Medicare Advantage QIC Appeal Outcomes

Background

When U.S. health insurers deny coverage, consumers often have the right to appeal the decision. This is the case in both commercial and government sponsored plans.

In Medicare plans, the appeals process consists of five levels.

The levels of the appeal process correspond to increasing levels of escalation:

1. An appeal submitted to a Medicare Administrative Contractor (MAC) or an MA plan.
2. An appeal submitted to a Qualified Independent Contractor (QIC)¹.
3. Review by an Administrative Law Judge (ALJ) and the Office of Medicare Hearings and Appeals (OMHA).
4. Review by the Medicare Appeals Council.
5. Judicial review in a federal district court.

While this five-tiered appeal process is complex, levels 1 and 2 mirror the recourse available to those who are commercially insured in individual or group plans.

Data

Publicly available claims denial data is scarce for Medicare Advantage plans, which means that public understanding of adjudication practices is limited. However, CMS maintains a dataset of outcomes for level 2 QIC appeals for Medicare part C and D plans². We analyze it below.

The interactive cards below show high level appeal outcomes. The alternate tabs at the top show outcomes broken down by conditions, services, and drugs.

Medicare Advantage Appeal Outcomes

Medicare Drug Plan Appeal Outcomes

Analysis

So what do the level 2 overturn rates mean?

On one hand, each overturn corresponds to a service or drug which will be covered, and which an independent party found to be medically merited. So the end result of a large volume of level 2 overturns is good for outcomes compared to those same claims being upheld at level 1 without further appeal.

On the other hand, each overturn corresponds to a service or drug which merited coverage from the get go. It is undoubtedly a good thing that level 2 appeals do work as a fail-safe for a small subset of all inappropriate denials. However, relying on second level appeals to correct large volumes of mistakes is deeply problematic. Initial appeal rates are uniformly miniscule, so most inappropriate denials will never even get seen by appeals. In addition, even denials that are ultimately overturned can cause delays in care. It is these perspectives that render level 2 overturn rates that are much higher than average troubling.

With this in mind, we highlight below some of the most troubling trends apparent in the QIC appeal dataset.

The Medicare Advantage data shows high overturn rates for expensive services and conditions. The table below shows the five services and conditions with the highest overturn rates.

The table below shows the five services and conditions with the highest overturn rates among part D data.

If there are this many inappropriate denials among appealed cases that make it to level 2, how many inappropriate denials are there to begin with? And how many are falling through the cracks?

Comparison to Traditional Medicare QIC Appeals

QIC appeal outcomes are not available for traditional Medicare, so direct comparison is not possible.

Access to traditional Medicare QIC appeal outcomes would be invaluable. It would allow us to contextualize administration of Medicare coverage determinations in MA.

According to federal regulation, MA plans must cover anything that traditional Medicare would. Yet many works³ suggest MA plans are wrongfully denying care. To make matters worse, inappropriate denials are often the result of automated processes.

Differences in QIC overturn rates would help illuminate problematic practices. There might be issues in MAC adjudication, in MA adjudication, or both. Discrepancies might be overarching, or specific to certain populations and demographics.

More than 15% of second level appeals for radiation and chemotherapy are being overturned. Overturn rates are far above average for services related to lymphoma and rectal cancer.

This is among appeals that already went through a first level appeal and were upheld. That population is, in turn, a small fraction of initial denials for those services. This suggests inappropriate denials for these treatments are large-scale problems among the affected subpopulations.

These statistics are problematic in their own right, but also belie a bigger problem. Traditional Medicare and Medicare Advantage outcomes are rarely compared directly. Comparable data is difficult to get even in cases where it should not be. This is one such case. QIC appeal data from traditional Medicare would inform the ability of MA plans to administer coverage rules as well MACs. Lack of comparable data facilitates complacency, and a national dialogue removed from facts. Profitable, problematic behaviors will not improve without measurement.

Comparison to Commercial IRE Appeals

Reviewers overturn level 2 appeals in MA less frequently than IRE appeals in commercial plans. We saw above that the average for MA plans is about 5%. In a previous post we saw that the average overturn rate among California IREs is 49%. New York, Washington, and the Federal Marketplace have IRE overturn rates above 25%⁴.

QIC appeal overturns measure the merit of appeals that reach independent review. The data then says that level 2 appeals in Medicare are, on average, less appropriate than their commercial counterparts. This is, at least partially, a reflection of differences in regulatory framework.

There is stringent regulation and standardization in Medicare claims adjudication. Standards and guidance dictate most coverage rules. As a result, it is easier to adjudicate claims, and to identify mistakes. These factors both improve outcomes, and make it difficult to justify mistakes.

Despite the exhaustive rules, there are high overturn rates for prior authorization denials in MA. These rates are closest in spirit to the level 1 appeals we've discussed here.

In fact, these rates are higher than corresponding rates for internal appeal overturns in commercial plans.

What would outcome statistics look like for high quality, unbiased, and appropriate adjudication?

First, we'd expect some consistency between initial determinations and level 1 appeal outcomes. Every overturn from an internal appeal is an acknowledgement of an adjudication mistake⁵. While each acknowledgement is laudable, a high volume indicates a systemic problem. Available level 1 overturn data indicates a systemic problem in MA.

Second, we'd expect some consistency between level 1 and level 2 appeal outcomes. Every overturn from a level 2 appeal corresponds to an insurer that doubled down on a mistake. It is a good thing that level 2 overturn rates are lower in MA than in commercial markets. Still, there is room for improvement, particularly for vulnerable populations of patients.

Such measures of agreement are called an inter-rater reliability (IRR) measure. These are often used to determine consistency of ratings provided by different individuals. To summarize, the data shows

• An IRR measure between initial adjudication and internal review is higher in MA than in commercial plans.
• An IRR measure between internal review and external review is higher in commercial than in MA plans.

Take Aways

Claims adjudication data can help shed light on inequitable and inappropriate practices. This can help lawmakers, regulators and investigative advocates focus on impactful issues.

Many reports have focused on issues in MA coverage for skilled nursing services. The data shows that skilled nursing denials affect a large population. There have been 19,347 level 2 appeals for such services in MA alone since 2020. Of those, 5%, or about 1,031 denials, were inappropriate according to QICs.

While the level 2 overturn rate for skilled nursing is relatively low, the number of appeals that make it to that level indicates a problem.

This leads to two fundamental, representative questions:

1. How many inappropriate skilled nursing denials are occurring in the first place?

   By Medicare rules, every denial that gets upheld at level 1 gets sent to level 2. We don't know how many level 1 appeals are being submitted or overturned, nor how many denials are uncontested. All we know is that, at a minimum, there have been 1,031 inappropriate skilled nursing denials in MA since 2020. That lower bound is likely a gross underestimate for the number of inappropriate denials. To improve it, we need access to level 1 appeal outcomes, and initial denial statistics.

2. Where else should investigators focus their attention?

   Skilled nursing is frequently denied and appealed in MA, so is a sensible focus. But the data also shows that level 2 appeal overturn rates are unremarkable. It suggests there may be disease groups and services that affect less people, but with more glaring problems. Equitable enforcement of coverage rights for such populations is critical. Delays and lack of coverage access for many vulnerable populations has disproportionately dire implications.

   We hope investigators will continue to report on these problems from different angles. The level 2 overturn rates suggest many vulnerable populations are facing questionable barriers. For example, those with breast, rectal, liver, prostate, esophogeal, and lung cancers, lymphoma, myeloma, and aortic aneuryism. The smaller number of cases will make it more difficult to report on such stories, but the need remains.

What to Do If You Receive an MA denial

When you receive a denial for coverage, keep an eye out for signs it is inappropriate. Medicare Advantage plans must cover services that Medicare would. If you suspect a denial is inappropriate, consider appealing the decision. If you need help, contact your state SHIP, or reach out to us at info@persius.org.