Is it cheaper to pay CMS fines than to fix your Medicare Appeals Process?

banish waste

The Centers for Medicare and Medicaid Services (CMS) fined 20 health plans a total of more than $5,000,000 in 2015. These fines were for Medicare Advantage and Part D plans that failed, among other things, to process Organizational Determinations, Appeals & Grievances (ODAG).

The largest single fine was $1M.

Can you afford a million dollar shaming? Do you want to?

I’m fascinated. It’s really amazing to me that CMS fined these plans. To add insult to injury, CMS publishes their “Notice of Imposition of Civil Money Penalty for Medicare Advantage-Prescription Drug and Prescription Drug Plan Contract” on the internet for all to see. The letter is typically addressed to the CEO or the executive in charge of the program.

I confess, being a CMS groupie, I cringe for the CEOs when I read them.

With 20 plans receiving fines and public shaming in a single year, I thought I would reach out to them to see how they are addressing the processes that got them fined. I imagine a red-faced CEO standing over a desk, teeth clenched, looming over the VP of Appeals & Grievances demanding dramatic and instant change.

So I emailed and called all of them.

The reaction

I thought I would hear how they were “mad as hell and not going to take it anymore!”

Alternatively, I thought I would hear how they were aggressively pursuing new systems and compliance initiatives. Instead, this is what I heard: Chirp, chirp, chirp.

That’s right, the sound of crickets.

Only one of 20 even returned my email. They said that they were “fine.” What an appropriate word.

A federal agency just fined your organization because your processes were so bad that it might be endangering people’s health. And you’re “fine”?

What about the other 19 organizations CMS fined? Are they “fine” too?

A theory emerges

It was time to do some detective work. I began spinning my digital Rolodex and contacting my network. Over several weeks last quarter, with the help of some colleagues, we were able to string together the following theory.

It might simple be a numbers game. Implementing change at a health plan is often difficult, time-consuming and expensive. It is simply uncomfortable for most plans. Most plans also have invested heavily in systems that are cumbersome and expensive to change.

The bottom line

What is the cost of the change versus the cost of no change?

Most importantly, what is the cost a quick fix? Perhaps it is easier and cheaper to simply slap some cheap process “band aids” on a bad process, hire a couple of clerks with No. 2 pencils and hope CMS doesn’t audit you again too soon?

Perhaps the cost of the fines are simply a cost of doing business? Are you willing to tell that to your customers in need of care?

Having spent the last two years building a world-class Appeals and Grievances solution, I hope that this theory is proved false. As a healthcare consumer and aging post-boomer-future-Medicare-beneficiary, I hope this proves false.

I hope plans, especially those fined and shamed, will have the courage to make Appeals & Grievances a shining example of their commitment to member and provider satisfaction. I hope they will return my calls and tell me what is really going on.

Mike Hurley

Mike Hurley

Mike Hurley is the industry manager for Health Insurance at Hyland, helping health insurance organizations transform business processes that drive value for members, providers and employees. Mike works with current... read more about: Mike Hurley

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