AHA Comments on the CMS’ Request for Information Regarding the Medicare Advantage Program

August 31, 2022

The Honorable Chiquita Brooks-LaSure
Centers for Medicare & Medicaid Services
7500 Security Blvd
Baltimore, MD 21244

Re: CMS-4203-NC, Medicare Program; Request for Information on Medicare

Dear Administrator Brooks-LaSure:

On behalf of our nearly 5,000 member hospitals, health systems and other health care organizations and our clinician partners — including more than 270,000 affiliated physicians, two million nurses and other caregivers — and the 43,000 health care leaders who belong to our professional membership groups, the American Hospital Association (AHA) appreciates the opportunity to provide comments in response to the Centers for Medicare & Medicaid Services’ (CMS) Request for Information (RFI) regarding the Medicare Advantage (MA) program.

The AHA appreciates CMS’s interest in exploring opportunities to advance health equity, expand patient access to care, drive innovation, support affordability and sustainability, and engage in collaboration with partners to improve the MA program. In this context, we are writing to share several serious concerns about the negative effects of Medicare Advantage Organization (MAO) practices and policies, which impede patient access to health care services, create inequities in coverage between Medicare beneficiaries enrolled in MA versus those enrolled in Traditional Medicare, and in some cases, even directly harm Medicare beneficiaries through unnecessary delays in care or outright denial of covered services.

As enumerated below, such practices include abuse of utilization management programs, inappropriate denial of medically necessary services that would be covered by Traditional Medicare, requirements for unreasonable levels of documentation to demonstrate clinical appropriateness, inadequate provider networks to ensure patient access, and unilateral restrictions in health plan coverage in the middle of a contract year, among others. These practices add billions of wasted dollars to the health care system, are a major driver of health care worker burnout,1 and worst of all, harm the health of Medicare beneficiaries.

These pain points are only getting worse as enrollment in MAOs continues to increase rapidly. In 2021, nearly 27 million people, representing 46% of the total Medicare population, were enrolled in a MAO, and enrollment is growing at a rate of nearly 10% per year. By 2023, more than half of all Medicare beneficiaries will be enrolled in an MAO.2,3 With millions of new enrollees each year, it is more important than ever to implement desperately needed oversight provisions to ensure that those enrolled in MAOs are not unfairly subjected to more restrictive rules and requirements than Traditional Medicare, which are contrary to the intent of the MA program. However, as the MA program continues to grow, 78% of hospitals and health systems responding to a recent AHA survey reported that their experience with commercial insurers and MAOs is getting worse. Less than 1% said it was getting better.4

These challenges also are contributing to the unprecedented financial strain that hospitals and health systems are currently facing. Specifically, the types of inappropriate delays and unnecessary denials reported by hospitals and health systems are costly and burdensome for providers to resolve, resulting in millions of dollars of delayed payment or non-payment for services rendered and compromising the financial stability of hospitals across the country. Even prior to the pandemic, approximately one third of hospitals were operating on a negative margin and another third were just breaking even. Meanwhile, the cost of caring for patients has increased by nearly 20% on a per patient basis since pre-pandemic levels due to unprecedented surges in labor and supply costs, as well as inflation, further driving up hospital expenses.5 As a result, operating margins for hospitals in 2022 have been generally negative to date.

Insurer practices that deny and delay payment for services appropriately rendered to patients exacerbate these financial challenges and destabilize providers of critical health care services. For example, in our most recent survey, 50% of hospitals and health systems reported having more than $100 million in accounts receivable for health insurance claims that are older than six months. This amounts to $6.4 billion in delayed or potentially unpaid claims that are six months old or more among the 772 reporting hospitals, leaving providers with untenable financial liability. In MA specifically, one-third of hospitals reported having $50 million or more in accounts receivable that are six months or older, suggesting that MA plans make up a significant portion of the problem.

At the same time, many of these insurers are reaping record-breaking financial profits, realizing much of this financial windfall by delaying and denying coverage of health care services for Medicare beneficiaries which they are contracted to cover. The government pays MAOs a per-beneficiary capitation rate, thus incentivizing them to minimize, to the extent possible, coverage of services to patients or payments to providers in order to boost their own profits — and there is mounting evidence that this is precisely what certain MAOs have been doing — again and again.6 In doing so, many insurers have found the MA program to be their most profitable line of business and have sought expansion into MA as part of their growth strategy.7,8 This is a critical red flag that greater oversight and accountability is needed.

In the following sections, we enumerate several issues and concerns regarding certain MAO practices and policies that restrict or delay access to care. We also address considerations for health equity, behavioral health access and post-acute care services in the MA program, as well as implications for continued growth in MA enrollment and the potential effects on cost and access. We conclude by summarizing specific recommendations that we believe are necessary to hold MAOs accountable for complying with the law, protecting beneficiaries from harm and ensuring the sustainability of the Medicare program.

However, our input is not all dire, and we point out where certain MAOs are taking steps to improve access to care and health outcomes while also creating efficiencies. We particularly see innovations occurring within MAOs that are part of integrated health systems. While the short comment period precludes us from fully exploring the unique value that these integrated MAOs provide, we look forward to other opportunities to highlight these positive developments with the agency.

View the detailed comments below.

1 Addressing Health Worker Burnout: The U.S. Surgeon General’s Advisory on Building a Thriving Health Workforce. 2022. https://www.hhs.gov/sites/default/files/health-worker-wellbeing-advisory.pdf
2 https://www.medpac.gov/wp-content/uploads/2022/03/Mar22_MedPAC_ReportToCongress_Ch12_SEC.pdf
3 https://www.kff.org/medicare/issue-brief/medicare-advantage-in-2021-enrollment-update-and-key-trends/
The AHA fielded this member survey between December 2021 and February 2022. The results reflect responses from 772 hospitals in 47 states.
7 https://www.kff.org/report-section/financial-performance-of-medicare-advantage-individual-and-group-health-insurance-markets-issue-brief/
8 https://www.forbes.com/sites/brucejapsen/2021/10/01/parade-of-health-insurers-expand-medicare-advantage-into-hundreds-of-new-counties/?sh=591ab1106b69