High Denial Rates for Medicare Advantage Inpatient Rehabilitation Requests

The Office of Inspector General (OIG) recently published a study revealing that major Medicare Advantage insurers demonstrate higher rates of denials for inpatient rehabilitation and long-term care requests. This is particularly significant given the high enrollment in Medicare Advantage plans offered by top providers like CVS Health Corporation, Humana Inc., and UnitedHealth Group, Inc.

The study examined prior authorization denials and appeals for long-term care hospitals (LTCHs) and inpatient rehabilitation facilities (IRFs) within 19 large Medicare Advantage organizations. By June 2024, denial rates reached 65% for LTCHs and 54% for IRFs, with a total of approximately 2,100 LTCH and 10,500 IRF denials. The findings underscored CVS Health, Humana, and UnitedHealth Group's substantial contribution to these figures.

CVS Health's denial rate for LTCHs was an alarming 80%, significantly higher than the 42% average of other organizations. Humana and UnitedHealth Group were not far behind, with LTCH denial rates of 72% and 71%, respectively. Highmark Health, although not in the top three, exhibited a denial rate of 73% but with fewer overall requests.

In terms of IRF denial rates, UnitedHealth Group led with 66%, followed by Humana at 54%, and CVS Health at 51%. Smaller insurers, including Molina Healthcare and Highmark Health, also reported high IRF denial rates, but their request volumes remained comparatively low.

The study did not assess the appropriateness of the denials but noted that about a third of LTCH and 43% of IRF denials were overturned on appeal. These high overturn rates, particularly among larger plans, indicate potential issues in the prior authorization review processes used by these insurers.

External Contractors and Denial Rates

The OIG highlighted that reliance on external contractors for processing prior authorizations might contribute to these disparities. naviHealth, a contractor and UnitedHealth Group subsidiary, reported higher denial rates than internal reviewers. Overturned denials were often associated with such contractors, suggesting inconsistencies between parent companies and their third-party partners.

The report suggests that the Centers for Medicare & Medicaid Services (CMS) should investigate these discrepancies and begin collecting detailed prior authorization data to address variations in interpretation of coverage criteria. The OIG has recommended further study, though CMS has yet to announce any actions in response to these recommendations.