Patients enrolled in some of the nation’s largest Medicare Advantage plans were denied requests 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.
It comes amid increased scrutiny of how insurers use prior authorization, a cost-cutting tool that experts say often leads to the delay or denial of necessary care.
“These denial rates are quite staggering,” said Miranda Yaver, an assistant professor of health policy and management at the University of Pittsburgh. “It’s another data point that reinforces what a lot of Americans have already been articulating a lot of frustration about — which is that healthcare decisions are being made with profit rather than medical necessity in mind.”
Erin Bliss, an assistant inspector general at HHS, said she was surprised by the findings.
“The range of denial rates from 8% all the way up to 80% by company for long-term care, that’s a pretty shocking variation,” she said.
A second report, also released Thursday, focused on prior authorization requests for skilled nursing facility care. It found that when patients appealed, plans reversed 95% of denials.
“We’re looking at an extremely high overturn rate,” Rosemary Bartholomew, the lead author of the reports, said. “That really raises concerns that there’s a breakdown happening at that first request step.”
Health Secretary Robert F. Kennedy Jr. has vowed to take steps to reform prior authorization. Last year, Kennedy announced that the agency had secured commitments from several major health insurers to streamline prior authorization rules and reduce the number of services subject to preapproval. In April, AHIP — an industry trade group that represents insurers — said leading health plans eliminated 11% of prior authorizations across a range of medical services, such as diagnostic imaging and outpatient surgery. In May, UnitedHealthcare said it removed two-thirds of authorization requirements for children.
Experts say, however, it’ll take time to determine if Kennedy’s reforms will effectively reduce delays for patient care.
Medicare Advantage plans are private-sector alternatives to traditional Medicare, which is run by the federal government and rarely requires prior authorization.
Medicare Advantage plans get a fixed amount of government funding per patient and can keep more money if they keep healthcare costs low, including through prior authorization.
The inspector general reports looked at requests in June 2024 among 19 Medicare Advantage groups.
Services including long-term acute care and inpatient rehabilitation — often used by patients recovering from serious illness, including stroke, heart problems and severe fractures — can be expensive. Long-term acute care hospitals cost an average of about $49,000 per stay in 2023, according to the report, while inpatient rehabilitation facilities cost roughly $24,000.
The report on denials found that UnitedHealthcare, CVS Health and Humana had the highest denial rates for those services, in some cases rejecting prior authorization requests more than 70% of the time.
Nearly 20 million people in the U.S. are enrolled in Medicare Advantage plans managed by these three companies.
When patients are denied requests for care, they are often forced to pay out of pocket or receive a lower level of care, Yaver said.
“This is an area that is unfortunately high cost, high stakes,” Yaver said. “Healthcare decision-making is extremely consequential.”
Following the reports, the office of the inspector general is recommending that the Centers for Medicare & Medicaid Services more regularly collect prior authorization data that will allow the agency to continue to investigate how widespread the issue is. It also recommended that CMS investigate the wide variation in denial rates from insurers.
“There isn’t visibility at this time into these rates,” Bliss said.
Insurers have argued that prior authorization helps keep healthcare costs in check by preventing unnecessary tests, procedures and treatments.
In an emailed statement, a spokesperson for Aetna, the insurance arm of CVS Health, said: “We review requests promptly, offer a clear appeals process, and are leading the way for continuous patient-centered improvements.”
UnitedHealthcare and Humana did not immediately respond to requests for comments.
Meredith Freed, senior policy manager for the program on Medicare policy at KFF, a nonpartisan health policy research group, said some of the prior authorization rejections patients face could also stem from the provider side — usually administrative errors like doctors not providing all the documentation needed to approve the request or submitting incorrect billing codes.
But Freed added that the unusually high rates of prior authorization denials in the HHS report “seem to undercut that point.”
“It just raises concerns that people are inappropriately being denied care,” Freed said.
Yaver, of the University of Pittsburgh, also noted that the report found that for-profit insurers were more likely than nonprofit insurers to deny prior authorization requests, raising questions about whether private insurers were looking to profit from denials.
“They’re not seeing widely different patients, but the denial rates were pretty disparate,” Yaver said. “It’s hard to see cost as being divorced from the calculations about coverage.”
