High Denial Rates in Medicare Advantage Plans Raise Concerns

According to a recent report from the Department of Health and Human Services' inspector general, patients enrolled in several major Medicare Advantage plans are experiencing high denial rates for essential services like rehabilitation. This report sheds light on concerns surrounding the use of prior authorization by insurers—a mechanism intended to manage costs but often resulting in care delays or denials.

The inspector general's findings reveal significant variations in denial rates among insurers, particularly for crucial services like long-term and inpatient rehabilitation care. These variations range from 8% to as much as 80% denial rates, suggesting potential inefficiencies in the request process.

Another report highlights a 95% overturn rate on appeals for skilled nursing facility authorizations, indicating many initial denials may not be justified. According to lead author Rosemary Bartholomew, this underscores inefficiencies at the initial request stage, where regulatory compliance and accurate claims submission are critical.

Health Secretary Robert F. Kennedy Jr. has launched efforts to reform prior authorization processes, aiming to minimize unnecessary preapproval requirements. AHIP, an industry trade group, points out that some insurers have begun reducing these requirements, with UnitedHealthcare notably removing several for pediatric services.

Medicare Advantage plans, which offer a private-sector alternative to traditional Medicare, often utilize prior authorization more frequently due to their fixed government payments per patient, incentivizing strict cost control measures. The report analyzed data from June 2024 covering 19 Medicare Advantage providers, highlighting UnitedHealthcare, CVS Health, and Humana for high denial rates, affecting nearly 20 million enrollees.

Following these findings, the inspector general recommends the Centers for Medicare & Medicaid Services increase data collection on prior authorization to better address these varying denial rates. Insurers like Aetna, part of CVS Health, defend their use of prior authorization as necessary for managing medical expenses, emphasizing their commitment to timely reviews and patient-focused improvements.

Meredith Freed from KFF notes that some denials arise from provider-side errors, such as incomplete documentation or incorrect billing codes. Still, the high denial rates reported suggest deeper systemic issues. The report also points out a trend where for-profit insurers are more likely to deny authorizations compared to nonprofit ones, prompting questions about their underlying motivations.