Medicare Plans Show Wide Gaps in Specialized Care Denial Rates
Choosing a Medicare Advantage plan often involves comparing premiums, provider networks, and extra benefits. Yet a new federal report suggests another factor deserves attention: how often insurers deny requests for specialized medical care.
The findings reveal significant differences among some of the largest Medicare Advantage providers, raising concerns about access to rehabilitation services, long-term hospital treatment, and skilled nursing care.
The report, released by the Department of Health and Human Services (HHS) Office of Inspector General, found that denial rates can vary widely depending on the insurer and the type of care requested. It also showed that many denials are later reversed, which has renewed discussions about prior authorization practices and patient access to medically necessary treatment.
Why the Findings Matter
More than half of all Medicare beneficiaries are enrolled in Medicare Advantage plans, which are administered by private insurance companies rather than the federal government. These plans frequently require prior authorization before approving certain services.
While insurers describe prior authorization as a tool to manage costs and confirm medical necessity, critics argue that it can delay treatment and create barriers for patients recovering from serious health conditions.
The new data suggests that approval decisions are not consistent across insurers. As a result, two patients seeking the same service may receive very different outcomes depending on their Medicare Advantage provider.
Denial Rates Vary Across Major Insurers
Freepik | Drazen Zigic | When choosing a Medicare Advantage plan, the rate of denied care might matter just as much as the premium.
The Inspector General’s review uncovered noticeable differences in denial rates for post-acute care services. These treatments are often needed after hospitalization and help patients continue their recovery before returning home.
1. Long-Term Acute Care Hospitals
Long-Term Acute Care Hospitals (LTCHs) care for patients who require extended treatment and close medical monitoring after a serious illness or injury.
The report found the following denial rates:
– CVS Health (Aetna): approximately 80%
– Humana: approximately 72%
– UnitedHealthcare: approximately 71%
– Average among other insurers: approximately 42%
The numbers show that some of the largest Medicare Advantage companies denied requests for long-term hospital care at nearly double the rate of many competitors.
2. Inpatient Rehabilitation Facilities
Patients recovering from strokes, major injuries, heart conditions, or complex surgeries often depend on inpatient rehabilitation facilities for therapy and supervised recovery.
According to the report:
– UnitedHealthcare denied approximately 66% of requests
– Humana denied approximately 54%
– CVS Health (Aetna) denied approximately 51%
– Average among other insurers: approximately 41%
The data indicate that rehabilitation care faced denial rates well above the industry average among several leading insurers.
3. Skilled Nursing Facility Care
Skilled nursing facilities provide medical supervision and rehabilitation services for patients who are not ready to return home after hospitalization.
Across Medicare Advantage plans, the overall denial rate for skilled nursing facility care was approximately 12%.
What stands out is what happened after appeals. Nearly 95% of denied requests were eventually overturned. That figure suggests many patients ultimately qualified for the care they initially struggled to access.
Many Denials Do Not Stand After Appeal
One of the most notable findings involved the frequency with which insurers reversed their decisions.
The report found that approximately 36% of long-term care denials were overturned after appeal. Rehabilitation care showed a similar pattern, with around 43% of denials later reversed.
For skilled nursing care, the reversal rate approached 95%.
These figures suggest that many patients who meet Medicare coverage requirements may receive an initial denial before eventually obtaining approval through the appeals process.
Kevin Thompson, CEO of 9i Capital Group and host of the “9innings” podcast, believes the numbers reflect broader issues within the healthcare system.
“It reveals what many of us have always known about capitalism mixed with healthcare. You show me the incentive and I will show you the outcome,” Thompson told Newsweek.
He also expressed concern about how insurers may handle appeals in the future.
“Now with the advent of AI, private insurers will deny first and then receive an appeal to deny a second time, just to see if it’s appealed once again before they approve.”
Specialized Care Faces the Greatest Challenges
The report shows that denials are heavily concentrated in post-hospital treatment rather than routine medical services.
The most affected categories include long-term acute care hospitals, inpatient rehabilitation facilities, and skilled nursing facility admissions. Patients often require these services after severe illnesses, surgeries, strokes, or traumatic injuries.
Delays in accessing these programs can affect recovery timelines and create additional stress for patients and families.
According to Thompson:
“Beneficiaries often get lost in the process, and what could be a life-saving treatment or transfer to an acute care facility can be delayed for days or even weeks.”
He also described how repeated submissions can become part of the process.
“When my father was in a facility, I was told this was simply the reality of the system. Staff explained that requests often have to be submitted three or four times, with the expectation that the first denial is almost automatic.”
Why Approval Rates Differ
Experts point to several possible reasons behind the variation in denial rates.
Each insurer develops its own prior authorization standards and internal review procedures. Third-party contractors responsible for evaluating claims may also apply different interpretations of coverage requirements.
Some healthcare observers believe financial considerations contribute to higher denial rates among certain for-profit insurers.
Alex Beene, a financial literacy instructor at the University of Tennessee at Martin, said the findings carry an important lesson for beneficiaries.
“For beneficiaries, the lesson from the data is to appeal quickly, involve their doctor and family when possible, and never assume an initial denial is final,” Beene told Newsweek.
What Insurers Say About the Report
Insurance organizations argue that the findings do not tell the complete story.
Aetna defended its approach in a statement provided to Yahoo News.
“Our priority is helping patients get the care they need without unnecessary delays. We review requests promptly, offer a clear appeals process, and are leading the way for continuous patient-centered improvements.”
Freepik | prostooleh | A federal report found that some Medicare Advantage plans deny specialized care requests far more often than others.
AHIP, a major trade group representing health insurers, also challenged some conclusions from the report. The organization stated that denial data does not always distinguish between administrative issues, such as missing documentation, and decisions involving medical necessity.
Chris Bond, an AHIP spokesperson, said:
“The reports ignore serious, well-documented concerns about wide variations in the cost and quality of post-acute care and skilled nursing facilities. More than 35 million Americans actively choose Medicare Advantage because it provides them with better, more affordable care – including helping seniors transition to high-quality, clinically appropriate care settings to support their rehab and recovery.”
Newsweek reported that requests for comment were sent to Aetna, Humana, and UnitedHealth Group via email.
What the Report Means for Beneficiaries
The findings suggest that Medicare Advantage members should pay close attention to coverage rules for post-hospital care. Prior authorization requirements can influence how quickly treatment is approved, and denial decisions may not always be final.
Patients who receive a denial may benefit from reviewing appeal options, consulting healthcare providers, and submitting additional supporting documentation when necessary.
Beene noted that the reversal rates raise important questions about the current process.
“That high reversal rate suggests the system could be doing more than simply screening out unnecessary care and may be placing barriers between vulnerable seniors and medically necessary recovery services.”
The HHS Office of Inspector General is encouraging regulators to gather more detailed information about denial decisions across Medicare Advantage plans. Officials also want to better understand why approval rates differ so significantly among insurers.
As Medicare Advantage enrollment continues to expand, the report places renewed attention on how coverage decisions affect access to specialized medical care. The findings also highlight a key reality for beneficiaries: an initial denial does not always reflect the outcome, especially when an appeal is filed.