High Denial Rates in Medicare Advantage Plans Raise Concerns

New federal findings are shining a spotlight on Medicare Advantage prior authorization practices, raising important questions about access to post-acute care, regulatory oversight, and the future of utilization management across the insurance industry.

A recent report from the Department of Health and Human Services Office of Inspector General (OIG) found that Medicare Advantage plans administered by some of the nation's largest health insurers are denying a substantial percentage of requests for long-term care hospital services and rehabilitation care. The findings have generated significant attention among policymakers, healthcare providers, consumer advocates, and insurers alike.

For insurance professionals, the report serves as more than a healthcare policy story. It highlights evolving expectations around prior authorization, appeals management, transparency, member experience, and regulatory compliance. As scrutiny intensifies, carriers and agencies operating in the Medicare market may face increasing pressure to demonstrate that utilization management programs balance cost containment with appropriate access to medically necessary care.

What the OIG Report Found

The OIG analyzed prior authorization decisions involving post-acute care services, including long-term care hospitals, skilled nursing facilities, and rehabilitation services. The report identified denial rates that surprised many observers.

Among the largest Medicare Advantage organizations reviewed, CVS Health denied approximately 80% of long-term care requests, while Humana and UnitedHealth Group denied more than 70%. Smaller Medicare Advantage organizations reported lower denial rates, averaging roughly 42%.

Rehabilitation services showed a similar pattern. UnitedHealth denied approximately 66% of requests, while CVS Health/Aetna and Humana denied more than half.

"These denial rates are pretty shocking."

Erin Bliss, Assistant Inspector General

The findings are particularly significant because post-acute care often represents a critical stage in recovery following major surgeries, strokes, serious injuries, or extended hospitalizations. Delays or denials during this period can influence patient outcomes, recovery timelines, and the likelihood of readmission.

Why Post-Acute Care Matters

Post-acute care is designed to help patients regain function, recover safely, and avoid complications after leaving an acute care hospital. Depending on the patient's condition, care may occur in a skilled nursing facility, rehabilitation center, long-term care hospital, or at home with supportive services.

The financial implications are substantial. Long-term care hospitals can cost tens of thousands of dollars per stay, while home-based alternatives often cost significantly less. However, the lowest-cost option is not always the most clinically appropriate option.

For insurers, this creates a familiar challenge: balancing cost management with individualized medical necessity determinations. For providers and patients, concerns arise when authorization decisions are perceived as barriers to recommended treatment plans.

The Growing Debate Around Prior Authorization

Prior authorization has become one of the most debated topics in healthcare administration. Insurers maintain that authorization requirements help prevent unnecessary services, reduce waste, and ensure appropriate use of healthcare resources.

Critics argue that increasingly complex authorization requirements can delay treatment, create administrative burdens, and restrict access to necessary care. The debate has intensified as healthcare organizations adopt advanced analytics and artificial intelligence tools to support utilization management decisions.

A Senate investigation released in 2024 raised concerns that certain insurers may have relied heavily on automated processes when evaluating post-acute care requests. The investigation noted a significant increase in denial rates at some organizations over recent years, fueling broader discussions about transparency and oversight.

The challenge for modern healthcare insurers is not whether utilization management should exist, but how it can be implemented fairly, consistently, and transparently while maintaining member trust.

Industry Perspective

A Key Finding: Appeals Frequently Succeed

One of the most noteworthy aspects of the OIG report involves the appeals process. The data showed that beneficiaries who appeal denied skilled nursing facility requests are frequently successful.

According to the report, approximately 95% of appealed skilled nursing facility denials were ultimately decided in favor of the enrollee.

This finding raises important operational questions. High reversal rates may indicate that beneficiaries who understand and pursue appeals are able to obtain medically necessary care, but they may also suggest inconsistencies between initial authorization decisions and subsequent clinical reviews.

For agencies serving Medicare beneficiaries, this underscores the importance of educating members about appeal rights and helping them navigate the process when appropriate.

Implications for Medicare-Focused Agents and Agencies

While agents are not directly involved in medical necessity determinations, the report highlights several areas where beneficiary education can create value and strengthen client relationships.

Member Expectations Are Changing

Consumers are increasingly evaluating health plans based not only on premiums and benefits but also on the ease of accessing care. Questions about prior authorization requirements, appeals processes, and provider networks are becoming more common during enrollment discussions.

Compliance and Documentation Matter

Agencies should ensure that marketing conversations accurately represent plan features and limitations. Clear communication about prior authorization requirements can help set realistic expectations and reduce future dissatisfaction.

Client Advocacy Remains Valuable

Beneficiaries often need guidance when navigating complex healthcare systems. While agents cannot provide legal or clinical advice, helping clients understand available resources and appeal procedures can significantly improve the customer experience.

Potential Regulatory and Industry Impact

The OIG findings arrive during a period of heightened regulatory focus on Medicare Advantage operations. Federal agencies, lawmakers, and consumer advocates continue to examine prior authorization practices, denial rates, and the use of technology in coverage determinations.

Several trends are likely to shape future discussions:

• Greater transparency requirements surrounding denial decisions and utilization management metrics.
• Increased oversight of automated and AI-supported authorization systems.
• Expanded reporting obligations related to appeals and overturn rates.
• Continued efforts to streamline prior authorization workflows while maintaining appropriate clinical review standards.

For carriers, these developments may lead to investments in technology, process improvements, and enhanced member communication strategies. For agencies, staying informed about carrier operational changes will become increasingly important when advising Medicare beneficiaries.

What Insurance Professionals Should Watch Next

The Medicare Advantage market continues to grow rapidly, making utilization management practices a central issue for regulators, insurers, providers, and consumers. The OIG report is unlikely to be the final word on the topic. Instead, it represents another milestone in a broader conversation about balancing affordability, clinical appropriateness, and access to care.

Insurance professionals should monitor future regulatory guidance, carrier policy updates, and evolving best practices surrounding prior authorization. Understanding these developments will help agencies better support clients while positioning carriers to respond effectively to growing public and governmental scrutiny.

As the healthcare landscape continues to evolve, one message from the report stands out clearly: beneficiaries who understand their coverage rights and appeal options are often in a stronger position to access the care they need. That reality places education, transparency, and communication at the center of the Medicare Advantage experience.