Insurers overturned 95% of appealed skilled-nursing care denials

In June 2024, the 19 largest Medicare Advantage organizations (MAOs) -- the private insurers CMS pays a fixed monthly amount per enrollee to run Medicare coverage -- denied 12% of requests to admit patients to a skilled nursing facility (SNF)⧉ for short-term rehab after a hospital stay.▸ That is a routine business decision under prior authorization⧉, the pre-approval step MAOs require before certain care gets covered. What HHS's inspector general found next is the story: when a patient or their doctor appealed, the same insurers overturned 95% of those denials -- 2,313 of 2,445 appeals -- admitting the care had been medically necessary all along.

MAOs are paid the same amount per enrollee whether that enrollee uses a little care or a lot, which OIG's own report notes⧉ creates "a potential incentive for insurers to deny enrollees' access to services in an attempt to increase profits."▸ The data breaks along exactly that line: SNF requests processed under for-profit MAO contracts were denied 13% of the time, versus 8% under nonprofit contracts⧉, and Molina Healthcare -- the insurer with the single highest denial rate at 23.4% -- operated only for-profit Medicare Advantage contracts, as did the three largest MAOs by enrollment: UnitedHealth Group, Humana, and CVS Health (Aetna's parent), which together cover nearly 20 million people and denied SNF requests at some of the highest rates in the review.

UnitedHealth Group alone received 42% of all SNF appeals among the 19 insurers and overturned 99.7% of them⧉ -- the single biggest driver of the overall 95% rate.▸ Every insurer that received at least 50 appeals overturned more than 90% of them; smaller insurers, with far fewer appeals to review, still overturned 59.5% combined. A UnitedHealth subsidiary called naviHealth does much of the initial reviewing: it processes half of all SNF requests among these 19 insurers -- including, for a fee, requests for rival insurers BCBS of Michigan, Highmark Health, and Humana -- and denied 14% of them, a higher rate than MAOs' own internal reviewers (11%) or other outside contractors (9%)⧉. On appeal, naviHealth's denials were overturned 97% of the time.

The starkest gap in the report is by patient, not insurer.▸ MAOs denied 40% of SNF requests from people already living in a nursing home for more than 100 days, versus 11% for every other enrollee⧉ -- despite this group submitting only about 3% of all SNF requests. OIG asked five large MAOs why, and three said their contractor naviHealth had written guidance instructing reviewers to weigh why a patient lives in a nursing facility⧉, on the theory those reasons often limit how much daily therapy a resident can meaningfully do. Patient advocacy and nursing-home industry groups told OIG that reasoning is wrong on its face -- a person's address shouldn't determine whether they qualify for care a doctor ordered. Under that guidance, naviHealth denied 47% of nursing-home residents' SNF requests, versus 13% for its other enrollees.

A companion OIG report⧉, built from the same 19 insurers' June 2024 data, reviewed the two costlier post-acute settings: long-term care hospitals (LTCHs) and inpatient rehabilitation facilities (IRFs).▸ Insurers denied a much larger share of those requests up front -- 65% for LTCHs and 54% for IRFs, against 12% for SNFs -- but overturned far fewer on appeal: 36% for LTCHs and 43% for IRFs, against SNF's 95%⧉. The setting insurers reversed themselves on almost every time was also, per Original Medicare's own 2023 payment data cited in that report, the cheapest of the three: $16,000 average per SNF stay, against $24,000 for inpatient rehab and $49,000 for a long-term care hospital⧉ -- and nearly three times what Original Medicare pays for home health, the lower-cost alternative a denied SNF patient is often steered toward instead. A purely cost-driven reviewer would get the cheap call right more often, not less.