Appealing Medicare Advantage Denials For Patients Gives Hospitals More Leverage

Reprinted with permission by the Report on Medicare Compliance

Fed up with claim denials for inpatient admissions by Medicare Advantage (MA) plans months after they were approved, Self Regional Healthcare in Greenwood, S.C., complained to the CMS regional office in Atlanta.

“We started sending information to CMS saying that if the Medicare Advantage plans do concurrent review and authorize inpatient care, we have every right to expect payment,” said Roy Baker, M.D., medical director of case management. Otherwise, the hospital should have the right to hold the beneficiary liable for the hospital stay. That had an impact. “CMS cares about beneficiaries. They took that to heart and [went to] the Medicare Advantage plan,” Baker said at a March 8 webinar sponsored by Intersect Healthcare and AppealMasters. “In 24 hours, a group of denials was overturned in one fell swoop. It made my CFO happy.”

CMS intervention is one way the hospital fights MA payment denials, Baker said. It has found success in new ways, along with other hospitals that have used assorted strategies to protect their revenue from the increasing number of claim denials they say they are experiencing. Some are appealing claim denials on behalf of patients because they have far greater rights, said Brian McGraw, president of Intersect Healthcare and AppealMasters.

“If you fight and win on the patient’s behalf, you get paid, even if your own [appeal] rights are exhausted,” he noted.

Hospitals Appeal Denials for Patients

MA plans are denying claims after clinical validation audits and readmissions within 30 days, said Denise Wilson, vice president of clinical audit and appeal services at AppealMasters. They also often refuse to authorize inpatient admissions, instead approving longer stays in observation. Most don’t follow Medicare’s two-midnight rule, Wilson noted. “UnitedHealthcare jumped on it right away and, after a year, they said they are not doing it anymore,” she said.

There also are some quirks in MA policy manuals, which are referenced in contracts, Baker said. Although MA plans must follow Medicare local and national coverage determinations and other regulations, hospital contracts govern many aspects of the relationships between MA plans and hospitals. For example, UnitedHealthcare’s policy manual has a statement that hospitals must provide a home visit to ensure safe discharges, Baker said. “I don’t know how many hospitals can afford to do a home visit for every discharge, and I haven’t seen them enforce it for denials yet,” he said. “But be careful.”

Self Regional doesn’t participate in any MA plans, although obviously the hospital treats patients enrolled in MA plans and accepts their payments. “There is no advantage to [participation],” Baker said. Hospitals lose most of their appeal rights, and “you have to go by what they say rather than what CMS says.”

Baker has made a lot of headway with MA plans by escalating problems to CMS (see box below). For example, when MA plans disagree with a diagnosis, they downgrade MS-DRGs by removing a complication and comorbidity (CC) or major CC. In response, Baker asked CMS whether the MA plans reported the diagnosis changes so their own risk scores could be adjusted. After Baker raised the risk adjustment issue to CMS, “we got a group of claims overturned,” he said. “Risk scoring is way off.” CMS has been conducting risk adjustment data validation audits of MA plans, and the Department of Justice in February joined a False Claims Act lawsuit against UnitedHealthcare that alleges the MA company exaggerated patients’ risk factors to increase reimbursement.

One caveat about complaining to CMS: it only intervenes when hospitals don’t have a contract with an MA plan. Otherwise, CMS defers to contract terms, McGraw said.

Appealing for Patients Requires Authorization

Meanwhile, Baker also has seen improvement by going directly to the source—the MA plan—with help from the American College of Physician Advisers and South Carolina Hospital Association. “We now have friends at Humana. I never thought I would say this,” Baker remarked, noting the MA plan has a new regional medical director who “has been extremely helpful.” Humana also has a corporate compliance department that addresses CMS complaints.

His hospital also appeals claims on behalf of patients. This is a powerful strategy that’s underappreciated by hospitals, McGraw says. Unless they negotiate better terms in their MA contracts, hospitals typically have one level of appeal. But patients in MA plans have an internal grievance process and then the same five levels of appeal that hospitals and beneficiaries enjoy under traditional Medicare, McGraw says. “If you’re a provider, it’s internal review only,” he says. “But patients have the five steps of the Medicare process in Medicare Advantage plans.”

‘Soft Approach’ Is Recommended

The catch: Hospitals need patients’ authorization to appeal payment denials on their behalf. This isn’t a big deal, however. McGraw said they just have to ask patients to sign authorized representative forms, which can be added to existing registration or discharge forms. Self Regional Healthcare asks patients for authorization on admission paperwork and hasn’t gotten pushback from anyone, Baker said.

Asking patients to authorize the hospital to appeal claim denials on their behalf usually requires a soft approach, McGraw said. When hospitals don’t get authorization upfront, they may ask for it in a post-discharge letter. “We talk about the hospital service to the community, and inform the patient that the insurance company in its infinite wisdom has deemed the stay medically unnecessary or changed the diagnosis that the doctor selected, which we disagree with, and that we would like to appeal on the member’s behalf,” he said. “Often your language is about your caring for your patient, and hopefully the patient had a good experience at the hospital. But not everyone does, so you might want to check out whether they were a satisfied patient before you send it out.” Include a stamped, self-addressed envelope and keep the letter to one page, McGraw advised.

Whether hospitals do it upfront at registration or after the fact, this is pretty easy. “I don’t understand why hospitals aren’t doing it,” McGraw said. Even when they have the form in place, they don’t tend to pursue appeals on behalf of patients.

They think it’s too burdensome, but it’s the same appeal they file on their own behalf, plus an address change. Each MA plan may have its own authorization form, so hospitals must make sure they use the correct one, McGraw said. The forms are different from consent to treat and assignment of benefits forms.

Appealing on patients’ behalf should be part of hospitals’ payer dispute management approach, an organized method for protecting their MA payments that begins with the contract terms and takes them straight through the appeals process, McGraw said. The contract should set forth the levels of internal appeal, the time frame for submitting medical records and receiving a response, the name of the medical director and all the other details required for the hospital to manage its denials and appeal rights. “You will get denials whether or not they repeal Obamacare,” he said.

Contact Baker at, McGraw at and Wilson at