How to Prevent and Manage Medicare Advantage Claim Denials in 2024 and Beyond
In 2023, 30.8 million people (51% of the eligible Medicare population) were enrolled in a Medicare Advantage plan. Enrollment has steadily increased over the last two decades, and in rural areas, it has quadrupled since 2010. On the surface, Medicare Advantage outperforms original Medicare across many areas of preventive care. However, the underlying narrative is quite different: Hospitals of all sizes and types, including rural providers, say delayed and denied Medicare Advantage payments make it harder and harder to remain profitable.
Are hospitals dropping Medicare Advantage?
The short answer is yes. Consider San Diego-based Scripps Health. Chris Van Gorder, president and CEO, recently told Becker’s Hospital CFO Report the health system faced a loss of $75 million on Medicare Advantage contracts in 2023. In late September, Scripps began notifying patients of its plan to terminate Medicare Advantage contracts for its integrated medical groups. Other hospitals have taken similar steps particularly as concerns about beneficiary access to medically necessary care continue to grow. The use of artificial intelligence to deny claims is also a large concern.
Still, not every health system can—or will—terminate its Medicare Advantage contracts because doing so would negatively impact patient satisfaction and retention. With that said, denial management (and prevention) will be paramount for those who continue to maintain these contracts.
Medicare Advantage denies medical treatment: What can you do?
Combating Medicare Advantage claim denials requires a proactive approach centered on revenue cycle management compliance and revenue integrity. Here are three strategies that can help hospitals prevent Medicare Advantage claim denials:
Move to a centralized billing office (CBO). A CBO is a centralized department that is responsible for managing the entire billing and collections process for all services rendered. This includes all aspects of revenue cycle management—claim submissions, denial and appeal management, payment posting, accounts receivable follow-up, and business analytics reporting. Moving to a CBO helps combat Medicare Advantage claim denials because it promotes consistency, revenue integrity, and enterprise-wide revenue cycle management compliance across all Medicare Advantage plan types.
Identify the root cause of each Medicare Advantage claim denial—then address it. When a Medicare Advantage plan denies a claim, look at the Medicare Advantage denial notice—specifically the adjustment code that spells out the reason for the denial or other type of payment adjustment. Adjustment codes provide healthcare organizations with insight into areas for potential process improvement. For example, if duplicate services are a common reason for Medicare Advantage denials, look into how and why this happens and whether you need to adjust workflows. The same is true for timely filing denials. Is it a workflow issue or something else? Leverage each Medicare Advantage denial notice to prevent future problems.
Streamline, standardize workflows for prior authorizations. Important steps include enabling revenue cycle management staff to specialize in prior authorizations for Medicare Advantage plans, signing up for Medicare Advantage newsletters to stay on top of prior authorization-related changes, and creating plan-specific prior authorization cheat sheets to quickly recognize when a prior authorization is needed and what clinical information is required. These and other strategies can help healthcare organizations reduce the likelihood of Medicare Advantage claim denials due to lack of prior authorization.
How the 2024 Medicare Advantage and Part D Final Rule may help
One glimmer of hope is the 2024 Medicare Advantage and Part D Final Rule. This rule, which took effect January 1, includes several mandates for transparency that may help reduce Medicare Advantage claim denials. In it, CMS requires the following:
Clarification of clinical criteria. The final rule establishes explicit clinical criteria guidelines for Medicare Advantage prior authorization.
Alignment with coverage determinations. Medicare Advantage plans must adhere to national and local coverage determinations as well as evidence-based criteria when making prior authorization decisions.
Continuity of care. The final rule requires Medicare Advantage plans to establish a utilization management committee to review policies annually and ensure consistency with traditional Medicare’s national and local coverage decisions and guidelines.
Extended validity. Medicare Advantage prior authorization approvals must now be valid for as long as medically reasonable, ensuring that patients receive uninterrupted care.
Looking ahead
Are hospitals dropping Medicare Advantage? Yes, some are. But many can’t afford to do this. With that said, Medicare Advantage claim denials won’t disappear any time soon, but healthcare organizations can certainly take proactive steps to mitigate them. Learn how Inland RCM can help.