Medicare Advantage Coverage Criteria and Utilization Management Requirements

Last April, the Centers for Medicare & Medicaid Services (CMS) released the 2024 Medicare Part D rule. CMS recently issued a list of frequently asked questions addressing parts of these Medicare Advantage coverage criteria and utilization management requirements that took effect in 2024. These FAQs are intended to make sure MA plans are covering care appropriately and not creating unnecessary barriers through prior authorization and other restrictions.

While MA plans are private health plans that contract with Medicare, they must cover all of the services that traditional Medicare covers. However, plans have sometimes put their own coverage restrictions in place that can make it harder for patients to access care. The new rules establish guardrails to prevent inappropriate limitations.

What This Means for Consumers

The Medicare Advantage Coverage Criteria and Utilization Management Requirements that went into effect on January 1, 2024 are designed to correct some troubling practices that have emerged in Medicare Advantage plans like inappropriate denials and delays in care due to utilization management barriers. When plans create too many administrative hurdles, it can negatively impact consumers’ health.

The goal is to make the MA program work better for patients by prohibiting plans from limiting coverage for reasons not grounded in established Medicare policies or current medical evidence. The new transparency provisions will also make it clearer what criteria plans are using to make decisions.

While plans retain flexibility to innovate and manage benefits, they must do so in accordance with the standards and protections of the traditional Medicare program. These rules will help ensure Medicare Advantage lives up to its promise of providing equivalent coverage to traditional Medicare in a coordinated plan, while giving peace of mind to consumers.

What This Means for Companies

The Medicare Advantage Coverage Criteria and Utilization Management Requirements could also have important implications for companies that market medical equipment, diagnostic services, and prescription drugs. Here are some potential effects:

• Stricter medical necessity criteria could reduce utilization and sales if MA plans deny coverage for certain devices, tests, or drugs that don’t clearly meet established Medicare policies. Companies may need to provide more evidence to support coverage.
• Transparency requirements around internal coverage criteria give manufacturers insight into what clinical guidelines MA plans are using to make coverage decisions. This allows companies to target their marketing and tailor their evidence dossiers.
• With requirements for medically reasonable prior authorization durations, manufacturers of chronic medications and durable equipment may see reduced administrative burden from fewer reauthorizations.
• Limits on use of algorithms and AI to automatically deny claims mean coverage decisions will remain human-driven clinical appraisals. This makes marketing to clinicians still important.
• Prohibitions on terminating post-acute care could increase sales of home health and durable medical equipment if patients have longer recovery periods.
• Overall reductions in barriers to care for Medicare Advantage members expands the market opportunity for manufacturers selling into this space.

While the rules aim to improve appropriate access for patients, they will require adaption from medical product companies used to more utilization control by payers. But the principles of sound evidence and patient-centered care are positive developments.

Key highlights from the Medicare Advantage Coverage Criteria and Utilization Management Requirements include:

Medical Necessity Determinations

MA plans must make decisions about whether care is medically necessary based on established Medicare coverage rules and policies. If Medicare doesn’t have definitive coverage criteria established for a particular service, MA plans can create their own internal criteria but it must be publicly posted and meet certain evidentiary standards. Essentially, MA plans can’t deny coverage for arbitrary reasons not grounded in Medicare policy or medical evidence.

Use of Algorithms/AI

There has been growing concern about MA plans potentially using automated computer tools or artificial intelligence to make improper blanket denials of care that should be individualized decisions. CMS clarified that while algorithms can assist in processing claims, They cannot fully replace individual assessments of medical necessity that consider the patient’s unique clinical circumstances. If plans use algorithms or AI, they must still comply with Medicare’s rules.

Transparency of Internal Criteria

When MA plans create their own coverage criteria, they must post this information publicly on their website without any subscription or paywall that would obstruct access. Criteria must be grounded in current medical guidelines and literature with proper citations. This level of transparency enables oversight.

Continuity of Care

The new rules prohibit MA plans from requiring prior authorization again for an ongoing course of treatment that has already been approved. Prior authorization approvals must be valid for a medically reasonable duration to avoid disruption of care.

Hospitalization Rules

MA plans must follow Medicare’s hospital admission criteria, including the “two-midnight rule” that says hospital stays expected to cross two midnights are generally appropriate for inpatient admission. However, a separate Medicare presumption around claims auditing does not apply to MA.

Post-Acute Facility Care

Plans cannot deny admission to a skilled nursing facility or other post-acute care setting ordered by a doctor if Medicare’s coverage requirements are met. MA plans also cannot terminate post-acute care without an assessment showing care is no longer medically necessary based on Medicare criteria.

Interrupted Stays

If a Medicare enrollee has a brief hospital discharge then returns to the same facility within three days, Medicare treats it as one continuous stay. MA plans must also follow this interrupted stay policy and not require a new prior authorization.

Physician Review

MA plans can only deny coverage for lack of medical necessity after a physician or appropriate health professional reviews the case. Nurses or other staff cannot independently make adverse determinations. This ensures clinical expertise.

Oversight Committees

MA plans that use prior authorization or other utilization management tools must establish internal committees led by their medical directors to review policies annually and ensure they align with Medicare coverage rules. This oversight protects against inappropriate restrictions.

Compliance Audits

Given concerns about barriers to care, CMS will be conducting both routine and targeted audits of MA plans in 2024 focused specifically on compliance with the new coverage and utilization management requirements. Findings could potentially lead to fines or other penalties.

In Conclusion:

The Medicare Advantage Coverage Criteria and Utilization Management Requirements represent an important step forward in balancing innovation with appropriate access to care. While Medicare Advantage plans can leverage their flexibility to improve coordination and benefits, they must do so in accordance with the standards and protections that consumers expect from the Medicare program. These new safeguards will help ensure that Medicare Advantage lives up to its promise of providing equivalent coverage to traditional Medicare without undue barriers or restrictions.

By realigning plan practices with established Medicare policies and putting the focus back on the clinical needs of each unique patient, the regulations reinforce the program’s commitment to high-quality, patient-centered care. Both consumers and the healthcare industry can be reassured that access will not be inappropriately limited by private plans. With strong oversight and a transparent, collaborative process, Medicare Advantage can continue to progress without compromising the healthcare that millions of America’s seniors rely upon.