High Denial Rates of Medicare Advantage Organizations Under Scrutiny

The National Association of Long Term Hospitals (NALTH) highlights concerns from the U.S. Department of Health and Human Services Office of Inspector General (OIG) regarding high denial rates by Medicare Advantage organizations (MAOs) for long-term acute care hospital (LTCH) and inpatient rehabilitation facility (IRF) services. This analysis points to significant barriers within the Medicare Advantage program that may impede access to vital medical services.

According to the OIG, nearly two-thirds of prior authorization requests for LTCH services were denied by MAOs, sparking concerns about the implications for beneficiary care access. This investigation arose from earlier findings suggesting these delays could obstruct timely healthcare access, raising questions about the efficiency of AI-driven prior authorization processes.

Among the 19 Medicare Advantage organizations studied, the largest three by enrollment size were particularly noted for their high rejection rates for LTCH and IRF services as of June 2024. Despite initial denials, these MAOs overturned 36 percent of LTCH and 43 percent of IRF denials upon appeal, reflecting that some initially denied care was medically justified. Variability in reversal rates, ranging from 14 to 86 percent, underscores inconsistencies in the authorization process.

Third-party contractors handling these requests were often responsible for high denial rates, with many decisions overturned upon appeal. This pattern indicates systemic challenges within Medicare Advantage related to authorization protocols, potentially affecting patient outcomes and care delivery.

The OIG recommended that Congress and the Centers for Medicare & Medicaid Services (CMS) address these authorization issues. NALTH President Chris Fox emphasized, “These findings confirm the long-standing concerns from LTCH providers, physicians, patients, and families regarding the restrictive nature of Medicare Advantage plans.” Such delays or denials in accessing medically necessary LTCH care may result in prolonged recovery and adverse outcomes.

NALTH has consistently communicated these concerns to CMS, citing a lack of progress in authorization practices despite claims of reduced denial rates. NALTH members report ongoing challenges in obtaining essential services for seniors, underlining the need for improved regulatory compliance and risk management in the Medicare Advantage framework.