Large Medicare Advantage health insurance companies routinely denied requests from older adults who tried to get rehabilitation or other types of post-hospital specialized care, according to a federal oversight agency.
More than half of requests for both long-term care and rehabilitation were rejected by major private insurance companies that offer Medicare Advantage plans, according to the Department of Health and Human Services’ Office of Inspector General.
Private health insurance companies face scrutiny over the use of “prior authorization,” a common industry tool to vet requests before allowing doctors or health facilities to bill for medical services. Senior advocates and nursing care industry officials say insurers use the cost-cutting tool to deny care older adults need, often shifting the financial and caregiving burden to families.
In companion reports released June 11, the inspector general highlighted Medicare Advantage denial rates in care settings such as long-term care hospitals, rehab facilities, or skilled nursing facilities. These are places for people who are ready to leave a conventional hospital but still need extra care while recovering from a stroke, a broken hip, or other complex medical issues.
“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.’”
How UnitedHealth, Aetna, and Other Insurers Fared
In one report, the Inspector General examined 19 Medicare Advantage plans and how often they denied requests for long-term hospital care or rehabilitation facilities.
Unlike traditional government-run Medicare, Medicare Advantage plans are administered by private insurance companies. Medicare Advantage plans get a set amount of federal funding per patient and can keep more profit if they control costs through strategies such as prior authorization and limiting networks of hospitals and doctors.
The three largest Medicare Advantage companies — CVS Health/Aetna, Humana, and UnitedHealth Group — had among the highest rejection rates of private Medicare insurance plans.
The report said CVS Health rejected 80% of requests from older adults seeking care at long-term care hospitals. Humana and UnitedHealth both denied more than 70% of requests for long-term care, according to the inspector general report.
The smaller Medicare Advantage plans rejected an average of 42% of long-term care requests.
UnitedHealth rejected 66% of requests from people seeking care at a rehabilitation facility. Humana and CVS Health/Aetna rejected more than half of rehabilitation requests, the report said.
For-profit Medicare Advantage plans were more likely to reject service requests than nonprofit Medicare plans, suggesting “financial incentives may be partially driving higher denial rates,” the report said.
The report, citing Medicare data, said long-term care hospitals are the most expensive post-hospital setting, with an average cost of $49,000, followed by $24,000 for a rehabilitation facility stay and $16,000 for skilled nursing. By comparison, the average cost for a person who gets post-hospital care at home is $6,000.
Private Medicare plans might have an incentive to deny costlier post-hospital care and instead approve less expensive care settings, said Rosemary Bartholomew, lead author of the two reports.
“Any time we see such a wide range of denial rates, it raises concerns for us that some patients may not be getting access to the care that they need,” Bartholomew said.
Health insurance industry groups pushed back against the inspector general’s findings.
The health insurance industry trade group AHIP said the reports left out key facts and painted a “flawed picture” of post-hospital care covered for more than 35 million Americans on Medicare Advantage plans.
“The reports ignore serious, well-documented concerns about wide variations in the cost and quality of post-acute care and skilled nursing facilities,” said Chris Bond, AHIP spokesperson.
A UnitedHealth Group representative referred USA TODAY to AHIP’s response. A Humana representative did not immediately respond to a request for comment.
In a statement, Aetna said the company prioritizes helping patients get the care they want without unnecessary delays.
“When combined with timely clinical information from our provider partners, prior authorization supports safe, effective, and affordable care. We review requests promptly, offer a clear appeals process, and are leading the way for continuous patient-centered improvements,” the Aetna statement said.
Denied Care Burdens Families
Groups representing post-hospital care providers said the federal reports highlight the frustrations that families and rehab facilities face when seeking to obtain insurance coverage for necessary services.
When older adults appealed, Medicare Advantage plans overturned 36% of long-term care hospital denials and 43% of rehabilitation denials, which suggests “some enrollees were initially denied medically necessary care,” one report said.
Fallon, of LeadingAge, said some families endure multiple rounds of appeals to contest denials. Other families whose claims have been denied attempt to pay their own costly care bills for a loved one who needs specialized care.
“You’re paying the full rate and not everyone can afford to do that,” Fallon said.
A March report from AARP found home care and assisted living costs for older adults and people with disabilities have surged over the past five years, straining affordability for middle-class families who struggle to pick up the tab.
The AARP report said the cost of the most common type of long-term services — home care and assisted living — surged nearly 50% from 2019 through 2024, far outpacing median income growth of 22% for senior households.
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