 277,098 279,824 306,295 863,217 contracts Number of appeals filed with the Quality 70,960 85,192 101,700 257,852 Improvement Organization for these contracts Rate of first-level appeal 1.20% 1.02% 1.12% 1.11% This represents the total number of unique contracts included in our analyses. * Source: OIG analysis of 201416 annual performance data and Quality Improvement Organization data for contracts that reported validated data, 2018. Medicare Advantage Appeal Outcomes and Audit Findings Raise Concerns About Service and Payment Denials 28 OEI-09-16-00410 APPENDIX F: CMS Comments Medicare Advantage Appeal Outcomes and Audit Findings Raise Concerns About Service and Payment Denials 29 OEI-09-16-00410 Medicare Advantage Appeal Outcomes and Audit Findings Raise Concerns About Service and Payment Denials 30 OEI-09-16-00410 ACKNOWLEDGMENTS Rosemary Rawlins served as the team leader for this study, and Ivy Ngo served as the lead analyst. Others in the Office of Evaluation and Inspections who conducted the study include Sarah Ambrose. Office of Evaluation and Inspections staff who provided support include Clarence Arnold, Joe Chiarenzelli, Evan Godfrey, and Michael Novello. Other Office of Inspector General staff who provided support include Jessica Swanstrom. This report was prepared under the direction of Blaine Collins, Regional Inspector General for Evaluation and Inspections in the San Francisco regional office, and Abby Amoroso and Michael Henry, Deputy Regional Inspectors General. To obtain additional information concerning this report or to obtain copies, contact the Office of Public Affairs at Public.Affairs@oig.hhs.gov. Medicare Advantage Appeal Outcomes and Audit Findings Raise Concerns About Service and Payment Denials 31 OEI-09-16-00410 ABOUT THE OFFICE OF INSPECTOR GENERAL The mission of the Office of Inspector General (OIG), as mandated by Public Law 95-452, as amended, is to protect the integrity of the Department of Health and Human Services (HHS) programs, as well as the health and welfare of beneficiaries served by those programs. This statutory mission is carried out through a nationwide network of audits, investigations, and inspections conducted by the following operating components: Office of Audit The Office of Audit Services (OAS) provides auditing services for HHS, either by conducting audits with its own audit resources or by overseeing audit Services work done by others. Audits examine the performance of HHS programs and/or its grantees and contractors in carrying out their respective responsibilities and are intended to provide independent assessments of HHS programs and operations. These assessments help reduce waste, abuse, and mismanagement and promote economy and efficiency throughout HHS. Office of Evaluation The Office of Evaluation and Inspections (OEI) conducts national evaluations to provide HHS, Congress, and the public with timely, useful, and reliable and Inspections information on significant issues. These evaluations focus on preventing fraud, waste, or abuse and promoting economy, efficiency, and effectiveness of departmental programs. To promote impact, OEI reports also present practical recommendations for improving program operations. Office of The Office of Investigations (OI) conducts criminal, civil, and administrative investigations of fraud and misconduct related to HHS programs, Investigations operations, and beneficiaries. With investigators working in all 50 States and the District of Columbia, OI utilizes its resources by actively coordinating with the Department of Justice and other Federal, State, and local law enforcement authorities. The investigative efforts of OI often lead to criminal convictions, administrative sanctions, and/or civil monetary penalties. Office of Counsel to The Office of Counsel to the Inspector General (OCIG) provides general legal services to OIG, rendering advice and opinions on HHS programs and the Inspector operations and providing all legal support for OIG’s internal operations. General OCIG represents OIG in all civil and administrative fraud and abuse cases involving HHS programs, including False Claims Act, program exclusion, and civil monetary penalty cases. In connection with these cases, OCIG also negotiates and monitors corporate integrity agreements. OCIG renders advisory opinions, issues compliance program guidance, publishes fraud alerts, and provides other guidance to the healthcare industry concerning the anti-kickback statute and other OIG enforcement authorities.