CMS issues a slew of Medicare Advantage regulations during audits, but lack of clarity hampers effectiveness

The first half of this year saw a tremendous amount of regulatory activity related to the Medicare Advantage (MA) program, with much of the policy action resulting from extensive advocacy efforts by nursing home organizations.

But many of the rules — such as those regarding prior authorizations for certain services — are unclear in their current form, leading to less effectiveness, said Nicole Fallon, vice president of integrated services and managed care at LeadingAge. Nursing home associations, including LeadingAge, have spearheaded efforts to collect data on Medicare Advantage to present to the Centers for Medicare & Medicaid Services (CMS) to show how the rules could be more effective.

“CMS has said that if we get more information about what’s not working, they’re willing to look at the regulations and make some refinements to make things work,” Fallon said.

Also involved in data collection are the American Health Care Association (AHCA), the National Home Care and Hospice Association, the American Association of Rehabilitation Medical Providers and the National Association of Long-Term Hospitals, she added.

CMS is also auditing nearly 90% of Medicare Advantage plans to ensure compliance. And as nursing homes seek clarification on some of the rules during the audits, MA plans are also expected to tighten payments.

Meanwhile, MA plans are putting pressure on the country front, especially when it comes to payments, she said. Fallon expects tough discussions during contract negotiations.

Managed care organizations are predicting 2025 will bring some cuts, she said.

“They’ve suggested that the only way to balance this is to either reduce payments to providers or reduce benefits and increase premiums and beneficiaries, which is usually their last resort,” Fallon said of budget cuts. “I don’t know how much they can go down.”

There’s some dissonance here, given analyses by the Wall Street Journal and the Medicare Payment Commission (MedPAC) that found that incorrect or erroneous documentation of diagnoses resulted in higher payments to plans. Specifically, MedPAC found that MA plans cost taxpayers $591 billion more over the past 18 years than it would have cost to treat the same people under traditional fee-for-service Medicare.

How effectiveness is lost

As she explained, one of the prior authorization regulations that came into force in January was intended to require prior authorizations to cover the costs of a so-called treatment cycle.

CMS’s definition of a course of care, however, is unclear, especially when it comes to how the rule applies to the post-acute care sector, she said. What’s more, the Office of Inspector General (OIG) last month announced its plan to study the use of prior authorizations for post-acute care among Medicare Advantage Organizations (MAOs), with results to be published in a 2026 report. The agency will examine the plan’s procedures for reviewing such authorizations, the scope of denials and the care settings to which patients are discharged after hospitalization.

The new regulations assume that prior authorization will cover all health cases of a person across service locations, but obtaining it has proven difficult once a person is admitted to a nursing and care facility.

“The idea was that you have to give one authorization and you don’t have to do all of these things over and over again; that’s creating administrative headaches for us,” Fallon said. “We’re working on that piece.”

Other regulations state that if a prior authorisation for a service has been issued and the service provider submits a request for payment for that service, it must be paid for.

“I’m not sure the plans are following that… that’s the problem we have,” Fallon said. “These are the things we need to start reporting to CMS so they can gather information about what trends we’re seeing.”

A Slow Move Towards More Responsibility

Another issue raised by recent regulations is the use of algorithms and artificial intelligence (AI) in how MA plans determine length of stay. That relies on averages, which aren’t very patient-centric — which is the whole point of MA, she said.

The regulations state that a plan cannot use artificial intelligence or an algorithm to terminate care. A reassessment must be done to see if the patient is no longer at a level of care that requires skilled services.

“That gives us some background. That clarification was actually put into the FAQ that CMS put out in February. We’ve really been pushing for more clarity and for more FAQs to come out,” Fallon said of the association’s efforts.

The industry really wants CMS to add some “substance” to these MA regulations, she said, in the form of frequently asked questions or examples of where the agency is headed in terms of increased oversight of MA plans.

What’s more, CMS has learned that these plans appear to be compliant with many of the new regulations, a review that was provided to LeadingAge.

“(CMS) has made it clear to us that they are going to … enforce it from day one this year. They expect compliance now,” Fallon said, referring to MA plans that comply with the new rules. “They have said they are going to use every tool in their toolbox to ensure compliance. They are going to audit almost every plan this year, to the point where it will be about 90% of Medicare Advantage enrollees, to make sure they are compliant.”