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How could new Medicare Advantage plan rules reduce problems in the program?

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Abe Wischnia

Special features columnist

New rules may finally reduce the problem of Medicare Advantage plans that deny patients treatment. They also could temper the content of those annoying Medicare Advantage commercials on TV.

The Center for Medicare and Medicaid Services (CMS) published new rules on April 12, 2023 that focus primarily on Medicare Advantage (MA) Plans. They include new requirements that should limit the ability of MA plans to use prior authorization (PA) to deny medically necessary care.

The structure of Medicare

Medicare beneficiaries must choose between two alternative models for accessing their health care.

  • Original Medicare. Original Medicare is the fee-for-service model. You can see any doctor, specialist, lab, hospital or other provider who accepts Medicare anywhere in the U.S. There are no network restrictions. Providers bill Medicare for treatments. Medicare pays the providers after they treat you or provide a covered service. Original Medicare does not require prior authorization for Medicare-covered services.
  • Medicare Advantage (Part C). The alternative is Medicare Advantage (MA), also known as Part C. Medicare provides a contract to these private insurance companies. They receive a fixed monthly fee from Medicare for each patient. The national average is about $1,170 per month. That fixed fee does not change, regardless of how often the patient sees a doctor or other provider. Most of the MA plans use the HMO model, requiring that you get all your medical services from their network of providers. If you go outside their network for a medical service, you will pay for it in full, out of your own pocket. You may find that the networks for many of these plans are limited.

Medicare Advantage prior authorization

Prior authorization is not necessarily bad. It can improve efficiency and reduce costs by avoiding unnecessary tests and treatment. It helps these organizations operate within the fixed monthly fee payment model.

The problem is that there have been too many findings of Medicare Advantage plans using opaque prior authorization decisions to improperly deny medically necessary care and treatments that are covered by Original Medicare.

The new rules still allow Medicare Advantage plans to use prior authorization to ensure services meet coverage rules. However, they limit the criteria that the plans can apply to deny a treatment or a service.

Regular readers of my column may recall my recent report about Bob Miller of Columbus, OH. He needed cataract surgery on both eyes. However, after the surgery on the first eye, his MA plan denied prior authorization for surgery on his second one.

His case is not an isolated example. In fact, according to a report by the Office of the Inspector General of The U.S. Department of Health and Human Services, Medicare Advantage plans have “widespread and persistent problems related to inappropriate denials of services and payment.”

The denials can delay or prevent someone from getting medically necessary care or force them to pay out of pocket for services that are covered by Medicare. Those who cannot afford to pay out of pocket often go without needed care. Too many don’t go through the appeals process to get that prior authorization denial reversed.

Some Medicare prior authorization rule changes

Among the prior authorization changes, the new rules require Medicare Advantage plans to:

  • Follow traditional Medicare coverage guidelines when making medical necessity determinations.
  •  Allow a prior authorization approval to be valid for as long as medically necessary to avoid disruptions in a patient’s care in accordance with applicable coverage criteria, the patient’s medical history, and the treating provider’s recommendation. That rule should prevent situations like Bob Miller’s from happening.
  • Post internal coverage criteria and provide a public summary of evidence that was considered to make medical necessity determinations.
  • Establish a committee, led by a plan’s Medical Director, that reviews utilization policies, including prior authorization.

The new prior authorization rules take effect in January 2024. To quote from the rules document, “This codifies CMS’s existing expectations about the appropriate use of prior authorization and will provide important beneficiary protections that prior authorization processes are not used as a barrier to accessing medically necessary services.”

Addressing problems with Medicare Advantage advertising

I’m happy to see that the document has a section addressing problems with the way Medicare Advantage plans are marketed. Medicare’s annual open enrollment period from Oct. 15 – Dec. 7 has been open season for an annoying and sometimes misleading advertising blitz.

The ads in all media, but especially television and newspapers, reflect efforts by insurance companies to get people to change from Original Medicare to Medicare Advantage or to switch from one plan to another.

Medicare Advantage TV commercials are all over the cable channels, and news shows that draw an older audience. They typically feature an aged celebrity or former athlete explaining how to get extra benefits not covered by Medicare. These ads will often include the phrase “get all the benefits you deserve.” Some promise to add money to your monthly social security benefit. The ads urge you to call a toll-free number to get those extra benefits.

Those ads are usually placed by marketing companies that collect leads and sell them to insurance brokers and agents. By calling that toll-free number, you are giving permission for insurance agents to call you. The agents often represent a limited number of Medicare Advantage plans, and their job is to sell you one. Furthermore, those promised extra benefits might not be available where you live or be limited. But too often, the insurance representatives don’t disclose those facts.

The new marketing rules take effect on Sept. 30 of this year, in advance of the next annual open enrollment period. That should mean more honest (if not less obnoxious) Medicare ads by early fall.

Some new rules for Medicare Advantage marketing

Among the changes, those marketing companies now:

  • Will be prohibited from advertising extra benefits in a service area where those benefits are not available, with some exceptions for when it’s unavoidable. For example, a Medicare Advantage plan advertises certain benefits in a Washington, D.C. newspaper. While those specific benefits are only available to plan members in Washington, D.C., the local distribution of this newspaper covers Washington, D.C., parts of Maryland, and parts of Virginia. In this case, the marketing of benefits that are not available to all readers is unavoidable since the “normal” distribution of the local newspaper is greater than the service area of the plan.  
  • Will not be allowed to tout phony savings you might get from enrolling in their plan if the savings are based on comparisons to people without insurance.
  • Must disclose in their materials which plans they represent.
  • If the ads use superlatives such as “the best plan,” “the most benefits,” or “the largest network,” etc., they will have to substantiate the claims with a reference consumers can check. 
  • Whenever the consumer is considering switching to a new plan the agent is selling, agents will be required to explain the effect of that enrollment choice on their current coverage.
  • Their marketing materials also will have to tell consumers that they can get additional information from the government-funded State Health Insurance Assistance Program (SHIP).

Banning Misleading Use of the Medicare Name

Another ongoing problem has been marketing companies using the Medicare name, CMS logo and pictures of a Medicare card in their newspaper, direct mail and TV ads. That can be confusing to consumers who might assume that the material is from Medicare. 

The new rules prohibit the use of the Medicare name, logo, or products in a misleading manner in marketing MA plans. Using the Medicare Card in marketing materials will require prior authorization by CMS.

The final set of rules, as published in the Federal Register, runs 724 pages and covers many important changes beyond what I’ve mentioned so far. They also address specific issues with respect to equity and accessibility.

It all sounds good. But the skeptic in me wonders whether CMS will have the political wherewithal, along with financial and investigative resources, to really enforce all these new rules against large insurance companies. I haven’t been that impressed by the CMS enforcement efforts in the past, so I wish I could express more confidence.

But we’ll get our first indication when the new Medicare Advantage ads start showing up this fall. (Abe Wischnia, Consumer Rescue)

*If you have a question or concern about your Medicare plan, feel free to reach out to Abe directly here. Your problem may become the subject of a future column. 

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Abe Wischnia

Abe Wischnia is a special features columnist at Consumer Rescue, focusing heavily on the Medicare system. His goal is to help seniors navigate the complex rules, coverage issues, plans, and premiums while also helping his readers steer clear of scams and fraud. Abe started his career as a television news reporter and newscaster. He later transitioned to roles as a senior public relations and investor relations executive for companies in technology and biotech. With degrees in journalism and an MBA, Abe has written for newspapers, television news and documentaries, magazines, and corporate publications.