AI Use by Medicare Advantage Blamed for Increased Denial of Nursing Home Services

Over-reliance on artificial intelligence is compromising post-acute care for nursing home residents on Medicare Advantage plans.

This view of the problematic use of algorithms for prior authorizations – and denial based on incorrect assessment of patient needs – is at the center of reporting and analysis published in the health, medicine and life sciences publication, STAT.

Skilled Nursing News also recently examined the issue of high administrative burdens from Medicare Advantage plans, as the federal government pushes to get more beneficiaries on managed care. And SNN also recently highlighted moves by the Centers for Medicare & Medicaid Services (CMS) to ensure that MA beneficiaries are not inappropriately denied coverage for post-acute care in SNFs.


The STAT investigation found artificial intelligence is increasingly driving denials by health insurance companies for medical claims in Medicare Advantage.

As health insurance companies expand their use of algorithms to predict a patient’s health care journey and outcome, the growing list of denials that follow cause conflict between physicians and insurers, putting treatment, sometimes for critically ill patients, in limbo.

The cost of the tussle between AI-based assessment versus doctor-based assessments can put the lives of nursing home residents in jeopardy, notes the STAT article.


Many residents are left in the end to either pay for their care out of pocket, forgo treatment or appeal a denial – a long-drawn out process not without its own flaws and costs, that financial leaders at hospitals suggest can result in lost lives.

Patient advocates told STAT that the problem with algorithm-based recommendations is that they are too rigid and broad, and in the end fail to support personalized care or better outcomes.

“While the firms say [the algorithm] is suggestive, it ends up being a hard-and-fast rule that the plan or the care management firms really try to follow,” said David Lipschutz, associate director of the Center for Medicare Advocacy, a nonprofit group that has reviewed such denials for over two years. “There’s no deviation from it, no accounting for changes in condition, no accounting for situations in which a person could use more care.

Moreover, Medicare Advantage plans, though popular for their lower premiums and prescription drug coverage, also give insurers more leeway in denying and limiting services.

Still, over the last decade, predictive AI tools have become a key feature used by Medicare Advantage insurers so much so that they have begun purchasing companies making these tools. STAT focused on a program created by NaviHealth, which was bought by UnitedHealth Group Inc. (NYSE: UNH), the largest Medicare Advantage insurer in the country. STAT claims that its analysis showed scores of nursing home residents were unfairly denied access to necessary care due to rigid adherence to NaviHealth’s program. 

But NaviHealth and United are far from the only companies pursuing this model. Elevance, Cigna, and CVS Health, which owns insurance giant Aetna, have all bought companies that have created such programs in recent years, the STAT article stated. These insurers aim to more precisely predict how many hours of therapy patients will need, which types of doctors they might see, and exactly when they will be able to leave a hospital or nursing home. They are motivated in part by payment frameworks that reward them for more effectively managing spending and outcomes for their beneficiary populations.

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