CMS Amends Guidance for Medicare Advantage Plans

New guidance follows a report to CMS by the OIG on Medicare Advantage Organization’s inpatient clinical criteria in denying claims.

EDITOR’S NOTE: This story is based on an analysis of the newly amended the Centers for Medicare & Medicaid Services (CMS) “Part C and D Enrollee Grievances, Organization/Determinations, and Appeals Guidance” by healthcare journalist Nina Youngstrom.

In its opening statement to the April 27, 2022 report titled “Some Medicare Advantage Organization Denials of Prior Authorization Requests Raise Concerns About Beneficiary Access to Medically Necessary Care,” the U.S. Department of Health and Human Services Office of the Inspector General states, “A central concern about the capitated payment model used in Medicare Advantage is the potential incentive for Medicare Advantage Organizations (MAOs) to deny beneficiary access to services and deny payments to providers in an attempt to increase profits.”

I’ll pause for a second while you all recover from the shock of that insightful statement.

CMS recovered from their initial shock and agreed with the recommendations that CMS issue new guidance on the appropriate use of MAO clinical criteria for medical necessity reviews, and to update its audit protocols to address the issues identified in the report. CMS followed through on those recommendations in an Aug. 3, 2022 update to the Medicare Managed Care Manual, with numerous revisions to the “Parts C-&-D Enrollee Grievances Organization/Coverage Determinations and Appeals Guidance.” 

If you are a provider who is often frustrated by the complicated and often contradictory authorization, denials, and appeal practices of your local Medicare Managed Care payers, and you page through the over 100 pages of the “Parts C-&-D Enrollee Grievances, Organization/Coverage Determinations, and Appeals Guidance” you are sure to find something that addresses your issues. 

The clarification and guidance that immediately got my attention was included in the significant additions to Section 50.1.1, Requirements for Provider Claim Appeals (Part C Only). 

“A non-contracted provider may request that an organization determination be reconsidered by the plan. Even reconsideration requests submitted by non-contracted providers that relate to the type or level of service furnished to the enrollee must be reviewed in accordance with the administrative appeal process outlined in 42 CFR Part 422, Subpart M.”

According to the first bullet under this statement:

“Diagnosis code/DRG payment denials. A non-contracted provider submits a claim to a plan. The plan initially approves the claim, which is considered a favorable organization determination. The plan later reopens and revises the favorable organization determination and denies the DRG code on the basis that a different DRG code should have been submitted and recoups funds.”


It’s like a CMS policy wonk was sitting in my office and heard my prayers. (I was going to write “heard me crying,” but I thought that was TMI.)

Another common point of provider pain was addressed in a section on Prior Authorization Denials and Coverage Denials. In the April 2022 report, the OIG noted several examples (many advanced radiology scans, pain injections, physician consults and post-acute care service requests) where prior authorization was denied for services. The authorization denials were found to be improper because sufficient documentation was provided to prove the need for care.  But also, the OIG cited MAOs for applying clinical criteria that were stricter than the CMS National Coverage Determinations (NCD) for the requested services.

The OIG audit found that MAOs improperly denied authorization requests 13 percent of the time. 

CMS now clearly states in the amended guidance that MAOs are required to apply Medicare coverage rules when processing preauthorization requests.  They may not use clinical criteria that result in preauthorization denials for services that would be covered under established NCDs and Local Coverage Determinations   for Fee-for-Service   Medicare beneficiaries. 

Although this guidance seems clear at first, you’ll probably come up with some important questions, such as the following:

  • How does this guidance impact the site-of-service denials that I see for advanced radiology services from some MAOs?
  • If pre-authorization is given by the MAO based on expectation that the patient will receive “necessary hospital services” for at least two midnights, is the payer prohibited from denying or recouping payments based on internal application of inpatient clinical criteria?
  • Medicare requires that accounts that have been discharged, and then readmitted on the same day be combined and paid as one account.  Many MAOs have denied “readmissions” for inpatient-admissions within 30 days of a previous inpatient stay. Will this practice now be strictly prohibited?

Depending on your own experiences with your own MAOs, I’m sure that you’ll think of more. 

Any questions that you have can be sent via a Questions Form that you can find on

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Dennis Jones

Dennis Jones is the senior director of revenue cycle at Jefferson Health. He is an experienced healthcare leader with broad and detailed knowledge of the revenue Cycle, compliance issues, denials management, process and workflow, and uncompensated care. Well known in the northeast region for his active leadership and diversified areas of expertise, Dennis is a past-president of the New Jersey Chapter of AAHAM and has held senior management positions in reimbursement consultant and provider organizations. While Dennis is recognized as a leading expert in Revenue Cycle process and technology, his expertise covers a wide variety of topics including RAC issues, managed care, uncompensated care, Medicare and Medicaid compliance, HIPAA, and process improvement. As a result, he has presented on topical healthcare issues for a variety of organizations including Deutsche Bank, The National RAC Summit, The World Research Group, The New Jersey Hospital Association and various state chapters of HFMA, AAHAM, and AHIMA. Dennis has been a frequent contributor to RACmonitor. Dennis is a graduate of the Pennsylvania State University with a degree in health planning and administration.

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