help_outline Skip to main content

News / Articles

Response to RFI for 2017 MAO Transformation Ideas

Published on 4/24/2017

Response to RFI for 2017 MAO Transformation Ideas

The Honorable
Thomas E. Price, M.D.
Secretary of Health and Human Services
Hubert H. Humphrey Building
200 Independence Avenue, S.W.
Washington, D.C. 20201

April 24, 2017

Dear Secretary Price and CMS Administrator Verma:

The American College of Physician Advisors (ACPA) appreciates the opportunity to respond to your RFI soliciting ideas to better achieve transparency, flexibility, program simplification, and innovation in the administration of Medicare Part C. The majority of ACPA members are physicians who are professionals with specialization in quality, utilization review, and utilization management for hospital-based providers. Our members interact with Medicare Advantage Organizations (MAOs) on a daily basis, thus gaining detailed 360-degree knowledge and experience from the point of care. We hope that the ACPA recommendations offered here will be useful to help achieve greater standardization, transparency, and effectiveness in the Part C program for the benefit of all stakeholders.

Medicare Part C offers several potential advantages to Medicare beneficiaries and to the Centers for Medicare and Medicaid Services (CMS.) MAOs are already required to provide all of the benefits of traditional Medicare. Among the potential advantages to beneficiaries are receiving benefits which would not otherwise be covered by traditional Medicare, such as vision and dental benefits, prescription drug coverage, and wellness programs. The principle benefit to CMS is fixed program cost, as the third party assumes both financial risk and administrative claims responsibilities.

Our members have repetitively insisted that stronger oversight of MAOs is needed as the current process has led to increasingly wasteful amounts of plan-related administrative burden imposed on hospitals in order for them to be fairly reimbursed for the care they provide. This has resulted in many clinical support personnel spending the majority of their productive time meeting these individual MA Plan-specific rules, rather than focusing on the many complex issues surrounding beneficiary care.

We strongly believe that the regulations in 42 CFR §422 and the Medicare Managed Care Manual can be strengthened to provide greater standardization, clarity, and transparency on the operations, obligations, and responsibilities of the MA Plans in order to prevent “cherry picking” or selective enforcement of Medicare rules by the MA Plans to their own benefit. Both contracted and non-contracted providers are experiencing these issues, but contracted providers are affected to a much greater extent due, in part, to the lack of CMS-granted appeal rights. Contracted providers are under increasing pressure to become non-participating with MAOs as non-contract providers receive non-discounted traditional Medicare payments and have standard Medicare appeal rights.

These issues affect the majority of hospital providers so clear regulatory intervention and strong policy guidance from CMS are needed. CMS should monitor for beneficiary safety and access as providers withdrawing from MA Plans could threaten MAO network adequacy and beneficiary choice.

The following examples provided by our membership reflect what we have experienced as a result of national practices of at least one of the four major MAOs.

  • 1.) Selective enforcement of Two-Midnight (2-MN) Rule policies that are beneficial to MAOs, such as level of care interpretations that lead to significantly fewer inpatient admissions and more prolonged observation stays than the 2-MN Rule would require.
  • Inordinate delay in approval of sub-acute rehabilitation:
    • a.) Prolongs patient recovery time as the beneficiary’s primary need is for rehabilitation optimally provided in a rehab setting and not within an acute care hospital.
    • b.) Prolongation of beneficiary hospitalization also forces hospitals to absorb the cost of care that should be provided at a lower level.
    • c.) Nearly universal refusal to approve acute inpatient rehab.
  • 2.) Provision of concurrent or prospective inpatient authorization with subsequent retrospective denial of payment for inpatient care:
    • a.)Though the Medicare Managed Care Manual has language prohibiting this, it continues to occur.
    • b.) With one major MAO, corporate practice is to issue an approval letter if National Committee for Quality Assurance (NCQA) concurrent review timeframes are not met by the MA Plan. However, fine print within the letter reserves them the right to deny upon retrospective review. This type of disclaimer defeats the purpose of the concurrent review NCQA standard, and confuses providers who would like to believe that concurrent approval is meaningful.
  • 3.) Inconsistent allowance for "full Part B" rebilling if services are determined retrospectively to have been more appropriately delivered in outpatient status. The MA Plan may determine retrospectively it will only approve outpatient level of care but then may not provide an avenue for rebilling, resulting in complete non-payment for the hospitalization.
  • 4.)Aggressive denial of diagnoses through coding validation as well as clinical validation:
    • a.) Definitions used in clinical validation are often not provided or are inconsistent with the current definitions offered by governing clinical societies.
    • b.) Diagnoses removed and not paid by the MAO are handled by a different department within the MAO from the one that submits Hierarchical Condition c.) Category (HCC) diagnoses to the Risk Adjustment Processing System (RAPS) and the Encounter Data System (EDS), creating abuse potential.
  • 5.) Implementation of 30-day readmission denial policies:
    • a.) MAOs claim that these policies are based on the Quality Improvement Organization (QIO) Manual provision whereby the QIO may deny payment for a readmission within 30 days if an identified quality of care issue resulting in premature discharge from the first admission may have reasonably caused the second admission.
    • b.) In issuing these denials, the MAOs generally fail to demonstrate any quality concern on the part of the healthcare facility – denying payment solely because the readmission occurred within the 30-day window and was for the same or similar DRG. CMS has recognized that some readmissions are unavoidable (and inevitable); the CMS Hospital Readmissions Reduction Program only penalizes facilities for excess readmissions. o These MAO denials are not called "denials" by the MAO, but rather claims in which payment for the first admission includes payment for the readmission. However, the diagnoses and procedures from the two admissions are not combined onto a single claim. The second claim is merely not paid. By not calling it a "denial," reporting of these "denials" to CMS may be averted by the MAO.
  • 6.) Inconsistent application of the Medicare Inpatient Only List:
    • a.) Leads to confusion among providers who are not paid if they order inpatient status for a procedure on the Medicare Inpatient Only List when the MA Plan does not follow the list and instead, considers the procedure appropriate for outpatient.
    • b.) The converse can also occur, when a provider believes the MA Plan authorized a procedure on the Medicare Inpatient Only List as outpatient, only to have payment denied for lack of an inpatient admission order.
  • 7.) Refusal to acknowledge and communicate with contracted providers who have a valid Appointment of Representation (AOR) (CMS Form 1696) signed by the beneficiary to allow the provider to represent them.

The ACPA feels the following suggestions would help achieve greater Part C transparency, simplicity, and efficiency.

  • 1.) Require MAOs to follow the 2-MN Rule and associated regulations and sub-regulations:
    • a.) Stop the effective subsidy of Part C plans by CMS and providers through level of care determinations more stringent than the 2-MN Rule.
  • 2.) Require a per diem payment to hospitals for delayed sub-acute rehabilitation approval decisions.
  • 3.) Consider requiring auto-approval if the patient has had three consecutive inpatient midnights of medically necessary care within the past 30 days, as with standard Medicare.
  • 4.) Require that concurrent level of care approvals within NCQA concurrent review time frames not be subject to hindsight denial.
  • 5.) Allow "full Part B” rebilling for inpatient cases denied by MA Plans retrospectively or upon provider self-audit.
  • 6.) Require MAOs to make their definitions of clinical diagnoses fully transparent:
    • a.) Involve impartial third parties such as governing clinical societies in definition development.
    • b.) Require MAOs to submit any diagnoses removed from claims to CMS, ensuring those same diagnoses for the same dates of service are not submitted as HCCs through RAPS/EDS, thus preserving the integrity of the Medicare Trust Funds.
  • 7.) Require "denials" for 30-day readmissions to describe an actual quality of care issue from the first hospitalization. Require a "denial" to be called a denial so that CMS can accurately track denial activity.

    8.) Require MAOs to follow the Medicare Inpatient Only List.

    9.) Provide contracted providers with the same appeal rights as provided by traditional Medicare and as offered to non-contracted providers.

    10.) Require MAOs to acknowledge providers who have a valid AOR from the beneficiary and communicate with the designated representative as they would with the beneficiary or the beneficiary's family member.

    The American College of Physician Advisors appreciates your consideration of our response to your RFI. The ACPA Government Affairs Committee and Board of Directors would be happy to provide further information and engage more extensively with CMS to improve the implementation of the Medicare Part C program.


    R. Phil Baker, MD
    Bernard Emkes, MD
    Larry Field, DO, MBA, Treasurer, ACPA
    Alvin Gore, MD
    Larry Hegland, MD
    Ronald Hirsch, MD
    Edward Hu, MD, President, ACPA
    Dr. Maria Johar
    Charles Locke, MD
    Steven Meyerson, MD
    Ven Mothkur, MD, Chair, ACPA Governmental Affairs Committee
    Ronald Rejzer, MD
    Juliet B. Ugarte Hopkins, MD
    Daniel Zirkman, MD, Secretary, ACPA