Health insurance has been a hot topic recently and as a Medicare Specialist, I hear a lot of commentary and concern about insurance company practices, like prior authorization denials. Understandably, many seniors enrolled in one are now questioning if they should be worried about their Medicare Advantage Plan. Here are the facts:
Across the nation, on average, the percentage of seniors who choose a Medicare Advantage plan versus those who stick with original Medicare and add a Supplement plan are about evenly split. Our area is a little similar as only a small majority of seniors, here, get their coverage through an Advantage plan. Why is this? We are fortunate to have many different insurance companies competing for your business. This allows for more competition, and we tend to have fewer problems with Advantage plans here. Most Advantage plans in our market have $0 premiums and offer some benefits that Supplement Plans don’t.
Why do Advantage Plans even exist? The federal government spends about 12% of its annual budget on Medicare (roughly $840 billion in 2024). A doctor billing traditional Medicare who follows Medicare guidelines doesn’t need approval before providing a procedure they deem appropriate. While this is great for patients, concerns arose over medical fraud, waste, and abuse. To combat costs and promote efficiency, Medicare Advantage plans were established by partnering with private insurance companies to provide a managed care approach to senior healthcare delivery. Managed care agencies save the government money by requiring pre-approval (or pre-authorization) before costly medical procedures are billable. The downside is insurance carriers can reject or delay care just to save money. Many people believe a high percentage of pre-authorizations are denied by insurers. In truth, most authorization denials happen because of clerical, documentation errors or omissions, and billing code mistakes.
Only about 10% of patients appeal denials and of those, 83.2% have the denial overturned. So, if you get a denial, appeal it! Reports suggest only 7.4% of prior authorizations are denied after missing documentation is provided. Even though a small percentage of authorizations are ultimately denied, patients can still suffer from having their treatment delayed. Generally, carriers are allowed 10 business days to respond to appeals, expedited to 2 business days in emergency cases. Legislation scheduled to go into effect in 2026 should reduce all requests to 72 hours. In some cases, even this is too long for a patient to wait for treatment. One study reports that insurance carriers using artificial intelligence to review requests increased denials from 10% in 2022 to 12% in 2023. Because more errors than expected were reported from AI reviews, most carriers have gone back to physician reviews, at least for now. Prior authorization for Advantage Plans can be a problem, but it is not as bad as the media reports. Concerns have been noted and corrective action is anticipated.
So when my clients who sign up for an Advantage plan that they are quite happy with ask why their friends and family always recommend choosing a Supplement plan instead, the Prior Authorizations problems is the reason. However, the facts are that most seniors will not have to deal with those issues, but if they do, I hope they know to appeal it.
In conclusion, Medicare Advantage Plans are still overall a great value for the level of care. The important part is choosing the right plan that best fits your needs. We have many great options in South Walton for Advantage plans. If you are soon aging into Medicare and going the Supplement plan route, I still recommend exploring multiple different companies as the rate on premiums can vary quite substantially. Of course, there are a few other things to consider as well. If you would like any assistance, I will be happy to help you explore any of these options further or just answer any questions. My services are no cost to you and I am always happy to help a neighbor. Reach out anytime! Email Christian@evergreenhealthins.com or call (850) 687 7606.
Author: Sowal Editor
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