Patients enrolled in some of the nation’s largest Medicare Advantage plans are being denied applications for rehabilitation and other critical services at unusually high rates, according to a report released Thursday by the Department of Health and Human Services’ inspector general.
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The move comes amid increased scrutiny of how insurers use pre-authorization, a cost-cutting tool. Experts say this approval often leads to delays or denials of needed treatment.
“These denial rates are quite staggering,” says Miranda Yarber, assistant professor of health policy and management at the University of Pittsburgh. “This is another data point that confirms what many Americans have already expressed a lot of frustration about: that medical decisions are being made with profit in mind, not medical necessity.”
HHS Deputy Inspector General Erin Bliss said she was surprised by the findings.
“Long-term care denial rates range from 8% to 80% from company to company, which is a pretty shocking variation,” she says.
A second report, also released Thursday, focused on prior authorization applications for skilled nursing facility care. It said the plan overturned 95% of denials when patients appealed.
“We’re seeing very high turnover rates,” said Rosemary Bartholomew, lead author of the report. “That really raises concerns that there might be a failure in the first request step.”
Secretary of Health Robert F. Kennedy Jr. has vowed to take steps to reform prior authorization. Last year, President Kennedy announced that the agency had secured commitments from several large health insurance companies to streamline their prior authorization rules and reduce the number of services subject to prior authorization. In April, AHIP, an industry group representing insurance companies, announced that major health plans have eliminated 11% of prior authorizations for a wide range of medical services, including diagnostic imaging and outpatient surgery. UnitedHealthcare announced in May that it had removed two-thirds of its licensing requirements for children.
But experts say it will take time to determine whether President Kennedy’s reforms can effectively reduce delays in patient care.
Medicare Advantage plans are private-sector alternatives to traditional Medicare that are run by the federal government and require little or no prior approval.
Medicare Advantage plans give you a certain amount of government funding for each patient, and you can secure more money if you can keep your medical costs low through things like prior authorization.
The inspector general’s report examined June 2024 requests among 19 Medicare Advantage groups.
Services such as long-term acute care and inpatient rehabilitation, often used by patients recovering from serious illnesses such as stroke, heart disease, or severe bone fractures, can be expensive. The average cost of a long-term acute care hospital stay in 2023 is about $49,000, and the cost of an inpatient rehabilitation facility is about $24,000, according to the report.
A report on denials found that UnitedHealthcare, CVS Health, and Humana had the highest denial rates for these services, denying more than 70% of prior authorization requests in some cases.
Nearly 20 million people in the United States are enrolled in Medicare Advantage plans managed by these three companies.
When patients have their requests for treatment denied, they are often forced to pay out-of-pocket or receive a lower level of care, Yaber said.
“Unfortunately, this is a high-cost, high-stakes field,” Yarber said. “Medical decisions are extremely important.”
In response to the report, the Office of Inspector General is recommending that the Centers for Medicare and Medicaid Services collect prior authorization data more regularly so it can continue to investigate the extent of the problem. It also recommended that CMS examine the wide variation in denial rates by insurance companies.
“At this time, these interest rates are not clear,” Bliss said.
Insurers argue that prior authorization helps control medical costs by preventing unnecessary tests, procedures, and treatments.
In an emailed statement, a spokesperson for Aetna, the insurance division of CVS Health, said: “We review requests quickly, provide a clear appeals process, and lead the way in continuous patient-centered improvement.”
UnitedHealthcare and Humana did not respond to requests for comment.
Meredith Fried, senior policy manager for the Medicare Policy Program at KFF, a nonpartisan health policy research group, said some of the prior authorization denials faced by patients can also be attributed to the provider, typically due to administrative errors such as a doctor not submitting all the necessary documentation to approve the claim or submitting the wrong billing code.
But Fried added that the unusually high rate of prior authorization denials in the HHS report “seems to undermine that point.”
“It only increases concerns that people are being inappropriately denied care,” Freed said.
The University of Pittsburgh’s Yarber also noted that the report found that commercial insurers were more likely than nonprofit insurers to deny prior authorization applications, raising questions about whether private insurers were trying to profit from denials.
“We’re not seeing wildly different patients, but there was a lot of variation in refusal rates,” Yarber said. “It’s hard to think of costs as separate from coverage calculations.”
