Medicare Advantage plans deny care at unusually high rates, HHS report finds
HHS inspector general finds Medicare Advantage plans denied rehabilitation requests at unusually high rates, with three largest insurers rejecting approval more than 70% of the time.
Objective Facts
Patients enrolled in some of the nation's largest Medicare Advantage plans were denied requests for rehabilitation and other critical services at unusually high rates, according to a report released Thursday by the Department of Health and Human Services' inspector general. The report examined prior authorization requests made in June 2024 among 19 Medicare Advantage groups and found significant differences in denial rates, particularly for costly services such as long-term acute care and inpatient rehabilitation. UnitedHealthcare, CVS Health and Humana recorded some of the highest denial rates, with certain requests rejected more than 70% of the time. When enrollees appealed, MAOs collectively overturned 36% of long-term care hospital coverage denials and 43% of inpatient rehabilitation facility denials, indicating that some enrollees were initially denied medically necessary care. HHS officials are urging the Centers for Medicare & Medicaid Services to collect more detailed prior authorization data and investigate why denial rates vary so widely among insurers.
Left-Leaning Perspective
Miranda Yaver of the University of Pittsburgh told NBC News that the denial rates are 'quite staggering' and represent 'data that reinforces what a lot of Americans have already been articulating a lot of frustration about — which is that healthcare decisions are being made with profit rather than medical necessity in mind'. Healthcare Dive reported that the investigation 'lends further credence to worries that Medicare Advantage insurers are improperly denying care for seniors in order to increase their profits'. Left-leaning coverage emphasizes the connection between for-profit structure and denial patterns, with particular focus on the finding that for-profit insurers were more likely than nonprofit insurers to deny prior authorization requests. Meredith Freed of KFF noted that while some rejections stem from administrative errors, the unusually high denial rates in the HHS report 'seem to undercut that point,' raising concerns that 'people are inappropriately being denied care,' and Yaver raised questions about 'whether private insurers were looking to profit from denials'. The framing emphasizes structural incentives in the Medicare Advantage model itself. One progressive analysis questioned whether 'Big Insurance can ever be trusted or regulated enough to prevent abuse of patients through prior authorization,' arguing that insurers' motivations are not to ensure clinically appropriate care but 'to decrease the amount spent on medical care to increase the corporations' profits'. Left-leaning outlets downplay or do not extensively cover the insurance industry's argument about cost control and the role of provider documentation errors. They also give minimal attention to the fact that insurers have made voluntary commitments to reduce prior authorizations, instead focusing on the systemic profit motive as the primary driver of denials.
Right-Leaning Perspective
Mary Beth Donahue, president and CEO of the Better Medicare Alliance, argued that 'insurers have made significant progress on paring back prior authorizations since 2024', pointing to industry efforts at reform. AHIP, the industry trade group, said the reports left out important context about paperwork errors from providers, noted that post-acute care is 'famously wasteful' making it a key area for prior authorizations, and stated that 'the reports ignore serious, well-documented concerns about wide variations in the cost and quality of post-acute care'. CVS Health's Aetna arm stated: 'We review requests promptly, offer a clear appeals process, and are leading the way for continuous patient-centered improvements'. Right-leaning and industry-aligned coverage emphasizes administrative challenges and cost-control necessities. AHIP argued that the OIG reports 'omitted key facts and painted a flawed picture,' asserting that 'more than 35 million Americans choose Medicare Advantage because it provides better, more affordable care'. Industry advocates note that Kennedy announced commitments from insurers to streamline prior authorization rules, and AHIP reported that 'leading health plans eliminated 11% of prior authorizations across a range of medical services'. The focus is on voluntary industry action and the complexity of prior authorization in managing costs and ensuring appropriate care. Right-leaning coverage minimizes discussion of the profit-incentive concern or the structural issues in the Medicare Advantage capitated payment model. It emphasizes that the high overturn rates on appeal may reflect appeals processing improvements or other administrative factors rather than systemic abuse.
Deep Dive
The June 2026 HHS Office of Inspector General report on Medicare Advantage denial rates reveals a genuine policy challenge with two competing interpretations. The capitated payment structure of Medicare Advantage—where plans receive a fixed monthly fee per beneficiary regardless of services delivered—creates inherent financial incentives to minimize costly services. The report's finding that UnitedHealthcare, Humana, and CVS denied post-acute care at rates 50-80% (compared to 42% for other insurers) suggests something more than random variation. The fact that 95% of appealed skilled nursing facility denials were overturned, and 36-43% of appealed long-term care denials were overturned, indicates a significant share of initial denials were improper. However, the insurance industry's point about post-acute care cost variation is not baseless—nursing homes and rehabilitation facilities have documented quality and cost disparities that warrant scrutiny. What each side gets right: Critics correctly identify that the capitated model creates profit-seeking incentives and that the data shows concerning patterns. The finding that for-profit insurers deny at higher rates than nonprofits is suggestive of profit motive. Industry advocates correctly note that not all denials are improper and that prior authorization serves a legitimate cost-control function when applied appropriately. Administrative errors from providers (missing documentation, incorrect billing codes) do occur and account for some denials. However, critics underestimate the complexity of prior authorization, while industry understates that a 70-80% initial denial rate with 95% appeal overturn rates indicates systemic error in the initial review process, not normal variance. What remains unresolved: The critical question is whether the variation in denial rates stems from different patient populations (unlikely given similar Medicare populations), different medical necessity standards (possible but concerning), or different profit motivations (most likely, but difficult to prove). The high appeal overturn rates suggest the initial review process is broken, but whether that's due to intentional profit-seeking, poor training, or inadequate review time remains unclear. Going forward, regulators must distinguish between legitimate cost control and improper denials through closer examination of clinical criteria and denial justifications, not just aggregate rates.