American Hospital Association, December 2020
Introduction
Health care coverage has never been more important as the nation battles the COVID-19 pandemic – now and for the foreseeable future. Two-thirds of the population relies on the private sector for health insurance coverage and thus access to health care. While private health insurance coverage has long served as the backbone of our national system, that very coverage and the security it offers millions of Americans is eroding at an alarming pace. Health care insurance was originally designed to be a straightforward financial agreement between a health plan and a consumer: the consumer paid a premium in exchange for coverage of a set of health care services offered by a certain group of providers. If disputes arose, consumers could expect that adjudication of the claim would follow a fair, efficient, and transparent process. This agreement, underpinning America’s system of health insurance for decades, is beginning to slip away in some markets across the country, and the COVID-19 public health emergency is further shining light on its erosion.
Not only are private health insurance plans the dominant source of health care coverage for most Americans, but employers, as well as the Medicare and Medicaid programs, rely on private health plans to provide or administer their health benefits. Approximately one-third of Medicare beneficiaries are enrolled in a private Medicare Advantage health plan, and nearly all states enroll some or all of their beneficiaries into Medicaid managed care plans.
Coverage through these plans is eroding as some health insurers restrict access to health care services by abusing utilization management programs and changing health plan rules in the middle of a contract year. For example, prior authorization, one of the most widely used utilization management tools, is designed to help patients obtain the right care in the right place. Insurers use prior authorization to ensure that providers order care that is consistent with clinical guidelines and protocols, as well as to confirm that such care is covered by the patient’s plan. This tool was designed to primarily help guide (and monitor) providers’ decision-making around treatments that are new, particularly high cost, or that have a history of questionable use. However, some plans are now applying prior authorization to a wide range of services, including those for which the treatment protocol has remained the same for decades and there is no evidence of abuse.
Unjustified use of utilization management tools like prior authorization has a number of negative implications for patients and the health care system. Patients are often blindsided by denials and can face unexpected medical bills as a result. The extensive approval process that doctors and nurses must go through adds billions of wasted dollars to the health care system and contributes to clinician burnout.
Evidence of the negative impact of these practices is mounting. The Department of Health & Human Services Office of the Inspector General (OIG) warned in a September 2018 report that high rates of Medicare Advantage (MA) health plan payment denials and prior authorization delays could negatively impact patients’ access to care. In 2019, a federal court found that the largest commercial insurer in the United States was abrogating the entire point of health insurance by systematically denying medically necessary, covered behavioral health services for financial reasons. It is worthy of note that in response to COVID-19, many health insurers, including at the urging of government, scaled back the use of many of these tactics precisely because they create barriers to care. State governments, as the primary regulators of insurance, have also taken action. For example, New York State passed a number of insurer accountability measures at the beginning of the COVID-19 to help ensure patient access to care and to remove unnecessary burdens on providers on the front lines.
In 2019, the American Hospital Association (AHA) fielded a survey to better understand the impacts of health plan utilization management practices on patients and providers. More than 200 hospitals and health systems responded. Their data was supplemented with interviews and group discussions with several hundred additional hospital and health system executives. The following report documents our findings related specifically to prior authorization and payment delays and denials. While these findings pre-date the COVID-19 public health emergency, they remain not only relevant but serve to underscore the urgency to address these issues as hospitals remain on the front line of care for COVID-19 patients. The report offers policymakers solutions to reduce the risk and burden of these programs while still enabling health insurance plans to compete on quality, benefit package design, provider networks, and other important aspects of coverage.
(This nine page report then discusses problems with interacting with the private commercial insurers, especially with prior authorization and with reimbursement delays and denials. They then discuss their view of potential policy solutions.)
Conclusion
Certain health plan practices threaten patient access to care and drive excessive administrative costs and burden in the health care system. While these concerns pre-date COVID-19, the current public health emergency both highlights and demands immediate action to protect patients and providers. Regulators should increase their oversight of health plans and implement a comprehensive simplification agenda, beginning with streamlining prior authorization requirements and processes, as well as monitoring for abusive payment delays and denials. These efforts will go a long way to addressing unnecessary costs in the system and allow for a more rational, navigable health system for patients.
AHA Comments on “Medicare for All”
By Tom Nickels, Executive Vice President AHA
American Hospital Association, February 27, 2019
America’s hospitals and health systems are working with policymakers to help expand coverage and improve affordability for all Americans. However, we are opposed to “Medicare for All,” as it would impede our shared goals.
To start, a one-size-fits-all approach would disrupt coverage for the more than 180 million Americans who are covered by employer-sponsored health plans. That coverage, and plans sold on the marketplaces, offer benefits that Medicare doesn’t. Importantly, enrollees in these plans are protected from catastrophic costs.
Further, the government can be an unreliable business partner, as we just witnessed with the longest partial government shutdown in our nation’s history. Congress also has a history of slashing provider payments for government health programs to meet its budgetary goals.
Additionally, important delivery system reforms to improve care, enhance quality and reduce costs would no longer be a priority once government controls all payments to providers.
Finally, public programs like Medicare and Medicaid reimburse providers less than the cost of delivering care for patients, which exacerbates access problems.
The AHA believes there is a better alternative to help all Americans access health coverage – one built on fixing our existing system rather than ripping it apart and starting from scratch. In addition to expanding Medicaid in the remaining non-expansion states, we support strengthening the marketplaces to improve their stability and affordability, and increasing enrollment efforts to connect people to coverage.
Comment:
By Don McCanne, M.D.
It is no surprise that members of the American Hospital Association (AHA) recognize the abuses of the private commercial insurance plans since they have to deal with them on a daily or even hourly basis. Although this report focuses on prior authorization and payment abuses, the extensive other problems, especially private insurers being the primary source and cause of the hundreds of billions of dollars in administrative waste in health care financing, should lead us to the conclusion that this industry should be eliminated. But what does AHA say?
In slamming the private commercial insurance industry, including private employer-sponsored plans, AHA certainly recognizes the source of these problems. But what about public insurance programs such as Medicare and Medicaid? AHA’s expressed complaint in today’s report is not with government administered plans but rather with private Medicare Advantage and the private Medicaid managed care plans.
AHA’s proposed solutions for prior authorization and payment abuses would leave in place our very expensive, fragmented and highly dysfunctional health care financing system, and would only tweak some of the administrative complexities. If the corrective measures would reduce the insurers’ net revenue, being masters of innovation, they would find other means of milking more out of the system. It is in their nature, and they will not change.
The hospitals would clearly benefit from a well designed, single payer, improved version of Medicare that covered everyone, so why do they not support it? The statement from AHA advances specious arguments such as the trite contention that “a one-size-fits-all approach would disrupt coverage.” Actually we should want the current coverage to be disrupted since it is the source of much of the dysfunction with health care financing.
Medicare does need to be improved and that would occur with enactment of Medicare for All, but the only real complaint AHA has is that the reimbursement rates are low. With the PNHP single payer model, hospital payment would be converted to global budgets, much like fire departments. The government would have to budget enough funds to be certain that the capacity of the system is adequate and that distribution is appropriate for the needs.
AHA and the AMA should concede that the health care system should be designed and financed to meet the health care needs of the patients. That means that the system needs to be adequate and then the physicians and hospitals will do just fine. And just think how pleasant the task will be when the system is finally cleared of all of the administrative garbage dumped on us by the private insurers.
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