Certain MA Rule Language ‘Gives You Much More to Work With’ in Appealing Claim Denials

By Nina Youngstrom  | June 26, 2023

Although the world opened up for hospitals and other providers with the April regulation that requires Medicare Advantage (MA) plans to abide by the two-midnight

They predict that CMS intervention will be a necessity to ensure MA compliance, but also see language in the rule that will help fend off denials or at least supercharge appeals when the rule takes effect Jan. 1. 

“We are all waiting with bated breath as to how the MA plans are going to deal with that regulation,” said Phillip Baker, M.D., assistant vice president and chief medical revenue officer at Self Regional Healthcare in South Carolina. With respect to the two midnight rule, for example, observation rates are about 22% to 24% for traditional Medicare versus 36% to 38% for MA contracted plans. For a long time, Self Regional mostly didn’t have contracts with MA plans, which meant they had to follow traditional Medicare even before the rule, but now the health plan has signed with several. “It hurts my soul,” Baker said. “Every one we sign will cost us money.”

Baker is skeptical MA plans will respond to the new rule until CMS enforces it. He’s not alone. It’s imperative to keep CMS informed of “payers not complying with the final rule,” although working with the MA compliance department may be productive, said Kendall Smith, M.D., chief physician advisor for PayerWatch, at a June 21 webinar sponsored by the firm.

According to the rule, which was published in the Federal Register April 12, MA plans are required to apply the same standards to beneficiary coverage decisions as are applied to traditional Medicare patients.2 CMS expects MA plans to base medical necessity decisions on national coverage determinations (NCDs), local coverage determinations (LCDs) and other coverage criteria. As the rule now makes abundantly clear, MA plans are only allowed to create internal coverage criteria when qualifying requirements aren’t fully established in Medicare statutes, regulations, NCDs or LCDs. The coverage criteria must be based on “evidence in widely used treatment guidelines or clinical literature” and
publicly accessible.

“A great deal of the proposed rule was taking existing guidance language and elevating it to the status of a rule,” said Bill Haynes, legal director of the clinical-legal unit at PayerWatch. “I had serious reservations about how effective it would be on payer behavior. We have to wait and see what impact it will have. I’m more hopeful than I have been.” He cites two sections in particular that could move the needle.

One is an update to requirements on basic benefits at 42 C.F.R. 422.101(b), Haynes said. Here’s the old language: “General coverage guidelines included in original Medicare manuals and instructions unless superseded by regulations in this part or related instructions,” he said, which amounted to “hand waving. It sounds helpful but is not actually helpful.”

Here’s the new language:
“We proposed to amend § 422.101(b)(2) by removing the reference to ‘original Medicare manuals and instructions’ and clarify that MA organizations must comply with general coverage and benefit conditions included in Traditional Medicare laws, unless superseded by laws applicable to MA plans, when making coverage decisions. Our proposal was designed to prohibit MA organizations from limiting or denying coverage when the item or service would be covered under Traditional Medicare and to continue the existing policies that permit MA organizations to cover items and services more broadly than original Medicare by using supplemental benefits….We also proposed to refer in § 422.101(b)(2) to specific Medicare regulations that include coverage criteria for Part A inpatient admissions, Skilled Nursing Facility (SNF) care, Home Health Services and Inpatient Rehabilitation Facilities (IRF) as examples of general coverage and benefit conditions in Traditional Medicare that apply to basic benefits in the MA program.” Haynes said, “That gives you much more to work with.” The previous language was vague. “It seemed helpful but when you have to argue a point, you have nothing to grab onto.”

In another helpful update in 42 C.F.R. 422.101(b)(6), CMS goes beyond stating MA plans could use internal coverage criteria in the absence of NCDs and LCDs. Now the rule requires publicly accessible internal coverage criteria and defines the terms, Haynes said.

“This should give providers much stronger language to argue against the reasons payers give for denying care,” Haynes said. He urges providers to be familiar with the revisions and ask the MA plans why they didn’t meet the definition. “It will be helpful in the long run to give providers much better ability to make clearer arguments” in their appeals of MA plan denials with payers, administrative law judges, arbitrators and independent review entities, Haynes said.

Not all the reasoning for the denials is the same. “Requiring the MA plans to follow the guidelines for access to SNF and IRF immediately is different. That’s patient care,” said Ronald Hirsch, M.D., vice president of R1 RCM. “The two midnight rule is really about payment and not access to necessary care.”

While he said adopting the inpatient-only list is straightforward, other provisions of 42 C.F.R. 412.3 are subjective. “A doctor simply declaring that a patient is expected to need two midnights does not make it so,” Hirsch explained. “There is significant practice variation across the country and MA plans have the right, just as Livanta does now with their short-stay audits, to be able to question the validity of that expectation or the medical necessity of that second midnight.”

Endnotes
1. Nina Youngstrom, “MA Final Rule: CMS Requires Two-Midnight
Rule, Puts Limits on Internal Coverage Criteria,” Report on Medicare
Compliance 32, no. 14 (April 10, 2023), https://bit.ly/43SZrwx.
2. Medicare Program; Contract Year 2024 Policy and Technical Changes to the Medicare Advantage Program, Medicare Prescription Drug Benefit
Program, Medicare Cost Plan Program, and Programs of All-Inclusive
Care for the Elderly, 88 Fed. Reg. 22,120 (April 12, 2023), https://bit.
ly/3CH7TmX. 

(Published by the Health Care Compliance Association, Report on Medicare Compliance, Volume 32, Number 23, June 26, 2023)