ERN’s Statement to Congress

ERN Enterprises, Inc.

Statement for the Record

Before the

U.S. House of Representatives Committee on Ways and Means

Subcommittees on Health and Oversight

Medicare Advantage: Past Lessons, Present Insights, Future Opportunities

July 22, 2025

ERN Enterprises, Inc. (ERN) appreciates the opportunity to submit this statement for the record. ERN is an advocacy firm founded in 2000 to help patients receive medically appropriate healthcare and hospitals resolve improper denials of medical claims by health plans.[1] To date, ERN has had the privilege of providing consulting, training, education, and technology services to providers in over 30 states. ERN currently provides direct claims and regulatory representation to over 25 hospital systems and ambulance providers across the States of California, Washington, Oregon, Texas, and Arkansas.

As ERN is actively involved in representing our provider members before the Centers for Medicare and Medicaid Services (CMS) for non-compliance and violations of Medicare law by Medicare Advantage Organizations (MAOs), we welcome and appreciate both subcommittee’s attention to deficiencies within the existing Medicare Advantage (MA) program.

Through our industry expertise and experience, ERN advocates for the following policy recommendations:

Reduce Post-Acute Authorization Delays

Many of our hospital provider members have expressed concerns with increasing time to discharge to a lower level of care facility (e.g., skilled nursing facility (SNF)), where a MAO denies continued authorization at a higher level of care facility (e.g., long-term acute care hospitals (LTACH), inpatient rehabilitation facilities (IRF)). These delays in care are directly linked to a reduction in approved post-acute care facilities. Existing MA regulations do not have network adequacy requirements for certain facilities, such as SNF, LTACH, and IRF. Inadequate network adequacy by MAOs for these specialized facilities result in direct harm to MA beneficiaries by imposing critical barriers to entry, delaying the transfer of MA beneficiaries to the correct level of care needed, and creating an acute care bed shortage as non-acute care patients await transfer.

Case Example: Between 2020 – 2021, one of ERN’s hospital provider members experienced egregious Medi-Cal health plan denials of authorization for continued stay at a LTACH level of care. The health plan stated that the patients could be treated at a SNF and, while the hospital requested placement to more than 150 skilled nursing facilities, no SNF was able to accept the patients until up to 9 months later, citing the health plan’s inadequate network. Unlike MA laws, however, California’s Medi-Cal county network adequacy standards for access to a SNF was 5 business days. Accordingly, based on the network adequacy law and contractual provisions mandating coverage of post-acute care services, the regulatory agency was able to order the health plan to take remedial action and preventive measures.

MA regulations currently mandate coverage requirements for post-acute care services. Nevertheless, access to care is effectively stifled by the lack of network adequacy requirements. As such, we recommend that Congress enact comprehensive MA network adequacy requirements for post-acute care providers, including but not limited to SNFs, LTACHs, and IRFs.

Provide Meaningful Oversight & Enforce Penalties for Non-Compliance

CMS minimally exercises its authority to provide oversight of health plans’ compliance with MA regulations and rarely levies penalties against MAOs in instances of explicit non-compliance. CMS was advised in the Department of Health and Human Services (HHS) Office of Inspector General (OIG) report dated September 2018 to enhance its oversight of MAO contracts and address persistent problems related to inappropriate denials.[2] As of late, this office alerted CMS to various issues and problematic industry practices by MAOs without seeing a cognizable improvement in oversight or enforcement measures.

Case Example #1: In February 2025, ERN escalated an internal audit finding to CMS and HHS senior leadership, alleging that CMS had engaged in improper conduct per HHS General Administration Manual, Ch. 5-10, by failing to oversee MAOs’ resolution of complaints. The audit found at least 150 instances of MAO non-responsiveness to previous CMS inquiries via the Complaint Tracking Module (CTM), the method by which CMS relays complaints to MAOs. The violations included, but were not limited to:

(1) Failure to reimburse emergency services, in violation of 42 C.F.R. § 422.113(b).

(2) Failure to reimburse post-stabilization services for which the MAO is financially responsible due to a failure to respond within 1 hour and assume responsibility for the patient upon a disagreement of care, in violation of 42 C.F.R. § 422.113(c)(2)(ii-iii).

(3) Improper denials of plan-directed care, in violation of 1) 42 C.F.R. § 422.113(c)(2)(ii-iii) & 42 C.F.R. § 422.113(c)(3) (holding plans financially responsible for post-stabilization care preapproved by a plan provider), and 2) Medicare Managed Care Manual, Ch.4 § 160(establishing a contracted provider as an agent of the plan).

(4) Improper DRG payment reductions without substantiation of a competent reviewer, in violation of 42 C.F.R. § 422.566(d).

(5) Improper recoupment of payment on a readmission basis despite the MAO not only being more restrictive than Medicare but also being the cause of the readmission through its denial of post-acute care recommended by the treating physician.

(6) Improper recoupment by an MAO attempting to retroactively downgrade level of care without conducting a proper reopening, in violation of 42 C.F.R. § 405.986.

(7) Improper denials of services, by asserting that a lower level of care (i.e., observation) was appropriate, in violation of 42 C.F.R. §422.101(b)and Medicare Local Coverage Determinations L34552

In April 2025, CMS responded to our correspondence, identifying approximately 50 cases encompassing 6 CTMs across 5 different MAOs that “stood out.” Please note that these 6 CTMs were supposedly previously resolved by MAOs and ratified by CMS. To date, ERN has yet to receive any contact for 3 of the 6 CTMs and has had to follow-up with CMS multiple times for some MAOs to effectuate contact with our office.

Case Example #2: In March and April 2025, ERN alerted CMS to an alarming trend of MAOs purposely attempting to circumvent post-stabilization authorization timeframe requirements under 42 C.F.R. § 422.113. This was accompanied by written substantive proof from 2 different MAOs and a list of CTMs which had been previously filed, improperly resolved by the MAOs, and ratified by CMS. As these are explicit and verifiable violations of law, our office expected CMS to take immediate action, to include an investigation and/or audit of MAO practices. However, CMS simply deferred the matter to the respective MAOs for resolution via the Account Managers.

Although ERN appreciates CMS’ ongoing efforts, our office’s experience reinforces the systemic failures outlined in the September 2018 HHS OIG report. The above examples merely provide a glimpse into CMS’ reluctance to exercise its authority or levy penalties, deference to MAOs, and failure to maintain oversight of MAO conduct. Therefore, we urge Congress to establish stronger framework and procedural controls for CMS, to potentially include substantive audits of CTM resolutions, to ensure MAO compliance with MA regulations.

Require Disclosure of Medical Reviewers in Adverse Determination Notices

Existing MA regulations provide limited transparency for providers and afford health plans complete autonomy to comply with such provisions, leading to undetectable instances of non-compliance. Under 42 C.F.R. § 422.590, MAOs are required to have physician reviewers with expertise in the appropriate field of medicine for the patient’s condition make all medical necessity determinations (or any substantively equivalent term used to describe the concept of medical necessity). However, there is no legal provision requiring MAOs to document or communicate the credentials, name, and/or signature of the physician reviewer in any adverse determination letters. ERN has witnessed countless instances of medical necessity denial determinations without any identifying information of a physician reviewer. In some instances, medical necessity denial determinations are only accompanied by the signature of a non-physician appeals specialist.

Case Example: In 2012, ERN detected a series of dubious medical necessity determinations for a patient who had a health plan under California’s jurisdiction. Unlike MA regulations, California law requires the name and contact information of the reviewing professional to be provided in written communications. This allowed our office to conduct an investigation and escalate the matter to the appropriate state regulatory agency, where it was later found that a non-licensed physician was improperly conducting the medical necessity reviews and denying and/or modifying authorizations of services. This led to multiple cease and desist orders, an ensuing criminal investigation, and serious penalties levied on the health plan.

As shown above in the case example, a disclosure requirement affords providers the ability to verify the integrity of health plan decisions and evaluate accompanying medical necessity determinations. As disclosure of medical reviewers is currently discretionary by MAOs, providers and patients have no means of detecting instances of potential non-compliance by health plans. In its current iteration, 42 C.F.R. § 422.590 does not adequately protect providers and patients. Thus, we believe it is imperative and necessary to enact legislation requiring the disclosure of a medical reviewer’s identity and credentials for adverse determinations.

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While ERN supports the overall goals of the MA program, various measures can be implemented to increase the quality, efficiency, and accountability within the MA program. As ERN continues to work with MAOs and CMS on behalf of our provider members, we look forward to working with the Ways and Means Subcommittees on Health and Oversight to meaningfully address these issues.

[1] See Channel 5 News Story: http://youtu.be/mw1TQhVFBKk.

[2] http://oig.hhs.gov/documents/evaluation/3140/OEI-09-16-00410-Complete%20Report.pdf