While much of the outrage around managed care denials has been directed toward Medicare Advantage plans, a federal advisory panel Thursday outlined policies that could force states to better track denials of medically necessary care in their managed Medicaid programs.

States can monitor denial rates and assess whether individual denials are appropriate, but most do not tackle that in any robust way, analysts told the Medicaid and CHIP Payment and Access Commission, which advises Congress on Medicaid policy.

“The federal minimum standards lack critical components to determine whether MCOs [Managed Care Organizations] are inappropriately denying care to Medicaid beneficiaries,” said Senior Analyst Lesely Baseman. “Our findings suggest that oversight requirements are incomplete in data monitoring, clinical audits and transparency.”

Medicaid is far and away the biggest funder of nursing home services in the US.

The Health and Human and Services Department Office of Inspector General found 13 states conduct some type of clinical audit, and in some instances, have found evidence of inappropriate denials of prior authorization. Earlier this week, the OIG reported that New York state officials used the wrong information to let stand half the denials in a sample of managed care appeals.

There also is no federal requirement to publicly report denials in Medicaid managed care, and just 14 states do so in any form currently.

“As a result, little is known about the extent to which beneficiaries are denied services, and the extent to which beneficiary appeals are upheld or reversed,” Baseman explained.

Four possible policies

Baseman and her colleague, principal analyst Amy Zettle, offered the commissioners four policies that could help change that and reveal more information about denial patterns.

MACPAC could advise the Centers for Medicare & Medicaid Service to:

  • Establish data reporting requirements of denials and appeal outcomes by all states
  • Require states to audit denials for clinical appropriateness
  • Publicly report new denial and appeal data in the Managed Care Program Annual Report
  • Include denials and appeals data on new state quality rating systems sites to better serve beneficiaries when deciding on plans

Regarding audits, Zettle said they had been proven effective at identifying inappropriate denials of care for medications, health screenings and inpatient services. Such audits are already required in Medicare Advantage, where they have similarly unearthed denials.

“Given the higher rate of denials in Medicaid than in Medicare Advantage, audits of this nature could help to ensure appropriate authorization of care in Medicaid managed care,” Zettle said.

All four policies could be adopted or they could be combined in some way. They will be issued as recommendations at a later point if given full approval by MACPAC.

But CMS action isn’t the only way regulators could have more clarity on frequency and reasons for Medicaid managed care denials. Zettle said states could do more to improve accountability and efficiency starting by enforcing existing policies and contracts with MCOs that require coverage of medically appropriate care.

MACPAC staff studied compliance issues through an external review of 41 states that do collect some form of denial data. In 22 states, they found managed care plans were out of compliance with authorization and service requirements already in regulation. In addition, 25 states had compliance issues on appeals. In 18 states, there were issues with both authorizations and appeals.

“Improving transparency of these processes can bring greater oversight and accountability,” Zettle said. 

Baseman said they heard “quite a bit about the process” from providers on Medicaid denials, but not necessarily on monitoring or oversight of those outcomes. Commissioner Tricia Brooks noted it would be important to understand how broadly denials affected beneficiaries and the providers waiting to care for them. She and staff members both pointed out that relatively few Medicaid patients appeal denials when they happen.

“There are lots more people who don’t file an appeal,” said Brooks, a research professor and senior fellow at the Georgetown University Center for Children and Families. “The outcomes of appeals can be multiplied many times to illustrate the problems that exist.”

Nursing home staffing rule comment

Also Thursday, commissioners discussed the official comments they will provide on the CMS nursing home staffing rule before a Nov. 6 deadline. Staff noted that MACPAC earlier this year made recommendations to improve payment transparency in the skilled nursing sector.

While the proposed rule does include some provisions to collect and report more state-level spending data, MACPAC staff said the request did not fully align with the commission’s guidance.

MACPAC also had recommended that CMS make payment rates publicly available, not just the share of payments spent on staffing; that CMS collect data on provider contributions to the non-federal share of Medicaid payments needed to calculate net provider payments; that CMS should compare payments to all costs of care for Medicaid-covered residents, not just staffing costs; and that assessments of payment rates also include assessments of quality outcomes and health disparities.