‘Astronomical’ Medicare Advantage Denials, Pre-Auth Issues Cause Outcry from Nursing Homes

The Medicare Advantage preauthorization process and denials of care are a growing concern across the continuum, and nursing home operators and advocates — as well as federal lawmakers — are pushing more urgently for change.

Such concerns are not new, and already some action has been taken: the Centers for Medicare & Medicaid Services (CMS) has sought to stop diversions of patients away from skilled nursing facilities while ensuring more consistency between MA and traditional Medicare.

Nevertheless, these forthcoming changes haven’t eased the headaches faced by nursing homes nor allayed fears by advocacy groups. And legislative efforts to reign in MA plans need to be stronger, nursing home operators and advocates say.

“Insurance providers won’t pay for patients to stay because, per their guidelines, they were well enough to go home … it is just astronomical, the amount of patients that are discharged too early because the insurances will no longer pay,” said Laray Fayad, Regional Director of Care Connect and Census Development at Texas-based Focused Post Acute Care Partners (FPACP), which operates 27 nursing homes.

In the end, the burdens of cost and care are shifted to providers of health care across the continuum, Fayad told Skilled Nursing News, and quality gets compromised while rehospitalizations go up.

“It is going to hit the hospital’s pocketbook, the skilled nursing facility’s pocketbook and the physician’s pocketbook. It’s not going to hit these insurance companies, but it’s gonna hit all the providers,” Fayad said.

For their part, federal officials have continued to demand more visibility into the preauthorization and denial process and seek to regulate it. Congress members recently pushed for additional requirements for insurers that would lessen administrative burdens for providers, including a 24-hour deadline for MA insurers to respond to preauthorization requests for urgently needed patient care.

Meanwhile, senators are also seeking insight into the denial process of some of the largest health insurance companies that offer MA plans, writing letters asking them for detailed documentation for more transparency into the denial process. The use of AI is also implicated in these denials.

Passing the burden of care, costs

According to studies, one in five Medicare beneficiaries discharged from the hospital receives post-acute care in a skilled nursing facility (SNF) at a cost of more than $28 billion annually. Nearly one-quarter of those admitted to SNFs are readmitted to the hospital within 30 days, and readmission is associated with a quadrupled mortality rate within 6 months.

Insurers often provide no evidence of overutilization for targeted procedures and treatments and continue to delay and even deny covering necessary care and overstep medical decision-making, according to clinicians and administrators affiliated with nursing homes. And this impacts rehospitalization rates.

“They’re getting nit pickier on what they’re allowing us to do,” said Fayad, noting that in the past, “If the patient had Medicare, we could actually treat them and give them exactly what they needed. Now, with these managed cares, they’re telling us yes or no, how long the patient can stay, and we have noticed that some patients [going] home too early, because the patients are bouncing back to the hospital.”

These rehospitalizations increase overall costs for health care, said Fayad, because a hospital stay might cost around $1,500, while a SNF stay at a Focus facility gets reimbursed by UnitedHealth for between $300 to $425.

Dr. George Williams, president of the American Academy of Ophthalmology (AAO), who sees patients in skilled nursing facilities, said it was very disturbing to see the number of critical eye surgeries and medications being delayed or denied by large insurance providers.

Many of the prevalent eye diseases confronting older patients – such as age-related macular degeneration and diabetic retinopathy – carry the risk of sight loss if not treated quickly, and yet medications and cataract surgeries are routinely denied by plans, Williams told SNN. This in the end means that physicians themselves or their practices have to bear the costs – sometimes up to $2,000 per dose – during the lag caused by prior authorization, or as a result of decline of coverage, he said.

“We have patients that present to us with acute visual loss due to these conditions, and they require immediate treatment. We can’t wait around literally days or in many cases, weeks, for a response from these Medicare Advantage plans,” said Williams. “And what we found now is that in the Medicare Advantage space, virtually all patients are required to get prior authorization for all of the FDA approved drugs, and it gets even worse because sometimes some of the Medicare Advantage plans are now requiring authorization for any treatment.”

Some gains have been made with Aetna and, in some regions, UnitedHealthcare — both organizations used to require prior authorization before cataract surgery, Williams said.

Along with physicians and hospitals, nursing homes bear the burden of managing the care of patients, with some operators sharing with SNN that they pay for the denied or delayed services out of their own pockets.

“CMS did create some new regulations that are helpful, but they’re not as strong as we believe that they should be,” Williams said. “We’re cautiously optimistic that CMS will respond to our requests and that eventually we’re going to be able to get a legislative mandate.”

Williams also wants the federal government to intervene in making the process simple, and believes it will benefit everyone across the care continuum.

“One of our primary requests to Congress is that there be increasing transparency around these prior authorization requirements and the clinical information that’s needed to support their analysis, their decisions,” he said.

And, with the growing presence of MA plans – 48% of the eligible Medicare population was on an MA plan in 2022 – there are also concerns that their requirements are not standardized, Williams said.

“It’s simply not realistic to expect that physician practices can be conversant and understand the requirements for all of these,” he said. “So we want to establish an electronic prior approval process. For Medicare Advantage plans, that’s where you start getting into questions of artificial intelligence and the best ways to do that, but artificial intelligence can’t be a black box. There has to be accountability on how the decisions are made.”

Savings over quality

Fayad said that it has been harrowing to deal with some of the largest Medicare Advantage insurers in Focused Post Acute Care Partners’ markets. The authorizations can take up to 10 days for care in immediate, make or break situations, in which case the doctor or the facility bears the responsibility, sometimes risking not getting paid at all.

“When we [ourselves] submit it … we are having a lot of difficulties. We’re not getting a fast turnaround time,” said Fayad. “So what some of our big hospital systems have started doing is that they will start the authorizations in their portal. And because they have a direct person that they can call and reach out to, we are getting authorization faster and on the weekend.”

Long turnarounds can be costly – even fatal for a range of serious conditions involving renal disease to pulmonary disease to heart conditions, she said.

“Some of these patients that we get are cut and dry. And still [the insurer] will fight us and deny the patient where we have to reach out to the physician and do a peer-to-peer with their medical director and our physician in order to get the patient the proper care and treatment that they need,” Fayad said.

MA plans are also not reimbursing for what are known as “avoidable days” – a reference to the unnecessary length of stay for a patient in a hospital due to medical error, inefficient care delivery, or lack of coordination among health care providers.

In this case, “the hospital eats the cost if the insurance says, I’m not paying after today because they need to go to the next level,” Fayad said. This creates a push for hospitals to refer patients to SNFs. However, there is no guarantee the SNF will get paid, or there may be a lag in payment. The nursing home may foot the bill out of its own pocket in the meantime.

And in some cases, the costs are hidden, such as when nursing homes bear the burden if a generic drug or a less desirable alternative medication is prescribed. An example is in the use of cheaper anticoagulants for treating congestive heart failure (CHF).

“Eliquis is more expensive, but it’s more beneficial because it doesn’t have limitations on food. So we have to fight these insurance companies and explain why this patient needs this medication instead of the other medication,” Fayad said.

The issue extends to antibiotics as well.

“I don’t know how many times an insurance company will tell us, why do they need this antibiotic?” said Fayad.

And sometimes, the preauthorization process denies treatments that require immediate attention, but the nursing home is forced to accept the expenses, Fayad explained.

“So the skilled nursing home, we will eat the cost,” she said. “If we realize that they really need the antibiotic, we give it to them.”

And then managed care companies have copays that complicate matters, she noted. If families are not able to pay the copay, either the nursing home absorbs that cost of the copay, or the family members take their loved ones home early where they can’t get the treatment they need. This may also translate to higher readmission rates, back to hospital and back to SNF.

Policy changes recommended

LeadingAge, the national nonprofit aging services provider association, conducted a survey and detailed study on this matter to guide legislative efforts. Its report notes that some of the problems exist due to prior authorization reviewers for MA plans not being required – until the recent MA final rule – to have expertise in post-acute care.

“Based upon MA plan determinations our providers have experienced, it is fair to conclude that some MA plans either do not understand Medicare coverage requirements or choose to flout these requirements,” LeadingAge’s report, released on May 18, stated. “Plans also seem to not be evaluating whether as a practical matter, is it more cost effective and efficient to deliver these services in a SNF. In addition, some MA plans do not appear to consider whether the individual has adequate family caregiver support to safely return home.”

Meanwhile, the American Health Care Association, the largest advocacy group for nursing homes, also pointed to a lack of communication in the preauthorization and denial process.

“AHCA supports efforts to strengthen beneficiary access to necessary care and services. There have been instances where insurer-led Medicare Advantage plans delay access or deny claims for skilled nursing/post-acute care for seniors. These health plans often make their own determination on how long someone is in a nursing home without speaking to the person or consulting medical professionals about specific care needs. This can unfortunately end coverage sooner than is needed,” AHCA said in an emailed statement to SNN. “CMS and Medicare Advantage plans should continue to work together to resolve this issue so patients can receive the care they need and deserve.”

For Fayad, if there was one thing that she could tell policy makers to change, it would be to trust the doctor.

“Normally a doctor isn’t going to write an order for skilled nursing unless the patient needs skilled services. So I wish that they would look at the clinicals instead of going by the book, where the book is not always a cut and dried picture of what all the patient might need,” Fayad said.