There’s been a flurry of regulatory activity related to Medicare Advantage (MA) in the first half of this year, with many policy actions being the result of extensive advocacy efforts among nursing home organizations.

However, many of the regulations – such as those related to prior authorizations for certain services – as they stand are unclear, leading to less efficacy, said Nicole Fallon, vice president of integrated services and managed care at LeadingAge. Nursing home associations including LeadingAge initiated a data collection effort on Medicare Advantage to present to the Centers for Medicare & Medicaid Services (CMS), in an effort to show how the regulations could be more effective.

“CMS said if we get more information about what’s not working, they’re willing to look at the regulations and make some refinements to get it working,” said Fallon.

The American Health Care Association (AHCA), National Association of Homecare and Hospice, the American Medical Rehabilitation Providers Association, and the National Association of Long Term Hospitals are all  involved in data collection efforts as well, she said.

CMS is also conducting audits of nearly 90% of Medicare Advantage plans to ensure compliance. And, as nursing homes seek to clarify some of the regulations amid the audits, payment under MA plans is expected to tighten as well.

Meanwhile, there are pressures especially on the rural front from MA plans when it comes to payments, she said. Fallon expects some challenging discussions during contract negotiation time.

Managed care organizations anticipate 2025 is going to bring some cuts, she said.

“They’ve suggested that their only way to balance that is to either reduce provider payments or reduce benefits and increase premiums and beneficiaries, which is usually their choice of last resort,” said Fallon of budget cuts. “I don’t know how much lower they can go.”

There’s some dissonance considering analyses conducted by the Wall Street Journal and Medicare Payment Commission (MedPAC) found that improper or erroneous diagnosis documentation resulted in higher payments to plans. MedPAC, in particular, found that MA plans cost taxpayers $591 billion more over the past 18 years than it would have cost to treat the same people with traditional fee-for-service Medicare.

How efficacy is lost

One regulation about prior authorizations, which took effect in January, was supposed to require prior authorizations to cover what’s called a course of treatment, she said.

The definition CMS gives for the course of treatment, however, is muddled, especially when it comes to how the rule can be applied in the post-acute care sector, she said. What’s more, the Office of the Inspector General (OIG) last month announced its plan to investigate the use of prior authorizations for post-acute care among Medicare Advantage Organizations (MAOs), with findings to be published in a 2026 report. The agency will be examining plan procedures for reviewing such authorizations, the scope of denials and the care settings to which patients are discharged following hospitalisations.

The prior authorization is supposed to cover a person’s health episode across sites of service with the new regulation, but it’s been challenging to apply when someone goes into a skilled nursing facility.

“The idea was, you’re supposed to give one authorization and not have to do these repeats; that causes us administrative burden headaches,” said Fallon. “We’re working on that piece of it.”

Another regulation tells MA plans that if a prior authorization is issued for a service and a provider submits a claim for that service, it needs to be paid.

“I’m not sure that the plans are following that … that’s an issue that we’ve been having,” said Fallon. “These are things that we need to start reporting to CMS so that they can take in information about what the trends are that we are seeing.”

Slow move toward more accountability

Another issue addressed in recent regulation is the use of algorithms and artificial intelligence (AI) in how MA plans determine length of stay. It’s based on an average, which isn’t very patient-centric – the whole goal of MA, she said.

The regulation states that a plan can’t use AI or an algorithm to terminate care. A reassessment needs to be done to see if the patient is no longer at a level of care that requires skilled services.

“That gives us a little bit of a leg to stand on. That clarification actually was put into an FAQ that CMS issued in February. We’ve really been pushing for more clarity and more of these FAQs to come out,” Fallon said of association efforts.

The industry really wants CMS to add some “meat on the bones” of these MA regulations, she said, in the form of FAQs or examples of what the agency is driving toward when it comes to more oversight of MA plans.

What’s more, plans feel that they are compliant with a lot of these new regulations, CMS has heard, a sentiment passed on to LeadingAge.

“[CMS] explained to us that they intend this year … they are enforcing on day one. They expect compliance already,” Fallon said, referring to MA plans in compliance with the new regulations. “They said they are going to use all the tools in their tool belt to ensure compliance. They intend this year to audit nearly all of the plans, to the point where it covers about 90% of those enrolled in Medicare Advantage plans to make sure that they’re complying.”