On October 17, 2024, the U.S. Senate Permanent Subcommittee on Investigations issued a report entitled “Refusal of Recovery: How Medicare Advantage Insurers Have Denied Patients Access to Post-Acute Care.”
Medicare Advantage is required to cover “all services that are covered by Part A and Part B of Medicare.” In other words, while Medicare Advantage insurers are permitted to offer additional benefits that are not available in Traditional Medicare, they may not deny coverage of the “basic benefits” that are available in Traditional Medicare. In determining whether a particular service or procedure would be available under traditional Medicare, Medicare Advantage insurers may rely on several different types of rules and evidence.
By 2023, a majority of those eligible for Medicare were enrolled in a Medicare Advantage plan, representing more than 30 million of nearly 60 million Medicare-eligible seniors. As it has grown, the industry has also become increasingly concentrated. In 2008, the three largest Medicare Advantage insurers enrolled 32 percent of Medicare Advantage beneficiaries; by 2023, the three largest Medicare Advantage insurers (UnitedHealthcare, CVS, and Humana)—the three
companies from whom the Subcommittee has sought information—enrolled 58 percent of all Medicare Advantage beneficiaries.
Despite the surge in enrollment, a growing number of hospitals and healthcare provider networks say Medicare Advantage insurer practices make it challenging to stay in business. A March 2024 survey of health systems revealed that 19 percent had stopped accepting one or more Medicare Advantage plans in 2023, and that 61 percent of health systems are either considering ceasing to accept all Medicare Advantage patients within the next two years, or will definitely do so. In March of this year, for example, Connecticut’s Bristol Hospital announced that it was eliminating 60 positions, a decision the hospital’s president attributed to delays in payment and coverage rejections by Medicare Advantage insurers.
Prior Authorization in Medicare Advantage
Both traditional Medicare and Medicare Advantage must cover services that are “reasonable and necessary for the diagnosis or treatment of an illness or injury.” Under Traditional Medicare, patients receive care at Medicare-certified facilities, and the facility or a provider then submits a report of their costs to Medicare Administrative Contractors for processing and reimbursement determination. These facility or provider claims are also subject to various compliance and auditing efforts to prevent improper payments. Because they take place after care (and sometimes after payment) has been provided, these processes are sometimes called “retrospective review.” Medicare Advantage insurers, by contrast, frequently require patients and providers to obtain prior authorization before receiving care.
In 2022, Medicare Advantage insurers received more than 46 million prior authorization requests, and either fully or partially denied about 3,400,000 of them, or about 7.4 percent. While prior authorization is not a verdict on what course of treatment a patient must pursue, a denial often forces a patient to either pay for the service out of pocket—if they can afford to—or forgo it entirely. Patients have the right to appeal denials but, in 2022, patients sought reconsideration of less than 10 percent of denied requests.
The American Journal of Managed Care found that the share of Medicare Advantage enrollees in a plan requiring prior
authorization for at least one category of healthcare services was 72.6 percent in 2019, which was similar to the rate it had been in 2009. But by 2023, the Kaiser Family Foundation reported that 99 percent of Medicare Advantage enrollees were in a plan requiring prior authorization for some services.
The expansion of prior authorization has created friction for providers and patients, and faces a backlash within the medical field. A 2023 survey of physicians from the American Medical Association found that 73 percent of physicians reported that the number of prior authorizations for medical services had increased somewhat or had increased significantly in the last five years. The survey also found that 78 percent of physicians reported that prior authorization sometimes led to abandoned treatment, and that 24 percent said that the practice had led to a “serious adverse event” for patients in their care. Media reports on hospital and provider groups that have stopped accepting Medicare Advantage patients cite “excessive prior authorization denial rates,” along with an allegedly slow pace of Medicare Advantage insurer reimbursement for claims that are approved, as the primary reason.
Post-Acute Care
Medicare Advantage beneficiaries have consistently had lower utilization rates of post-acute care services than Traditional Medicare beneficiaries. HHS OIG’s 2022 audit noted that stays in post-acute care facilities were among the most likely areas for wrongfully denied prior authorization requests. In particular, Medicare Advantage insurers “denied requests for transfers to post-acute care facilities that met Medicare coverage rules, claiming that beneficiaries’ needs could be met at a lower, less costly level of care.” Although Medicare Advantage insurers do not have to pay the rates set by Traditional Medicare and can negotiate different rates with facilities, it is likely that they can still experience significant cost savings by moving beneficiaries to lower levels of care.
The U.S. Senate Permanent Subcommittee on Investigations’ analysis of data obtained from UnitedHealthcare, Humana, and CVS shows that, across all three companies, prior authorization requests for post-acute care services for Medicare Advantage enrollees were denied at substantially higher rates than prior authorization requests for other types of care.
In 2019, UnitedHealthcare issued an initial denial to 8.7 percent of the post-acute care prior authorization requests it received; by 2022, it denied 22.7 percent of all such requests, an increase of 172 percent. Yet UnitedHealthcare’s overall prior authorization denial rate changed little, going from 7.3 percent in 2019 to 7.6 percent in 2022. Data obtained by PSI show that, while UnitedHealthcare’s prior authorization denial rates increased for each type of post-acute facility during the period covered by this report, the increases were particularly striking for skilled nursing facilities.
CVS provides Medicare Advantage plans through its subsidiary Aetna Inc., which it acquired in 2018. Between 2019 and 2022, the number of post-acute care service requests CVS subjected to prior authorization increased by 57.5 percent, far higher than the roughly 40 percent growth the company experienced in enrollment during that period; meanwhile, the number of total requests subject to prior authorization almost exactly mirrored the rate of growth in enrollment. Along with some increases in post-acute care facility denial rates, CVS appears to have increased the rate at which it subjected these claims to the prior authorization process. By 2022, CVS was denying prior authorization of post-acute care facilities more than all other types of service requests combined.
Between 2020 and 2022, the rate at which Humana denied requests for prior authorization for stays at long-term acute care hospitals increased by 54 percent. As Humana’s prior authorization training materials for long-term acute care hospitals demonstrate, stressing a facility’s cost and providing ways to challenge providers who recommended their use can effectively enable human reviewers to increase denials, even when using accepted medical necessity criteria.
HHS OIG’s 2022 report noted that one of the most common sources of problematic prior authorization denials involved Medicare Advantage insurers claiming “that the patients did not need intensive therapy or skilled care, and that their needs could be met at a lower level of care, such as home health services at the patient’s residence,” even when these less intense options “were not clinically sufficient to meet the patients’ needs.”
One of the key concerns identified in the 2022 HHS OIG audit was that Medicare Advantage insurers frequently claimed that patients, whose providers had recommended a placement into a particular type of post-acute care facility, could be safely treated in a less-intense—and less costly—setting, even if these alternatives were not “clinically sufficient to meet the patient’s needs.” Under existing audit protocols, this type of wrongful denial may be particularly difficult to monitor for post-acute care services because many of the criteria on which to evaluate medical necessity are open to interpretation: the patient’s illness is “complex enough” to require further hospital care; the patient “need[s]” special nursing care; the patient needs “to be seen by a doctor every day.” Notable increases in adverse determination rates
could help preserve CMS resources by indicating which procedures or contracts to target.
The Subcommittee was able to analyze prior authorization data that Medicare Advantage insurers are not currently required to make public, and to examine internal documents from the insurers that provide context for the trends born out in this data. But many of the issues that most frustrate patients and providers remain cloaked in uncertainty. This is particularly true of insurers’ use of automation and predictive technologies, which PSI continues to investigate. Media reporting on this issue indicates that many of the most disturbing practices, including using artificial intelligence to fix Medicare Advantage beneficiaries’ lengths of stay in certain facilities, were accomplished through informal pressure campaigns on employees. Such wrongs are unlikely to be captured in computer code or official communication, to say nothing of regulatory filings.
Although the Subcommittee’s recommendations are targeted at regulators, the Subcommittee stated that this should not distract from the fact that it is insurers who are using prior authorization to protect billions in profits while forcing vulnerable patients into impossible choices. This is particularly troubling when recent analyses indicate that Medicare Advantage is more expensive than Traditional Medicare, with one assessment concluding that, in 2024, the government spent 22 percent more to fund Medicare Advantage plans than it would have had those beneficiaries been enrolled in Traditional Medicare. There is a role for the free market to improve the delivery of healthcare to America’s seniors, but there is nothing inevitable about the harms done by the current arrangement. Insurers can and must do better, for the sake of the American healthcare system and the patients the government entrusts to them.
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