Private Medicare Denies Rehab Care at Exceedingly High Rates

An HHS Office of Inspector General (OIG) report found that among 19 Medicare Advantage organizations, the three largest denied prior authorization requests for care in long-term care hospitals (LTCHs) and inpatient rehabilitation facilities (IRFs) at higher rates than most of their peers.

“In some cases, high denial rates were driven by contractors that denied prior authorization requests on behalf of the MA organizations, many of which were later overturned on appeal by the [organization],” the investigators noted. “This raises concerns about whether contractors are receiving appropriate training and oversight from MA organizations.”

Overall, the 19 plans in June 2024 denied 65% of LTCH prior authorization requests and 54% of IRF requests. For the LTCH requests, denial rates varied widely, with CVS Health denying 80% of 393 requests, while University of Pittsburgh Medical Center Health System denied 8% of 72 requests.

In terms of appeals, plans overturned 36% of LTCH denials on appeal, as well as 43% of IRF denials. Again, overturn rates varied widely; among LTCH appeals, for example, Elevance Health overturned 69%, while CVS Health overturned 10%. Among IRF appeals, Blue Cross Blue Shield of Michigan topped the list with an 86% overturn rate, while Humana overturned only 14%.

A second OIG report found that when prior authorization denials were challenged for patients needing a skilled nursing facility (SNF), appeals succeeded 95% of the time.

The authors called the pattern of denials and overturning of them “concerning” and recommended that CMS, which regulates nursing homes, “regularly collect request-level prior authorization data that include service type and contractor information.” The report also urged CMS to act on whatever breakdowns are causing the high overturn rate.

To do the SNF review, the OIG collected data from the 19 largest Medicare Advantage parent companies regarding prior authorization requests that they or their contractors processed in June 2024. The authors also interviewed patient advocacy and industry organizations to hear their perspectives. The 19 plans in this study had 29.3 million people enrolled in their Medicare Advantage contracts in June 2024, which represented 86% of enrollment in the Medicare Advantage at that time.

The 19 Medicare Advantage plans studied denied around 13,500 of 109,400 requests for SNF admission, for an overall denial rate of 12%. However, denial rates varied greatly by plan, with Molina Healthcare topping the list at a 23% denial rate for 591 requests, while MHH Healthcare denied only 0.4% of the 242 requests it received. Among some of the larger Medicare Advantage plans, Humana had a 13.5% denial rate (out of 26,450 requests), while UnitedHealth Group came in at 12.9% of 41,486 requests.

“Although no specific denial rate is expected or correct, the wide variation in MA [Medicare Advantage] organization denial rates for SNF requests is concerning because it is unclear why some [MA plans] had denial rates that were much higher than their peers,” the authors wrote. “Extremely high or low denial rates may indicate differences in MA organization policies or performance, such as how they interpret or apply coverage criteria. In future work, OIG will conduct an in-depth review of a sample of case files to examine MA organizations’ processes for reviewing prior authorization requests for post-acute care.”

“Differences in denial rates between for-profit and nonprofit MA organization contracts suggest that financial incentives may be partially driving higher denial rates among some MA organizations,” they added. Medicare Advantage plans “can operate for-profit contracts only, nonprofit contracts only, or both types of contracts. The MA organization with the highest SNF denial rate, Molina Healthcare, Inc., operated only for-profit contracts at the time of our review, as did the three largest MA organizations.”

So what happened to the appeals? “Enrollees and providers appealed around one-fifth of requests for SNF admission that Medicare Advantage organizations denied in June 2024 (approximately 2,400 of 13,500 denials),” according to the report. “Among the denials of SNF admission that enrollees appealed, the 19 MA organizations in this study overturned 95% in favor of the enrollee (2,313 of 2,445 appeals).” That result was driven mostly by UnitedHealth Group, “which received 42% of the SNF appeal requests and overturned them 99.7% of the time.”

Not surprisingly, insurers disputed the reports’ results. “This report reflects data from 2024. Since then, health plans have voluntarily eliminated roughly 6.5 million prior authorizations across markets — including more than 15% in Medicare Advantage,” Mary Beth Donahue, president and CEO of the Better Medicare Alliance, which represents Medicare Advantage plans, said in a statement. “Prior authorization is an important tool for safe, appropriate, and affordable care. We remain committed to working with policymakers to continue improving prior authorization, so decisions are faster, easier, and more accurate for more than 35 million Medicare Advantage beneficiaries.”

Chris Bond, spokesperson for America’s Health Insurance Plans, which represents Medicare Advantage plans and other commercial insurers, said in a statement, “The reports ignore serious, well-documented concerns about wide variations in the cost and quality of post-acute care and skilled nursing facilities. More than 35 million Americans actively choose MA because it provides them with better, more affordable care — including helping seniors transition to high-quality, clinically appropriate care settings to support their rehab and recovery.”

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