The Department of Health and Human Services’ Office of Inspector General released companion reports on June 11 exposing widespread denial practices at major Medicare Advantage organizations. Investigators examined 19 of the nation’s largest private Medicare plans and discovered rejection rates that far exceeded what medical necessity would justify, particularly when appeals successfully overturned the vast majority of these denials.

CVS Health/Aetna, Humana, and UnitedHealth Group emerged as the three worst performers, denying care at substantially higher rates than their industry peers. The findings spotlight how prior authorization-a cost-control mechanism requiring insurers to approve treatments before doctors can provide them-has become a barrier preventing vulnerable seniors from receiving medically necessary care when they need it most.

Staggering Denial Rates for Post-Hospital Care

The inspector general’s investigation revealed that Medicare Advantage plans denied 65% of requests for long-term care hospital services and 54% of requests for inpatient rehabilitation facilities. These facilities serve patients who have left conventional hospitals but still require intensive medical support while recovering from strokes, hip fractures, or other serious health conditions that prevent independent living.

CVS Health rejected 80% of the 393 long-term hospital care requests it reviewed, making it the industry’s harshest denier. In stark contrast, University of Pittsburgh Medical Center Health System denied only 8% of its 72 requests, demonstrating that high denial rates reflect corporate policy choices rather than medical standards.

“Imagine knowing you’re not ready to go home, you can’t go to the bathroom, you still need help but they’re (insurance companies) saying no,” said Nicole Fallon, vice president of integrated services and managed care policy at LeadingAge, which represents nonprofit nursing homes and other aging-service providers. “You’re stressed and you ask, ‘What am I going to do? I can’t take care of myself at home.'”

The rejection patterns create devastating real-world consequences for seniors and their families, who suddenly face the impossible choice between paying thousands of dollars out-of-pocket for necessary care or attempting to provide complex medical support at home without proper training or equipment. Senior advocates argue that insurers exploit the prior authorization system to shift financial and caregiving burdens from insurance companies onto vulnerable families already stretched thin emotionally and financially.

Appeals Expose Unjustified Denials

Perhaps most damning in the federal investigation was the discovery that Medicare Advantage organizations overturned 36% of long-term care hospital denials and 43% of inpatient rehabilitation denials when patients appealed. These reversal rates climbed even higher for skilled nursing facility care, where appeals succeeded 95% of the time-a statistic that investigators found deeply concerning.

The overturn rates varied wildly among insurers, exposing fundamental inconsistencies in how companies evaluate medical necessity. Elevance Health reversed 69% of its long-term hospital care denials upon appeal, while CVS Health overturned only 10%. For rehabilitation facility appeals, Blue Cross Blue Shield of Michigan reversed 86% of denials, whereas Humana overturned just 14%.

Third-Party Contractors Drive Denial Epidemic

Investigators discovered that third-party contractors processing authorization requests on behalf of Medicare Advantage organizations drove many of the excessive denial rates. Contractors denying prior authorization requests on behalf of Medicare Advantage organizations contributed to high denial rates, with insurers later overturning many of these decisions on appeal. This pattern raises serious concerns about whether contractors receive appropriate training and oversight from the Medicare Advantage organizations that hire them.

Several major insurers hired NaviHealth, a UnitedHealth subsidiary, to evaluate rehabilitation care requests using artificial intelligence algorithms. Federal investigators now report that insurers themselves concluded NaviHealth’s denials often failed to withstand scrutiny, overturning the company’s skilled nursing home care denials 97% of the time when patients appealed.

A STAT investigative series in 2023 previously exposed how NaviHealth’s artificial intelligence-driven denials frequently resulted in poor health outcomes for desperately ill patients. The new federal findings confirm those concerns and demonstrate that even the insurers paying for NaviHealth’s services recognize its denial recommendations lack medical justification in the overwhelming majority of cases.

Medicare Advantage Business Model Under Scrutiny

Unlike traditional government-administered Medicare, Medicare Advantage plans operate through private insurance companies that receive a set amount of federal funding per patient. The business model creates financial incentives to deny services. Companies keep more profit when they successfully control costs through authorization restrictions and limited networks of hospitals and doctors.

This payment structure transforms every approved medical service into a direct reduction of company profits, creating institutional pressure to reject care whenever possible. Senior advocates and nursing care industry officials argue the system encourages denials that serve corporate bottom lines rather than patient health, particularly when insurers can rely on patient frustration and confusion to prevent most denied patients from pursuing appeals.

Federal Investigators Demand Action

The Office of Inspector General found the pattern of denials and subsequent overturning concerning. Investigators recommended that the Centers for Medicare & Medicaid Services, which regulates nursing homes and Medicare Advantage plans, regularly collect request-level prior authorization data that include service type and contractor information. The report urged CMS to investigate and address whatever system breakdowns cause the alarmingly high overturn rates.

The recommendations signal growing federal concern that Medicare Advantage insurers exploit vulnerable seniors through denial practices that have nothing to do with appropriate medical care management. With enrollment in these private plans continuing to grow rapidly, the inspector general’s findings suggest millions of older Americans face unnecessary obstacles to accessing care their doctors recommend and that appeals ultimately prove they needed all along.

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