Two New Proposed Rules for Medicare Advantage Plans Expands Beneficiary Rights
At the end of 2023, the federal government announced two important proposed rules to improve the rights of Medicare beneficiaries. One addresses the troubled designation of “observation status,” and the other proposes changes to strengthen Medicare beneficiary protections and promote access to additional benefits and providers.
When an individual is treated at a hospital, instead of being formally admitted, they may be treated under observation status. They can be classified as an outpatient under observation status even if they stay in an inpatient room for multiple days. This can be problematic, because only inpatient admissions are covered under Medicare Part A. Furthermore, post-hospitalization care such as a stay at a rehabilitation facility is covered by Medicare only if the patient has had a 3-day hospital admission.
Many patients assume they have been admitted once they go from the emergency room to the floor, but they may never be formally admitted, or their status may be changed. The new proposed rule, which resulted from a class action lawsuit, outlines appeals processes for individuals who were admitted but then reclassified as outpatients under observation status during their hospital stay. The rule provides for both expedited and standard appeals. It also includes a retrospective appeals process for individuals who, at any time since 2009, had hospital admissions where their status was changed to outpatient observation. Once this rule is finalized, beneficiaries will have meaningful tools to address reclassifications that impact Medicare coverage of their hospital and post-hospital care.
The other new proposed rule includes policy and technical changes to strengthen Medicare beneficiary protections and promote access to additional benefits and providers. One important proposal is to standardize the financial compensation that Medicare brokers receive when beneficiaries enroll in Medicare Advantage Plans.
Over the last few decades, enrollment in Medicare Advantage plans has skyrocketed, and many seniors get trapped in these plans as their health needs increase. While Medicare beneficiaries can switch from Medicare Advantage plans to traditional Medicare on an annual basis, they often cannot afford to do so because they cannot enroll in supplemental coverage (i.e., Medigap policies).
When beneficiaries first enroll in Medicare, they are guaranteed to qualify for a Medigap policy without pricing based on their medical history. However, Medigap insurers can deny coverage to beneficiaries transferring from Medicare Advantage plans or base their prices on medical underwriting. Although the new rule does not address this problem, it does even the playing field among Medicare Advantage plans. Currently, these plans offer financial incentives to agents and brokers that might “result in beneficiaries being steered to [certain] Medicare Advantage plans over others.” The new rule, however, requires that brokers receive a flat standard compensation ($642 per enrollee) regardless of the plan the beneficiary enrolls in.
Another important aspect of the proposed rule is an expansion of behavioral health providers. Last year, drug and addiction counselors were allowed to directly bill Medicare. The new proposed rule will allow 2 additional classes of providers - marriage and family therapists (MFTs) and mental health counselors (MHCs) - to bill Medicare. It is estimated that approximately 400,000 providers will enroll as Medicare providers.
Medicare is also making changes designed to increase beneficiary use of supplemental benefits offered under Medicare Advantage plans. Many plans offer supplemental benefits such as dental and vision to attract enrollees, but use of many of these supplemental benefits has remained low. The new rule will require that beneficiaries receive notice about the supplemental benefits available to them mid-year, as well as information on costs and how to access the benefits. The rule also establishes standards for supplemental benefits designed to improve the health and function of chronically ill beneficiaries.
One change in the proposed rule impacts beneficiaries receiving long-term care. As noted above, many beneficiaries find themselves stuck in Medicare Advantage plans. This can be especially problematic as their health declines, because these plans may have limited specialty providers and often will terminate rehab and home health coverage more quickly than traditional Medicare. Therefore, the rule changes designed to enhance the appeal rights of Medicare Advantage enrollees are particularly important.
The proposal makes two changes related to these appeals. It would allow beneficiaries to appeal expedited review of coverage termination to an independent Quality Improvement Organization just as traditional Medicare beneficiaries can, instead of the current process that allows review only by the Medicare Advantage Plan itself. The rule also preserves the beneficiaries’ right to appeal termination of skilled nursing home care even once they have left the facility.
Lastly, the proposed rule makes changes designed to increase access and limit costs for beneficiaries who are eligible for both Medicare and Medicaid, and includes some changes to utilization management policies and procedures to address health equity. If you have questions about Medicare, you can reach out to me at ssiegel@norris-law.com.