Ballad Health has filed a federal lawsuit against UnitedHealth Group (NYSE: UNH) and its insurance arm, UnitedHealthcare, over Medicare Advantage practices, including practices related to beneficiaries’ post-acute care access.

Johnson City, Tennessee-based Ballad is a nonprofit health system that operates 19 hospitals in Tennessee and Virginia. The organization alleges that the United entities have “systematically abused and manipulated” the Medicare Advantage system, costing Ballad more than $65 million over the last five years.

Among other claims, Ballad’s Oct. 21 legal complaint alleges that United’s approach to Medicare Advantage results in “extended inpatient stays to avoid patient access to appropriate post-acute care.”

“Taking legal action was our last resort,” Alan Levine, chairman and CEO of Ballad Health, said in a press release. “This is not our first choice; it’s not a choice we’ve had to make before. But we had to take action because we believe UnitedHealth’s behaviors are so harmful to patients, doctors and community hospitals.”

UnitedHealth Group and UnitedHealthcare had not responded to Skilled Nursing News’ requests for comment as of press time.

United has in the last several years faced a series of lawsuits – as well as investigations by governmental and media organizations – over Medicare Advantage issues. These issues include the use of artificial intelligence tools in approving or denying claims for post-acute care, as well as incentive payments that federal lawmakers fear inappropriately limit hospitalizations of nursing home residents.

United has pushed back against many of these claims, including through a defamation lawsuit against The Guardian.

Meanwhile, skilled nursing providers have spoken in recent years about the challenges posed by the expansion of Medicare Advantage, including low payment rates, high administrative burdens and constricted access to post-acute care.

Ballad’s bed day payment allegations

In terms of allegations related to post-acute care, Ballad’s legal complaint zeroes in on the matter of bed day payments.

Ballad claims that United engages in Medicare Advantage practices that end up “delaying and/or denying approval for post-acute care for patients” who are ready to be discharged from the hospital. Because of these delays and denials, Ballad cannot discharge these patients.

So, United in 2024 agreed to make “bed day payments” to Ballad to help offset the unreimbursed costs that hospitals were incurring due to MA patients’ longer lengths of stay, according to the complaint.

“Unnecessarily extending hospital stays also has the cascade effect of lengthening emergency room wait times for other patients who need admission to the hospital,” the complaint noted. “Thus, this practice by United is extremely harmful to the entire system of care.”

Ballad alleges that United has failed to make any bed day payments and owes the hospital system $7.1 million in such payments.

Medicare Advantage beneficiaries are indeed more likely to have a longer stay in the hospital than traditional Medicare beneficiaries, with this trend even more pronounced for people who ultimately transfer to a skilled nursing facility, according to research findings recently published in JAMA Internal Medicine.

“Extensively documented barriers to discharge in Medicare Advantage due to prior authorization or more limited postacute care networks are plausible explanations for this pattern of care,” the researchers wrote. Their study looked at the Medicare Advantage program as a whole and was not specifically focused on United.

High stakes

Beyond the bed day payment issue, Ballad’s complaint takes issue with several “unseemly mechanisms” that United allegedly utilizes to maximize profits. These mechanisms include upcoding; using payments to United’s health care services arm, Optum, to circumvent Medical Loss Ratio (MLR) guardrails; and “grossly delaying and underpaying medical providers.”

And Ballad emphasizes that the stakes are particularly high given the growth of Medicare Advantage. About 72% of Ballad’s Medicare patients now are enrolled in Medicare Advantage plans, according to the complaint.

The harm to Ballad is particularly egregious as its hospitals are located predominantly in rural markets, the health system claims.

“While some health systems and hospitals may be able to tolerate such behavior due to their more favorable payer mix, rural systems are disproportionally harmed, and so are their patients,” the complaint states.

Medicare Advantage as skilled nursing disruptor

The growth of Medicare Advantage has been “one of the most profound” disruptors of the skilled nursing sector in the last five years, Stephen Taylor, principal of senior living and care segment leader for CliftonLarsonAllen (CLA), said in November 2024.

Providers are struggling to adapt, given that MA rates tend to be 20% to 30% lower than traditional Medicare, he noted.

Beyond the payment rates, SNF providers have registered deep concerns with the administrative burdens related to Medicare Advantage, including work related to obtaining authorizations and appealing denials.

“It’s really an insane amount of resources that we’ve added to assure that we’re advocating appropriately for the patient,” Kim Majick, chief development officer at Carespring Health Care Management, told SNN in 2023.

Medicare Advantage organizations – not just UnitedHealth – are under increasing scrutiny and pressure, which has led to some changes and some promises of future improvement. For example, more than 40 insurance companies pledged to reduce prior authorization requirements and take other steps to streamline processes over the next two years.

“We hope these efforts will extend meaningfully to post-acute care settings – particularly skilled nursing facilities (SNFs) and home health agencies – where delays and denials are most frequent and often most harmful,” said Nicole Fallon, VP, Integrated Services and Managed Care Policy at LeadingAge, the nation’s largest association of nonprofit aging services providers.

While the effects of these efforts remain to be seen, SNF providers are taking steps to adapt to the rise of MA.

For instance, Larry H. Miller Senior Health is continuing to focus on increasing its share of fee-for-service Medicare residents. Even though the proportion of FFS beneficiaries is shrinking as MA becomes a bigger portion of the total Medicare pie, the dramatic growth of the older adult population in the United States means that the absolute number of FFS beneficiaries is still increasing, Andy Frasure, COO at Larry H. Miller Senior Health, pointed out at the 2025 Skilled Nursing News RETHINK Conference.

Providers also are taking steps to adjust their payer mix, while focusing on quality metrics and gathering the data to show payers the value they are delivering to the health care system writ large.

These strategies bring their own challenges and uncertainties – for instance, Medicaid uncertainty related to the passage of the One Big Beautiful Bill Act adds a new wrinkle to payer mix strategies. And walking away from certain MA contracts is an option; in fact, Ballad will not renew its Medicare Advantage contract with UnitedHealth after its June 30, 2027 expiration date, the health system stated in its press release.

However, SNF providers would be hard-pressed to totally forgo MA business, given the number of older adults in that program. So, providers are forging ahead with the assumption that current trends will hold and that Medicare Advantage will be a major payer in the years ahead.

“At the end of the day, providing quality care and aligning yourself with [MA] payers is going to be a long term strategy. Medicare Advantage growth is absolutely not slowing down. It is speeding up,” said CLA’s Taylor.