DEPARTMENT OF HEALTH &. HUMAN SERVI.CES	 Office of Inspector General 

Washington, D.C. 20201 

OCT 2 2 2009
 

TO:	 Charlene Frizzera 

Acting Administrator 

Centers for Medicare & Medicaid Services 

FROM: stuart Wright 

Deputy Inspector General 

for Evaluation and Inspections 

SUBJECT:	 Memorandum Report: "Beneficiary Appeals in Medicare Advantage," 

OEI-OI-08-00280 

This~emorandum report provides information about appeals made by beneficiaries in Medicare 

Advantage (MA). Specifically, it provides information on: (1) outcomes of organization 

determinations and first-and second-level appeals of beneficiaries enrolled in MA, (2) Medicare 

Advantage Organization (MAO) compliance with timeliness requirements for determinations 

and appeals, and (3) the Centers for Medicare & Medicaid Services (CMS) oversight ofthe MA 

appeals system. 

We found that MAOs make the vast majority of organization determinations in favor of 

beneficiaries, and deny very few. Ofthese denials, called adverse determinations, very few were 

appealed, and upon appeal, MAOs overturned more than half oftheir own denials. We also 

found thatMAOs decided 23 percent of adverse expedited determinations, and 18 percent of 

appeals, late. At the second level of appeal, the Independent Review Entity (IRE) overturned 

about one in five adverse MAO reconsiderations. Finally, CMS'identified many MA contracts 

that failed to meet appeals-related audit elements. 

Our review also raises questions and concerns. We found that beneficiaries appealed fewer than 

1 in 10 adverse determinations. Although no rate of appeal is expected or correct, further study 

could examine factors that might explain this rate. Further study could also identify differences 

between denials that beneficiaries appeal and those that beneficiaries do not appeal. Particularly 

concerning are the problems with timeliness in processing adverse expedited determinations and 

the higher IRE overturn rate of expedited cases. Because expedited cases concern time-sensitive 

care, it is important that such care be delivered with minimal delays. 

OEI-O 1-08-00280	 Beneficiary Appeals in Medicare Advantage 
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OEI-01-08-00280 Beneficiary Appeals in Medicare Advantage

BACKGROUND 

The Medicare Prescription Drug, Improvement, and Modernization Act of 2003 made several 

important changes to Medicare managed care, including increasing payments to MAOs and 

renaming the program “Medicare Advantage.”1

 As of April 2009, 10.9 million Medicare 

beneficiaries (about 22 percent of all Medicare beneficiaries) were enrolled in 752 MA 

contracts.2 These numbers represent increases of 106 percent and 164 percent, respectively, 

from 2003, when MA was enacted. An MAO, the parent organization, may hold multiple 

managed care contracts, which are agreements to provide MA services across a specified 

geographic area. Each contract may include multiple plans. 

A capitated payment system, such as that used by MAOs, could create fiscal incentives to 

underserve beneficiaries.3

 A properly functioning appeals system provides a vital safeguard to 

protect against those incentives. 

MA Appeals Process 

The Social Security Act states that MAOs must have a procedure to determine whether a 

beneficiary is entitled to receive health services and the amount, if any, a beneficiary is required 

to pay for these services.4

 It also mandates that MAOs offer beneficiaries the right to appeal an 

adverse determination.5

 Further, it requires that the Secretary of the Department of Health and 

Human Services contract with an IRE to review second-level appeals in cases where an MAO 

has returned an adverse decision to a beneficiary’s initial appeal.6

If the IRE upholds the MAO’s decision, a beneficiary can continue the appeal with an 

Administrative Law Judge, then with the Medicare Appeals Council, and finally, via judicial 

review.7 MAOs can appeal Administrative Law Judge decisions and any higher-level 

decisions.8

Organization Determination. An organization determination is any decision made by an MAO 

about whether a beneficiary is entitled to receive health services and the amount, if any, a 

beneficiary is required to pay for these services.9 For example, MAOs make organization 

1 P.L. No. 108-173 §§ 211 and 201. 

2 CMS, “Monthly Contract and Enrollment Summary Report.” Available online at 

http://www.cms.hhs.gov/MCRAdvPartDEnrolData/. Accessed on July 14, 2009. 

3 Government Accountability Office, GAO/T-HRD-93-10, “Medicaid: States Turn to Managed Care to Improve 

Access and Control Costs,” 1993. Available online at http://archive.gao.gov/d42t14/148756.pdf. Accessed on 

July 14, 2009. 

4 Social Security Act, § 1852(g)(1)(A). 

5 Social Security Act, § 1852(g)(2)(A). 

6 Social Security Act, § 1852(g)(4). 

7 Social Security Act, § 1852(g)(5), 42 CFR §§ 422.600, 422.608, and 422.612. 

8 42 CFR §§ 422.608 and 422.612. 

9 42 CFR § 422.566(a). 
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OEI-01-08-00280 Beneficiary Appeals in Medicare Advantage

determinations about whether to pay for temporarily out of the area renal dialysis services, 

emergency services, poststabilization care, or urgently needed services; whether to pay 

for any other health services furnished by a provider other than the MAO that the enrollee 

believes are covered under Medicare (or, if not covered under Medicare, should have been 

furnished, arranged for, or reimbursed by the MAO); or discontinuation or reduction of a service 

if the enrollee believes that continuation of the service is medically necessary.10

The parties that can request an organization determination are: the beneficiary or an authorized 

representative, the beneficiary’s provider, or the legal representative of a deceased beneficiary’s 

estate (in this memorandum report we refer to all of these parties as the beneficiary).11

Beneficiaries can request three types of organization determinations: a standard service request, 

an expedited service request, and a payment request.12 Organization determinations have three 

possible outcomes for the beneficiary: favorable, partially adverse, or wholly adverse. When the 

MAO notifies a beneficiary of a partially or wholly adverse determination, it must inform the 

beneficiary, in writing, of the right to appeal a wholly or partially adverse determination.13

Table 1 shows the timeframes by which MAOs must provide their decisions on organization 

determinations.14 If an MAO fails to meet these timeframes, the determination is considered 

adverse to the beneficiary and the beneficiary may appeal.15

 Table 1: Timing for Organization Determinations and Appeals

Type of Request Organization 

Determination 

First-Level 

Appeal 

Second-Level 

Appeal 

Standard Service Request 14 days 30 days 30 days 

Expedited Service Request 72 hours 72 hours 72 hours 

Payment Request In accordance with Prompt 

Payment Standards* 60 days 60 days 

* See 42 CFR § 422.520. 

10 42 CFR § 422.566(b). 

11 42 CFR § 422.566(c)(1) 

12 42 CFR §§ 422.568(a), (b), and 422.572. 

13 Social Security Act, § 1852(g)(1)(B), and CMS, “Medicare Managed Care Manual,” Pub. No. 100-16, ch. 13, 

§ 40.2.2. 

14 42 CFR §§ 422.568(a), 422.568(b), and 422.572(a). For standard and expedited service requests, an MAO must 

make its determination and notify the beneficiary as expeditiously as the beneficiary’s health requires, but no later 

than the timeframes set forth in Table 1. 42 CFR §§ 422.568(a) and 422.572(b) allow for an extension to the 

timeframes under certain circumstances. 

15 42 CFR § 422.568(f). 
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OEI-01-08-00280 Beneficiary Appeals in Medicare Advantage

First-Level Appeal. Beneficiaries have 60 days to appeal an MAO’s adverse organization 

determination.16 The same parties that can request a determination can also file an appeal with 

the MAO.17 Appeals, like organization determinations, fall into one of these three categories: 

• Standard Service Request: A beneficiary can appeal an MAO’s refusal to authorize 

provision of a service.18

• Expedited Service Request: A beneficiary or a physician may request an expedited 

reconsideration of a determination.19 The MAO does not have to grant a beneficiary’s 

request for an expedited reconsideration, unless the MAO determines that the standard 

timeframe could jeopardize the life or health of the beneficiary or the beneficiary’s ability to 

regain maximum function.20 However, if a physician requests or supports an expedited 

reconsideration and states that the standard timeframe could jeopardize the life or health of a 

beneficiary or the beneficiary’s ability to regain maximum function, the MAO must expedite 

the reconsideration.21

• Payment Request: A beneficiary can appeal the MAO’s denial of payment for a service that 

a provider has already performed.22

Table 1 also shows the timeframes by which MAOs must provide their decisions on first-level 

appeals.23

The MAO must designate a person other than the one involved in making the organization 

determination to decide the outcome of the appeal.24 This outcome is called a reconsideration. 

The MAO’s reconsideration is either favorable, partially adverse, or wholly adverse to the 

beneficiary. If the reconsideration is partially or wholly adverse, the MAO must forward it to the 

IRE.25 The MAO must also notify the beneficiary that it has forwarded the case.26

16 42 CFR § 422.582(b). 

17 42 CFR § 422.578. 

18 42 CFR § 422.590(a). 

19 42 CFR § 422.584(a). 

20 42 CFR § 422.584(c)(2)(i). 

21 42 CFR § 422.584(c)(2)(ii). 

22 42 CFR § 422.590(b). 

23 42 CFR §§ 422.590(a), 422.590(b), and 422.590(d). For standard and expedited service requests, an MAO must 

make its reconsideration as expeditiously as the beneficiary’s health requires, but no later than the timeframes set 

forth in Table 1. 42 CFR §§ 422.590(a) and 422.590(d)(2) allow for an extension to the timeframes under certain 

circumstances. 

24 42 CFR § 422.590(g). 

25 42 CFR §§ 422.590(a)(2), (b)(2), and (d)(5). 

26 42 CFR § 422.590(e). 
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OEI-01-08-00280 Beneficiary Appeals in Medicare Advantage

If an MAO does not provide the beneficiary with a decision within the specified time, the 

outcome of the case is considered to be adverse to the beneficiary, and the MAO must forward 

the case to the IRE.27 The IRE then reviews the case as it would any partial or wholly adverse 

reconsideration. 

Second-Level Appeal. CMS currently contracts with Maximus Federal Services, Inc., as the IRE. 

The IRE must review wholly or partially adverse MAO reconsiderations.28 The IRE can either 

overturn, partially overturn, or uphold the MAO’s reconsideration. When it has made its 

decision, the IRE must notify the beneficiary, the MAO, and CMS.29 If the IRE overturns the 

MAO’s reconsideration, the MAO then must act within certain timeframes. The IRE can also 

dismiss the appeal under certain conditions: for example, if the appeal is brought by a party with 

no standing to do so, if it was not filed timely, or if a preservice appeal has become moot because 

a beneficiary received the service.30 MAOs must submit these cases to the IRE; they do not have 

the authority to dismiss them on their own. Table 1 also shows the timeframes by which the IRE 

must provide decisions on second-level appeals.31 

CMS Oversight of MA Appeals Process 

CMS oversees MAOs’ performance in the appeals process in two ways: through audits of 

MAOs and through data submitted by MAOs and the IRE. CMS regional offices are responsible 

for ongoing MAO oversight. 

Audits. Prior to 2007, CMS audited every Part C contract every 3 years. However, resource 

constraints and the growth in the number of MA contracts necessitated changes to this approach. 

Beginning in 2007, CMS implemented a risk-based approach to identify contracts for audit. 

These contracts are audited by CMS regional staff. Regional staff can also recommend that 

contracts receive focused, or for-cause, audits. 

CMS also uses an assessment tool called the Targeted Appeals Monitoring System to select 

contracts for audit, by identifying MA plans that are outliers in performance in processing 

appeals. This system uses data from the IRE, as well as specific appeals-related questions from 

beneficiary surveys. 

CMS’s annual audit strategy details the specific elements that must be reviewed in every routine 

audit for that year (CMS regional auditors can request additional elements be included during an 

27 42 CFR §§ 422.590(c) and (f). 

28 42 CFR § 422.592(a). 

29 42 CFR § 422.594(a). 

30 Maximus Federal Services, Inc., Medicare Advantage Organization Reconsideration Process Manual, §§ 4.2.5 

and 4.7. CMS, “Medicare Managed Care Manual,” Pub. No. 100-16, ch. 13, § 70.7.5. 

31 Medicare Part C Qualified Independent Contractor Task Order Statement of Work, § I.A.3. For standard and 

expedited service requests, the IRE must make its reconsideration as expeditiously as the beneficiary’s health 

requires, but no later than the timeframes set forth in Table 1. Section I.A.3 of the Medicare Part C Qualified 

Independent Contractor Task Order Statement of Work allows for an extension to the timeframes under certain 

circumstances. 
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OEI-01-08-00280 Beneficiary Appeals in Medicare Advantage

audit). Specific appeals-related elements include whether MAOs are: meeting timeliness 

requirements for making organization determinations and reconsiderations, meeting 

documentation requirements, and designating appropriate MAO staff to decide appeals. 

Data submitted by MAOs and the IRE to CMS. Upon request, MAOs must provide beneficiaries 

with aggregate appeals data including the total number of appeals per 1,000 enrollees as well as 

the outcome of those appeals.32 MAOs should provide informational copies of these data to the 

appropriate CMS regional office.33 In 2009, CMS began requiring MAOs to submit the number 

and outcomes of organization determinations and reconsiderations.34

The IRE submits reports to CMS that include aggregate MAO appeals data on an ongoing basis. 

These reports include timeliness of MAO organization determinations and reconsiderations, as 

well as MAO compliance with the IRE’s decisions. The reports are derived from the Medicare 

Appeals System (MAS), a CMS system containing appeals data. 

When an MAO makes an adverse reconsideration, it forwards descriptive case information to the 

IRE. The IRE staff enters this information, without verification, into the MAS. They also enter 

second-level appeals data, such as date and disposition of the appeal, into the MAS. 

METHODOLOGY 

Scope 

This evaluation is national in scope. We analyzed data on service-related organization 

determinations made from October 1 to December 31, 2007, and service-related appeals made 

subsequent to adverse determinations from that timeframe. We did not analyze data on payment 

determinations or reconsiderations. We also analyzed data on second-level service appeals 

reviewed by the IRE in which the original determination date was between October 1 and 

December 31, 2007. 

Data Sources 

MAO data. To obtain data on organization determinations and first-level appeals, we drew a 

stratified random sample of 105 MA contracts from the universe of 505 MA contracts in the 

50 States and District of Columbia as of October 2007. We excluded demonstration contracts 

and contracts not subject to the MA appeals requirements. We stratified the 505 contracts based 

on enrollment: 

• high-enrollment contracts: all contracts with more than 60,000 beneficiaries 

(25 contracts, all included in the sample); 

32 CMS, “Medicare Managed Care Manual,” Pub. No. 100-16, ch. 13, §§ 170 and 170.5.1. 

33 Ibid., § 170.5. 

34 CMS, “Medicare Part C Plan Reporting Requirements Technical Specifications Document,” Version: July 21, 

2009. 
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OEI-01-08-00280 Beneficiary Appeals in Medicare Advantage

• medium-enrollment contracts: contracts with 10,001 to 60,000 beneficiaries 

(40 contracts sampled out of a universe of 136); and 

• low-enrollment contracts: contracts with 10,000 or fewer beneficiaries (40 contracts sampled 

out of a universe of 344). 

IRE data. We analyzed data on second-level appeals from the MAS. We also conducted 

structured interviews with IRE staff. 

CMS data. We analyzed data on audits of MA contracts and summary data on corrective action 

plans. We also conducted structured interviews with staff at five purposively selected CMS 

regional offices. We selected the offices based on geographic diversity. 

Data Collection 

MAO data. To obtain data on organization determinations and first-level appeals, we sent each 

MAO in our sample a data request. We attempted to contact nonresponsive MAOs three times in 

writing, and once by telephone, to obtain data. We received data for 101 of the 105 contracts in 

our sample. Of the four that did not submit data, we dropped two contracts that served 

dual-eligible populations, effectively reducing our sample to 103 contracts. The beneficiaries 

from those two contracts could have utilized the Medicaid appeals process, which is outside the 

scope of this study. Of the remaining 103 contracts, 2 did not respond to our request for data, 

yielding a 98-percent response rate.35 We allowed MAOs to report aggregate counts of 

favorable organization determinations. 

IRE data. We obtained the MAS data from CMS. We also visited the IRE’s office in Victor, 

NY, where it reviews the majority of second-level MA appeals, and conducted structured 

interviews with staff there. 

CMS data. We obtained data from CMS on the number of audits conducted in 2007 and 2008, as 

well as data on corrective action plans resulting from those audits. We also conducted structured 

interviews with staff at five CMS regional offices, by telephone and in person. 

Data Analysis 

MAO data. We concatenated all the data submissions from each MAO into two analytic files, 

one for organization determinations and one for appeals. We then analyzed each file in SAS. 

Some MAOs provided data outside the scope of our review. Because some MAOs submitted 

data outside our requested timeframe, we limited the organization determinations to those 

decided between October 1 and December 31, 2007. Similarly, we limited reconsiderations to 

those requested between October 1, 2007, and February 29, 2008, (this latter date corresponds to 

the 60-day limit on appeals of adverse determinations in our requested timeframe).36 To 

35 We have sent CMS information regarding these two contracts under separate cover. 

36 In limiting reconsiderations by date, we recognize that some could stem from organization determinations made 

prior to October 1, 2007. 
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OEI-01-08-00280 Beneficiary Appeals in Medicare Advantage

determine the timeliness of determinations and appeals, we compared the request date with the 

decision date. We weighted the results of our analysis based on the strata described above, 

making them projectable to the universe of MA contracts. See Appendix A for confidence 

intervals and point estimates for the results of our analysis of MAO data. 

IRE data. We analyzed MAS data on outcomes of second-level appeals. To maintain 

consistency with the MAO data, we only analyzed appeals associated with contracts in the 

universe from which we drew our sample. We analyzed all appeals from this universe. The IRE 

reviewed 2,212 service-related appeals that had an original determination date between 

October 1 and December 31, 2007. It dismissed 223 appeals, beneficiaries withdrew 91 appeals, 

and disposition data were missing for 2 appeals. Our analysis includes the remaining 

1,896 appeals. The numbers of appeals reviewed by the IRE does not match the number of 

adverse reconsiderations made by MAOs. This discrepancy is likely because we analyzed the 

universe of data for IRE appeals, whereas our analysis of MAO data comes from a sample of 

contracts, with projected results. 

CMS data. We analyzed the number of contracts CMS audited in 2007 and 2008. We matched 

data on contracts audited with data on unmet audit elements and corrective action plans. We 

analyzed elements related to organization determinations and reconsiderations as specified in 

“Chapter 13: Claims, Organization Determinations, Appeals and Grievances” of CMS’s 

Medicare Advantage Audit Guide Version 4. 

Limitations 

We did not independently verify any of the information submitted by MAOs or in the MAS. 

Further, we cannot verify that MAOs provided data on all organization determinations in our 

requested timeframe, or that they provided data on all reconsiderations associated with adverse 

determinations. Though we requested that MAOs provide only reconsiderations of adverse 

determinations that were made between October 1 and December 31, 2007, we did not match 

reconsiderations to their initial determinations. We did not verify whether MAOs forwarded all 

adverse reconsiderations to the IRE. Our analysis of MAO timeliness did not include whether or 

not the MAO received an extension. Finally, because we allowed MAOs to submit aggregate 

counts of favorable organization determinations, we could not analyze their timeliness. 

Standards 

This study was conducted in accordance with the “Quality Standards for Inspections” approved 

by the Council of the Inspectors General on Integrity and Efficiency. 
Page 9 – Charlene Frizzera 

OEI-01-08-00280 Beneficiary Appeals in Medicare Advantage

RESULTS 

MAOs decided the vast majority of organization determinations in favor of beneficiaries; 

they denied very few 

MAOs processed over 3.2 million organization determinations from October 1 to 

December 31, 2007. High-enrollment contracts processed about 1.3 million determinations, 

medium-enrollment contracts processed about 1.6 million, and low-enrollment contracts 

processed about 400,000. Overall, MAOs decided 98 percent of organization determinations in 

favor of beneficiaries, with minimal variation by contract enrollment. See Table 2 for the 

disposition of organization determinations. 

 Table 2: Outcome of Organization Determinations 

Disposition 

Number of 

Organization 

Determinations 

Percentage of 

Organization 

Determinations 

Favorable to member 3,196,469 97.8% 

Wholly adverse to member 65,430 2.0% 

Partially adverse to member 7,593 0.2% 

Overall total 3,269,492 100% 

Source: Office of Inspector General (OIG) analysis of MA contract data, 2009. 

Of the more than 3.2 million determinations MAOs processed, just over 73,000 were wholly or 

partially adverse to beneficiaries. Standard determinations comprised 93 percent of these 

denials; 7 percent were expedited. 

Although most denials were timely, MAOs decided 23 percent of adverse expedited 

determinations late. MAOs must process expedited service requests within 72 hours.37

Expedited service requests are those in which the MAO or the beneficiary’s physician 

determines that the standard 14-day timeframe could jeopardize the life or health of the 

beneficiary or the beneficiary’s ability to regain maximum function.38 Our analysis does not 

examine whether the MAO received an extension to the mandated timeframe. 

In contrast with expedited denials, MAOs processed only 4 percent of standard service denials 

late. Of these late denials, one in four was more than 16 days late. Because the timeliness 

threshold is 14 days, this means at least 1 month had elapsed since the original service request. 

37 42 CFR § 422.572(a). 

38 42 CFR § 422.570(c)(2). 
Page 10 – Charlene Frizzera 

OEI-01-08-00280 Beneficiary Appeals in Medicare Advantage

Of those adverse organization determinations, very few were appealed, and upon appeal, 

MAOs overturned more than half of their own denials 

Beneficiaries can appeal a wholly adverse or partially adverse organization determination made 

by the MAO. Of the 73,023 adverse determinations, MAOs received only 5,478 appeals 

(8 percent). However, when beneficiaries did appeal, MAOs overturned their own denial 

54 percent of the time, and partially overturned an additional 2 percent of denials (see Table 3). 

Beneficiaries appealed 5 percent of the standard service-related determinations that MAOs 

denied, versus 35 percent of adverse expedited determinations. 

 Table 3: Outcome of First-Level Appeals (Reconsiderations)

Disposition 

Number of 

First-Level 

Appeals 

Percentage of FirstLevel Appeals 

Favorable to member 2,966 54.1% 

Wholly adverse to member 2,428 44.3% 

Partially adverse to member 84 1.5% 

Overall total 5,478 100%* 

* Column does not add to total because of rounding. 

Source: OIG analysis of MA contract data, 2009. 

MAOs decided 18 percent of first-level service appeals late. MAOs must decide standard service 

appeals within 30 days and expedited appeals within 72 hours.39 When MAOs do not meet 

specified timeframes for appeals, the outcome is considered adverse to the beneficiary and the 

MAO must forward the case to the IRE.40 Our analysis does not examine whether the MAO 

received an extension to the mandated timeframe. 

At the second level of appeal, the IRE overturned about one in five adverse MAO 

reconsiderations 

The IRE received 2,212 service reconsiderations in which the MAO’s adverse organization 

determination occurred in the last calendar quarter of 2007.41 The IRE dismissed 10 percent of 

these cases; beneficiaries withdrew their appeal in an additional 4 percent. Our analysis 

excluded these withdrawals and dismissals. The IRE reviewed 1,896 service appeals in which it 

rendered a decision, and decided in favor of the beneficiary in 19 percent of them. Of these 

cases where the IRE overturned the MAO’s decision, appeals for practitioner services 

(30 percent) were the most common; clinic, lab, or x-ray services (19 percent) were the second 

most common. The IRE decided about 3 percent of service appeals partially adverse to the 

beneficiary. See Table 4 for the breakdown of dispositions for second-level appeals. 

39 42 CFR §§ 422.590(a)(1), 422.590(a)(2), 422.590(d)(1). 

40 42 CFR §§ 422.590(c) and (f). 

41 To determine the outcome of IRE reconsiderations, we analyzed data from the MAS. We did not match these 

data with data we received from MA contracts. Further, the results of our analysis of MA contracts are projections. 

Therefore, the exact number of adverse MAO reconsiderations does not match the number of cases reviewed by the 

IRE. 
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OEI-01-08-00280 Beneficiary Appeals in Medicare Advantage

 Table 4: Disposition of Second-Level Service Appeals

Disposition 

Number 

of 

SecondLevel 

Appeals 

Percentage 

of SecondLevel Appeals 

Favorable to member 363 19.1% 

Wholly adverse to member 1,481 78.1% 

Partially adverse to member 52 2.7% 

Overall total 1,896 100%* 

* Column does not add to total because of rounding. 

Source: OIG analysis of MAS data, 2009. 

IRE staff told us that the most frequent reason they overturn an MAO’s decision is because it 

was not in accordance with Medicare coverage requirements. On occasion, IRE reviewers need 

additional information from the MAO to render a decision. In the event that an MAO does not 

provide requested data, the reviewer typically makes a decision favorable to the beneficiary. 

The IRE overturned 25 percent of adverse expedited service reconsiderations, compared with

16 percent of standard service reconsiderations. About 35 percent of the overturned expedited 

appeals concerned nursing home care; 23 percent related to clinic, lab, or x-ray services; and 

15 percent were for practitioner services. 

IRE staff told us that their review process worked well overall, although they did raise some 

concerns. When MAOs submit case file data to the IRE, they include a standard form that 

includes the type and description of the appeal. In some cases, IRE staff cannot determine from 

the form whether a case is a standard or expedited appeal, because the MAO marked both in 

different places. In these cases, IRE staff review the entire case file to make an appropriate 

determination about the type of appeal. 

CMS identified many MA contracts that failed to meet appeals-related audit elements 

In 2007, the first year of CMS’s new audit strategy, it audited 106 MA contracts. Its strategy 

specified that all routine audits would include all audit elements related to organization 

determinations and first-level appeals. 

In 2008, CMS adjusted its methodology for selecting contracts to audit, moving from a focus on 

contracts to larger managed care entities. For example, rather than auditing a single contract 

from a large MAO, CMS’s audit included multiple contracts operated by that MAO. As a result, 

CMS almost tripled the number of contracts it audited, auditing 279 MA contracts in 2008. As 

in 2007, routine audits in 2008 included all appeals-related audit elements. 

Because CMS may not have much data on new contracts, it might not select them for routine 

audits until they have been in operation for some time. As a result, staff from one CMS region 
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OEI-01-08-00280 Beneficiary Appeals in Medicare Advantage

told us it holds regular conference calls with MAOs that operate contracts in its purview. The 

region uses these calls to identify issues that can lead to a focused audit. 

To audit the various elements, CMS regional staff request data from the MAO. Regional staff 

we spoke with told us that obtaining accurate, complete data is often a challenge, requiring 

multiple requests from CMS. According to one region, the quality of data varies across 

contracts, with newer contracts requiring more assistance from CMS. If a contract fails to 

provide the requested data, CMS will deem it noncompliant with that audit element. 

The content of beneficiary notices was the most commonly unmet audit element regarding 

organization determinations, and unmet timeliness elements were the most common for appeals. 

In 2007, 68 contracts had at least one unmet appeals-related audit element (64 percent of all MA 

contracts audited that year). The three most commonly unmet elements were all related to 

organization determinations: the content of beneficiary notices of claim denials (unmet by 

41 percent of audited contracts), making correct claim determinations (27 percent), and content 

of beneficiary notices of standard preservice denials (25 percent). The most commonly unmet 

elements related to reconsiderations addressed timeliness: timeliness of favorable claims 

reconsiderations, and of requests for expedited reconsiderations, both unmet by 22 percent of 

audited contracts. 

In 2008, 197 contracts did not meet at least one appeals-related audit element (70 percent of all 

MA contracts audited that year). The most frequently unmet element was again related to 

organization determinations: 50 percent of audited contracts did not meet the element for 

content of beneficiary notices of claim denials. Other commonly unmet elements for 

determinations included timeliness of requests for expedited determinations (unmet by 

39 percent of audited contracts), and making correct claim determinations (38 percent). 

The most commonly unmet audit elements for reconsiderations all concerned timeliness: 

adverse standard preservice reconsiderations (unmet by 39 percent of audited contracts), requests 

for expedited reconsiderations (38 percent), and favorable claims reconsiderations 

(34 percent). See Table 5 for the 10 most frequently unmet elements in 2007 and 2008. 

When a contract does not meet an audit element, it must develop a corrective action plan and 

submit it to the CMS regional office for approval. CMS staff told us that, to approve a corrective 

action plan, they look for a “credible plan with supporting documentation” that is “workable and 

doable.” Once CMS accepts the corrective action plan, the contract must successfully complete 

it and submit data to CMS demonstrating improvement. 

For example, CMS required one contract that did not meet the audit element for content of claim 

denial notices to complete a corrective action plan. The contract had to establish policies and 

procedures to ensure that a denial notice is issued each time a claim is denied, train staff on these 

policies and procedures, and audit denied claims monthly. 
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OEI-01-08-00280 Beneficiary Appeals in Medicare Advantage

Table 5: Most Frequently Unmet Audit Elements From 2007 and 2008 CMS Audits 

Unmet Audit Elements, 2007 

Audit Element 

Number of 

Contracts Not 

Meeting Element 

N = 106 

Percent of 

Contracts Not 

Meeting Element 

N = 106 

Claim Denials (Notice Content) 43 40.6% 

Correct Claim Determinations 29 27.4% 

Standard Preservice Denials (Notice Content) 26 24.5% 

Favorable Claims Reconsiderations (Timeliness) 23 21.7% 

Requests for Expedited Reconsiderations (Timeliness) 23 21.7% 

Interest on Clean Claims Paid Late 22 20.8% 

Timely Payment of Noncontractor Clean Claims 20 18.9% 

Adverse Standard Preservice Reconsiderations (Timeliness) 20 18.9% 

Favorable Standard Preservice Reconsiderations (Timeliness) 20 18.9% 

Adverse Claims Reconsiderations (Timeliness) 17 16.0% 

Unmet Audit Elements, 2008 

 

Audit Element 

Number of 

Contracts Not 

Meeting Element 

N = 279 

Percent of 

Contracts Not 

Meeting Element 

N = 279 

Claim Denials (Notice Content) 141 50.5% 

Adverse Standard Preservice Reconsiderations (Timeliness) 110 39.4% 

Requests for Expedited Organization Determinations (Timeliness) 108 38.7% 

Requests for Expedited Reconsiderations (Timeliness) 107 38.3% 

Correct Claim Determinations 106 38.0% 

Standard Preservice Denials (Notice Content) 98 35.1% 

Favorable Claims Reconsiderations (Timeliness) 96 34.4% 

Standard Preservice Denials (Timeliness) 93 33.3% 

Adverse Claims Reconsiderations (Timeliness) 91 32.6% 

Effectuation of Third-Party Expedited Reconsideration Reversals 53 19.0% 

Source: OIG analysis of CMS audit data, 2009. 
Page 14 – Charlene Frizzera 

OEI-01-08-00280 Beneficiary Appeals in Medicare Advantage

CONCLUSION 

We found that MAOs decided the vast majority of organization determinations in favor of 

beneficiaries, and that MAOs overturned more than half of their own denials upon appeal. We 

also found that MAOs decided 18 percent of first-level appeals late. Our review also showed 

that CMS audits have identified many MA contracts that did not meet its timeliness standards for 

determinations and first-level appeals. 

However, our review raises questions and concerns. We found that beneficiaries appealed fewer 

than 1 in 10 adverse organization determinations. Although no rate of appeal is expected or 

correct, further study could examine factors that might explain this rate. For example, some 

beneficiaries may be unaware of their right to appeal an adverse determination. This concern is 

reflected in CMS’s audit findings, which showed that many MAOs failed to use CMS-approved 

notices when informing beneficiaries of a service denial. These notices are important because 

they inform beneficiaries why the MAO denied their request and how to file an appeal. Further 

study could also identify differences between denied requests that beneficiaries appeal and those 

that beneficiaries do not appeal. 

Particularly concerning are the problems with timeliness in processing adverse expedited 

determinations and the higher IRE overturn rate of expedited cases. Because expedited cases 

concern time-sensitive care, it is important that such care be delivered with minimal delays. 

This report is being issued directly in final because it contains no recommendations. If you have 

comments or questions about this report, please provide them within 60 days. Please refer to 

report number OEI-01-08-00280 in all correspondence. 
Page 15 – Charlene Frizzera 

OEI-01-08-00280 Beneficiary Appeals in Medicare Advantage

APPENDIX A 

Table A-1: Confidence Intervals

 

95-Percent Confidence 

Interval 

Variable Unweighted N Weighted N 

Point 

Estimate 

Lower 

Bound 

Upper 

Bound 

Outcome of Service Requests, Percentage 

Favorable to Member 1,751,010 3,196,469 97.8% 97.2% 98.4% 

Outcome of Service Requests, Percentage Partially 

Or Fully Adverse to Member 35,450 73,023 2.2% 1.7% 2.8% 

Type of Adverse Service Requests, Percentage 

Standard Service Denials 32,587 67,944 93.0% 90.4% 95.7% 

Type of Adverse Service Requests, Percentage 

Expedited Service Denials 2,863 5,079 7.0% 4.3% 9.6% 

Timeliness of Adverse Service Requests, 

Percentage Expedited Decided Timely 2,284 4,051 76.9% 69.6% 84.3% 

Timeliness of Adverse Service Requests, 

Percentage Expedited Not Decided Timely 771 1,215 23.1% 15.7% 30.4% 

Timeliness of Adverse Service Requests, 

Percentage Standard Decided Timely 33,686 68,214 96.1% 95.3% 97.0% 

Timeliness of Adverse Service Requests, 

Percentage Standard Not Decided Timely 1,803 2,746 3.9% 3.0% 4.7% 

Timeliness of Adverse Service Requests, 

Percentage Standard 16 Days Late 553 705 25.7% 22.8% 28.5% 

Outcome of Reconsiderations, Percentage 

Favorable to Member 1,284 2,966 54.1% 45.8% 62.5% 

Outcome of Reconsiderations, Percentage Partially 

Favorable to Member 40 84 1.5% 0.7% 2.4% 

Timeliness of Reconsiderations, Percentage Service 

Reconsiderations Not Decided Timely 395 991 18.2% 7.7% 28.7% 

Count of Service Requests, Total Number of 

Service Requests 1,786,460 - 3,269,492 2,483,317 4,055,667 

Count of Service Requests, Number of Service 

Requests Processed by Low Enrollment Plans 46,158 - 396,959 -47,091 841,009 

Count of Service Requests, Number of Service 

Requests Processed by Medium Enrollment Plans 471,763 - 1,603,994 857,125 2,350,863 

Count of Service Requests, Partially or Fully 

Adverse to Member 35,450 - 73,023 56,039 90,007 

Count of Reconsiderations, Total Number of 

Reconsiderations Processed by Medicare 

Advantage Organizations 

 2,630 - 5,478 4,096 6,859 

Source: Office of Inspector General analysis of Medicare Advantage contract data, 2009.