This bill establishes requirements for Medicare Advantage plans regarding the rate at which they overturn initial denials of coverage made through prior authorization, with contract termination for excessive reversals.
Mark Pocan
Representative
WI-2
This bill amends the Social Security Act to establish new requirements for Medicare Advantage plans regarding how often they can overturn initial denials of coverage following prior authorization requests. Specifically, it mandates contract termination for plans whose rate of reversed prior authorization denials exceeds 25% in a given year. This measure aims to curb excessive initial denials by Medicare Advantage organizations.
New Rule Forces Medicare Advantage Plans to Cut Denials: Contract Terminated if 25% of Denials Are Reversed
This legislation aims to curb a frustrating practice in Medicare Advantage (MA) plans: the routine denial of coverage for services that require prior authorization, only to approve them later after a lengthy appeal process. The bill amends the Social Security Act to establish a hard limit on how often an MA plan can reverse its own initial coverage denials. Specifically, if an MA plan requires prior authorization, the Secretary of Health and Human Services must terminate that plan’s contract if more than 25 percent of its initial prior authorization denials are later reversed through reconsideration or appeal within a plan year.
The 25% Rule: Stopping the 'Deny First' Strategy
For years, patients and providers have complained that MA plans frequently deny necessary care upfront, forcing beneficiaries to jump through hoops to get approval. This bill tackles that head-on by setting a clear metric. Think of it this way: if a plan denies 100 requests for prior authorization for things like physical therapy or specialized equipment, and 26 of those denials are overturned later on appeal, that plan is now in violation. The consequence isn't a fine or a warning—it’s mandatory contract termination. This is a powerful enforcement tool designed to make MA plans get their coverage decisions right the first time.
What This Means for Everyday People
If you or a family member relies on Medicare Advantage, this change is a big deal for accessing care quickly. Currently, when an MA plan denies a service, it often creates a costly delay. Maybe a patient needs a specific type of durable medical equipment, and the plan denies it, forcing the patient to wait weeks or months for the appeal to go through. During that time, their condition might worsen. By mandating contract termination for plans that exceed the 25% reversal rate, the bill creates a massive financial incentive for MA organizations to approve medically necessary services immediately. It essentially discourages the “deny and delay” tactic that many plans use as a cost-saving measure.
The Enforcement Hammer
The bill is low on vagueness and high on consequence. The 25% threshold is a bright line that is easy to measure. Furthermore, the legislation explicitly states that the standard, lengthy contract termination procedures do not apply in these cases. This means the Secretary can move swiftly to terminate the contract of a non-compliant plan, removing loopholes that might allow plans to drag out the process. There is a secondary enforcement mechanism: the Secretary can also terminate a contract if a plan suddenly shows a "significantly fewer" number of reconsidered denials compared to the previous year, suggesting the plan might be trying to manipulate the numbers or avoid proper reconsideration processes. The whole point is to ensure that the initial coverage decision is fair and accurate, reducing the burden on patients to fight for the care they were promised.