With Declining Managed Care Rates and Baseless Denials, Providers Ask, “Is It Worth It?”

Managed care insurers’ popularity among beneficiaries is steadily increasing. Currently, 30% of the Medicare population is enrolled in managed care plans, and that percentage is predicted to grow exponentially through 2030. Beneficiaries choose managed care plans for access to additional benefits, including vision, dental, hearing, and prescription coverage. However, there is a concerning pattern within the long-term care (LTC) industry: managed care insurers denied services and payments that may prevent beneficiaries from accessing medically necessary care and leave providers uncompensated.

After the Centers for Medicare and Medicaid Services’ (CMS) annual audits of managed care insurers “highlighted widespread and persistent problems related to inappropriate denials of services and payment,” the Office of Inspector General (OIG) released a report (OEI-09-18-00260) of findings from its review of denials of prior authorization requests and payment denials issued by 15 of the largest Managed Care insurers. The OIG found that managed care insurers denied 13% of prior authorization requests that would have been covered by Medicare fee-for-service. The review also found that 18% of payment requests denied by managed care insurers met Medicare coverage rules and managed care billing rules, confirming the higher-than-average denial rate providers suspected.

Managed care insurers have a convenient position within the denial appeal system structure, acting as judge and jury. Providers or beneficiaries are required to appeal denied services directly with the denying insurer. After a three-level appeal process, there is no option for cases to be reviewed by an independent party. With the recent uptick in enrolled beneficiaries, managed care insurers seem to have gained an upper hand, forcing providers to play by their rules. The reality is, when LTC providers admit managed care beneficiaries, they run the risk of not receiving reimbursement for care already provided.

Simultaneously, rates for managed care residents continue to decline. The average daily rate for a managed care resident is $120 per day less than for their traditional Medicare resident counterparts.

Many providers have started to ask, whether it is worth it to admit a managed care beneficiary. Unfortunately, there isn’t a clear-cut answer. Providers need to assess their contracts with insurers, the skillsets of staff managing denials (including MDS coordinators, the finance department and administrators), processes to review payment and denials, and ultimately their risk tolerance.

What can providers do to protect their investment (services already provided) or recoup their losses?

Consider outsourcing to an expert. Providers may be spinning their wheels trying to navigate the managed care appeal process, costing valuable staff time. A subject matter expert can quickly review denials for validity and assist in drafting responses for appeals.

The post-acute care advisors at Celtic Consulting frequently offer advisory support to providers fighting managed care denials. The firm is also relied on for its expertise in responding to additional data requests (ADRs). Further, Celtic Consulting specializes in managed care accounts receivable and revenue collections and has helped clients collect millions of dollars of outstanding revenue.

The OIG recommended that CMS direct managed care insurers to address vulnerabilities that may lead to manual and system errors. Experts believe providers won’t feel much relief until managed care insurers face further regulations. Industry influencers and providers alike, are asking for independent denial reviews and requirements to follow the Managed Care Manual publication 100-16 issued by CMS.