Federal Watchdog Warns of Step Therapy’s Troubling Effects, Including Profit-Driven Decisions

A federal watchdog organization is validating the Academy’s opposition to the addition of step therapy in Medicare Advantage for Part B drugs. The Department of Health and Human Services’ Office of Inspector General issued a report last week that raises new and alarming concerns about the damage to patients of fail-first requirements, including the prospect of denied claims and profit-driven decision-making. 

The Centers for Medicare & Medicaid Services announced in August that it will allow step therapy by Medicare Advantage plans, beginning in 2019. Many of the issues highlighted in the OIG report confirm the Academy’s belief that step therapy is a legally questionable policy that could deny or delay medically necessary treatments. 

In its report, the OIG finds that a “central concern” in the new policy is that plans have potential incentives to inappropriately deny access to services and payment in an attempt to increase their own profit.  This is beyond troubling to the Academy, since our community of ophthalmologists strongly believes in evidence-based treatment decisions. The OIG’s investigators say that other factors —primarily financial in nature — could drive the policy’s implementation. 

The investigators also noted the following in their report: 

Overturned appeals

The OIG specifically found that 75 percent of Medicare Advantage plans’ coverage or payment denials were overturned at the first level of appeal. Additional denials were overturned in later stages of appeal. This staggering overturn rate shows that Medicare Advantage plans are routinely denying covered services and forcing beneficiaries to appeal these decisions or forego care. 

More disruptions in necessary care

Step therapy will exacerbate treatment disruptions and coverage delays that are already regularly taking place in the Medicare Advantage program. The policy puts Medicare Advantage plans – rather than providers – in charge of the critical first line of treatment. The OIG found that Medicare Advantage plans’ profit incentives and error rates raise serious concerns about beneficiaries’ well-being. 

Patient confusion and administrative burdens

The investigators relayed that beneficiaries and providers appealed only one percent of denials. This low appeals rate occurred in spite of the high rate of overturns. They speculate that this is due to the “confusing and overwhelming” process for many beneficiaries. 

The report also notes that Medicare Advantage plans’ questionable coverage denials are particularly difficult for their patient population. These delays in treatment “may be especially burdensome for beneficiaries with urgent health conditions.” 

The Academy is partnering with patient advocates to prevent CMS’ step-therapy plan from taking effect in January. To amplify our opposition, the Academy joined 240 patient and provider groups — including a variety of stakeholders representing vision-related ailments ranging from blindness to diabetes — to urge our allies (PDF) in the U.S. Senate and House of Representatives to prevent a fail-first policy that could prevent patients from receiving necessary treatments.