Medicare Advantage (MA) plans limit use of Medicare-covered services, in part, through pre-service (prior) authorization requirements for post-acute care (PAC), including care provided by a skilled nursing facility (SNF), inpatient rehabilitation facility (IRF), or long-term acute care hospital (LTCH). If an MA plan denies a request for PAC, MA enrollees and their healthcare providers can challenge the denial by appealing the denial decision to the MA plan (requesting a redetermination). If the MA plan again denies the prior authorization request, the appeal is automatically sent to the CMS’ Independent Review Entity (IRE) as a Level 2 appeal.
In this blog, we report trends in Medicare’s IRE decisions related to institutional post-acute care (SNF, IRF, and LTCH). We examined IRE decisions between 2020 and quarter 1 (Q1) of 2024 using data from the Medicare Parts C & D IRE Decision Database.
IRE Determinations for Post-Acute Care. In Table 1, we document that very few appeals were overturned by the IRE for LTCH, SNF, and IRF care. The overturn rate was exceptionally low for LTCHs, less than 1 percent.
Table 1. Post-Acute Care and IRE Determinations (Between January 1, 2020 and March 31, 2024)
Source: KNG Health analysis of Medicare Parts C & D IRE Decision Database. *IRE Appeals Upheld also includes cases that were determined to be partially favorable.
Changes in Prior Authorization Requirements and Early Assessment of Impact on IRE Determinations. In April 2023, CMS released a rule that clarified clinical requirements to ensure beneficiaries in MA plans receive equal access to treatment they would be eligible for under Traditional Medicare (TM). Although CMS used the rule to clarify existing prior authorization requests, many of the provisions introduced in the rule were effective beginning January 1, 2024. The rule brings forward changes to medical necessity determinations made by MA plans to align with TM coverage guidelines and minimize disruptions in continuity of care.
Given the CMS prior-authorization requirements for MA plans, an early assessment can be conducted to determine if this resulted in any change in rates of the IRE overturning appeal denials. We observe an increase in IRE overturn rates for 2024 Q1 for LTCHs (Figure 1). However, the opposite is true for IRFs and SNFs who saw a decrease in appeals overturned, although overturn rates varied over the time period for IRFs and SNFs. As new appeals data is released in the decision database, further analysis would be required to assess whether the changes seen in IRE overturn rates persist and if there are shifts in reasonings as to why IREs might uphold MA plan denials.
Implications of Prior Authorization Denials in Accessing Care. A 2022 HHS OIG report found that MA plans denied prior authorization and payments for services that met TM coverage rules and would otherwise be covered by TM. In the report, stays in PAC facilities were one of the most commonly denied types of service by MA plans. There is a lack of transparency in the information that MA plans send to IREs for the appeals process as well as the criteria used by the IRE to makes its determinations. CMS’s clarification of MA prior authorization requirements–specifically stating that MA plans cannot use criteria more restrictive than used in TM–is an important first step in standardizing medical necessity decisions. However, there is a continued need for guidance and transparency in prior authorization decisions and redeterminations by the IRE regarding PAC. One limitation of our analysis is that the Medicare Part C & D IRE database only provides information on Level 2 appeals. Therefore, we do not have data to reflect the prior authorizations that were approved by the plan. It is possible that MA plans are approving prior authorization requests at a higher rate. Discussions with PAC providers suggest, however, that this is not the case. CMS will need to ensure that IRE decisions are consistent with the requirements of the rule and increase the transparency for how the IRE reaches its determinations.
Services : Blog, Practice Area - Healthcare Reform and Payment Innovation Expertise: Medicare, Medicare Advantage
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Jermaine Piper is a Research Assistant in the Healthcare Reform and Payment Innovation Practice. Mr. Piper’s work focuses on conducting environmental scans on topics such as value-based payment programs, socioeconomic disparities in health care technology access, and financial indicators linked to hospital closures. In addition, Mr. Piper’s work includes data visualization for the construction of health sector chartbooks and quantitative cost-criterion analyses for new technology add-on payment (NTAP) applications for CMS. Furthermore, Mr. Piper also models payment adjustment factors for outpatient prospective payment systems (OPPS) and ambulatory surgical centers (ASC) settings for a state workers compensation program, utilizing proposed and final rules provided by CMS. Prior to joining KNG Health, Mr. Piper worked directly in health care as a Phlebotomist and Medical Laboratory Assistant for a local hospital. In this role, he provided direct patient care and facilitated the running of the hospital’s outpatient clinic and laboratory. Mr. Piper has a Master’s in Public Health with a concentration in Health Policy Analysis and Evaluation at the University of Maryland School of Public Health and has a BS in Public Health from the University of Maryland College Park. |
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Lane Koenig is President and Founder of KNG Health Consulting and Director of the Healthcare Reform and Payment Innovation Practice. He is a healthcare economist with over 20 years’ experience in the public and private sectors. As President of KNG Health Consulting, Dr. Koenig has overall responsibility for the quality and direction of KNG Health’s research. He serves as Project Director and Principal Investigator for many studies, particularly those related to healthcare reform proposals, healthcare provider payments, value-based purchasing, and delivery system innovations. With expertise on hospital and post-acute care payment and quality issues, his work regularly assesses the potential impact on hospitals and other providers of proposed legislation or regulations. He has assisted both industry and Federal and state governments in the development and assessment of healthcare provider payment policies and value-base purchasing initiatives. Prior to founding KNG Health in 2007, Dr. Koenig was the senior economist in the Office of Policy at the Centers for Medicare & Medicaid Services (CMS). Before joining CMS, Dr. Koenig was a Senior Scientist in the healthcare finance practice at The Lewin Group. Dr. Koenig has led over 100 quantitative and qualitative health policy and health economic studies and has published over 20 peer-reviewed studies in journals, such as Health Affairs, Health Services Research, and Medical Care. He graduated with Honors from the University of Florida, Gainesville and earned his PhD in Economics from the University of Maryland, College Park. |
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