Health insurance companies must change prior authorizations
Health Secretary Robert F. Kennedy and Dr. Mehmet Oz announced that major insurance companies have agreed to reduce and streamline prior authorizations.
Federal regulators say Medicare Advantage, a major health insurance company, routinely denied applications from older adults seeking rehabilitation and other types of specialized post-hospital care.
More than half of applications for both long-term care and rehabilitation are denied by large private insurers offering Medicare Advantage plans, according to the Department of Health and Human Services’ Office of Inspector General.
Private health insurance companies are facing increased scrutiny over their use of “prior authorization,” a common industry tool that vets applications before allowing doctors and medical facilities to bill for medical services. Senior advocates and long-term care industry officials say insurance companies often use cost-cutting tools to deny seniors the care they need, shifting the financial and care burden onto families.
In a related report released June 11, the inspector general highlighted Medicare Advantage denial rates in care settings such as long-term care hospitals, rehabilitation facilities, and skilled nursing facilities. These are places for people who are ready to leave a traditional hospital but need special care while recovering from a stroke, broken hip, or other complex medical problem.
“Imagine knowing you’re not ready to go home, you know you can’t go to the bathroom, you still need help, and[your insurance company]says no,” said Nicole Fallon, vice president of integrated services and managed care policy at LeadingAge, which represents nonprofit nursing homes and other senior service providers. “You get stressed out and think, ‘What should I do? I can’t take care of myself at home.'”
How did UnitedHealth, Aetna and other insurers cope?
In one report, the inspector general examined 19 Medicare Advantage plans and how often they denied applications for long-term hospital care and rehabilitation facilities.
Unlike traditional government-run Medicare, Medicare Advantage plans are managed by private insurance companies. Medicare Advantage plans receive a set amount of federal funds for each patient and can keep more profits if they control costs through strategies such as prior authorization and hospital and physician network limits.
The three largest Medicare Advantage companies (CVS Health/Aetna, Humana, and United Health Group) had some of the highest denial rates for private Medicare insurance plans.
According to the report, CVS Health denied 80% of requests from seniors to receive treatment at long-term care hospitals. Humana and UnitedHealth both denied more than 70% of long-term care applications, according to the inspector general’s report.
Smaller Medicare Advantage plans denied an average of 42% of long-term care claims.
UnitedHealth denied 66% of requests from people seeking care at a rehabilitation facility. Humana and CVS Health/Aetna denied more than half of the rehabilitation requests, according to the report.
For-profit Medicare Advantage plans are more likely to deny requests for service than nonprofit Medicare plans, and “financial incentives may be partially responsible for higher denial rates,” the report said.
Citing Medicare data, the report said long-term care hospitals are the most expensive of all post-traditional hospital facilities, with average costs of $49,000, followed by rehabilitation facility stays at $24,000 and skilled nursing at $16,000. By comparison, the average cost for those receiving post-discharge care at home is $6,000, the report said.
Private Medicare plans may have an incentive to deny more expensive post-discharge care and approve cheaper care settings instead, said Rosemary Bartholomew, lead author of the two reports.
“Every time we see such a wide range of refusal rates, it raises concerns that some patients may not be getting the care they need,” Bartholomew said.
Health insurance industry groups and their allies pushed back against the findings of the inspector general’s report.
AHIP, a health insurance industry trade group, said the report omits important facts and paints an “incomplete picture” of post-hospital care coverage for the more than 35 million Americans enrolled in Medicare Advantage insurance plans.
“The report ignores serious, well-documented concerns about wide disparities in the cost and quality of post-acute care and skilled nursing facilities,” said AHIP spokesperson Chris Bond.
A representative from UnitedHealth Group referred USA TODAY to AHIP’s response. Representatives for Humana did not respond to requests for comment.
Aetna said in a statement that the company’s priority is to help patients receive the care they want without unnecessary delays.
“Combined with timely clinical information from our partner healthcare providers, prior authorization supports safe, effective and affordable care. We review requests quickly, provide a clear appeals process, and lead the way to patient-centered continuous improvement,” Aetna’s statement said.
Refusal of care places a burden on families
Groups representing post-hospital care providers said the federal report highlights the frustrations faced by families and rehabilitation facilities seeking insurance coverage for needed services.
When seniors appealed, Medicare Advantage plans overturned 36% of long-term care hospital denials and 43% of rehabilitation denials. This suggests that “some enrollees were initially denied medically necessary care,” one report said.
LeadingAge’s Fallon said some families endure multiple appeals to fight denials. Other families whose claims have been denied are left on their own to pay the high cost of care for loved ones who require specialized care.
“We’re paying the full price, but not everyone can afford it,” Fallon said.
According to a March report from AARP, the cost of home care and assisted living for the elderly and disabled has soared over the past five years, straining the burden on middle-class families who have difficulty receiving the money.
The AARP report found that costs for the most common types of long-term services (home care and assisted living services) jumped nearly 50% from 2019 to 2024, far outpacing the median income growth rate of 22% for older households.
Contact Ken Alltucker at alltuck@usatoday.com.
