OIG Findings on Medicare Advantage Denials of Nursing Home Care Renew Calls for ‘Meaningful Penalties’ 

Medicare Advantage plans denied about 12% of requests for admission to nursing homes and overturned almost all of those denials upon appeal, raising concerns that patients may have been initially denied critical medical care, according to a report posted Thursday by the Office of Inspector General (OIG).

“The extremely high overturn rate indicates that some enrollees were initially denied medically necessary care and raises concerns about denials that were not appealed,” the OIG report noted.

The latest report follows the federal watchdog’s concerns raised in previous investigations into MAOs’ use of prior authorization to limit access to nursing home care, and comes at the behest of providers, who have faced both administrative and payment burdens as a result of MAO practices, according to Nicole Fallon, vice president of integrated services and managed care policy at LeadingAge.

OIG added the issue to its work plan, and what was originally intended as one report became two because of significant findings related to skilled nursing facilities (SNFs), Fallon told Skilled Nursing News, adding that OIG’s independent review of the data identified legitimate concerns and validated the troubling patterns in post-acute care, especially in the SNF setting, that LeadingAge members had been voicing.

The report reviewed data from June 2024, concluding that MAOs denied roughly 13,500 of 109,400 requests reviewed across the 19 largest MAO parent companies. Denial rates varied widely among insurers, ranging from 23% to 0.4%. And, more alarmingly, long-stay nursing home residents faced disproportionately high SNF denial rates, with 40% of requests rejected.

The report also criticized the lack of adequate training and oversight for contractors, including AI tools like naviHealth, a subsidiary of UnitedHealth Group that processed about half of all SNF authorization requests in the study.

The report’s most striking finding was that when denials were appealed, MAOs overturned 95% of them and ultimately approved the requested care. Only about 18% of denials were appealed, meaning most denied beneficiaries never pursued a review. OIG said the extraordinarily high overturn rate suggests that some beneficiaries may have been initially denied medically necessary care and raises concerns about what happened to the much larger group whose denials were never appealed.

“What we hear from our provider members and skilled nursing facilities is that sometimes families and residents don’t want to appeal because, first, they think the plans know the rules better than they do,” Fallon said. “There’s sometimes a level of deference that may not be warranted. The other concern is that if the appeal is unsuccessful, they’re on the hook for any of those days that exceeded coverage.”

Appeals also mean delay in crucial care. Beneficiaries who appealed a denial typically waited six days from the initial request to a final decision, while many waited 10 days or longer, the report noted. Because patients seeking SNF care are often still hospitalized while awaiting authorization, such delays can extend hospital stays, increase costs, and create uncertainty and stress for patients recovering from illness, injury, or surgery.

“The real worrying thing is that [services] should have been approved in the first place,” Fallon said. “Somebody who is recovering from a surgery, a medically complex condition, they’re not feeling well, and you’re putting them through this process.”

The report highlighted concerns about the role of naviHealth, a subsidiary of UnitedHealth Group that processed about half of all SNF authorization requests in the study. NaviHealth denied 14% of requests, a higher rate than MAOs that reviewed requests internally (11%) or other contractors (9%). When those denials were appealed, MAOs overturned 97% of them.

OIG also said the findings raise questions about whether contractors are receiving adequate training, guidance and oversight.

MAOs will only clean up their act if they face penalties for such practices, Fallon said.

The Centers for Medicare and Medicaid Services (CMS) audits frequently identify prior authorization problems, including erroneous denials and systemic errors, but such findings have not consistently led to “meaningful penalties,” Fallon noted.

“Plans get cited for this stuff routinely, and then we don’t see any change,” Fallon said, explaining that the lack of change is due to penalties being treated by big insurers like a slap on the wrist.

“For a plan like United or Aetna [or] one of the big ones, if a CMP isn’t big enough, they just see it as the cost of doing business, so you need to have meaningful penalties to really lead to that change,” Fallon said.

UnitedHealth Group, Humana, and CVS Health are the largest for-profit companies whose plans cover the majority of people enrolled in Medicare Advantage.

Long-stay residents face very high denial

The OIG also found that long-stay nursing home residents faced much higher denial rates than other beneficiaries. Medicare Advantage plans denied SNF-level care for nursing home residents 40% of the time, compared with 11% for all other enrollees.

Some MAOs argued that nursing home residents may be less likely to meet Medicare criteria for intensive daily skilled therapy because they already receive certain services. Patient advocates and nursing home organizations disagreed, arguing that a beneficiary’s place of residence should not determine eligibility for SNF care and that nursing home services are not equivalent to the intensive rehabilitation and skilled nursing provided in an SNF.

The report noted that denial rates were generally higher among for-profit MAO contracts than nonprofit contracts and observed that plans may have financial incentives to authorize less expensive alternatives, such as home health services, instead of SNF care.

OIG emphasized that it could not determine from the data alone how many denials were inappropriate, but said the combination of substantial denial rates, wide variation among plans, and extremely high appeal overturn rates warrants closer scrutiny.

LeadingAge members who operate their own MA plans or Institutional Special Needs (I-SNP) plans say they serve the same populations under the same rules as large insurers but take a different approach to meeting beneficiaries’ needs, Fallon said.

Provider recommendations

OIG recommended that CMS should investigate why so many SNF denials are overturned on appeal, examine large differences in denial rates across plans and contractors, study the much higher denial rates experienced by nursing home residents, and collect more detailed prior authorization data to improve oversight.

Short of that and heavier penalties on MA plans, Fallon said nursing homes will continue to suffer both financial loss.

“Our skilled nursing facilities do pick up the tab for a number of things because one of the things they often aren’t able to capture is the cost sharing,” she noted. “We have regulatory obligations for safe care transitions. Some [SNF providers] are like, ‘I just can’t, in good conscience, discharge somebody home right now,’ so if the initial prior authorization doesn’t come, they end up eating costs sometimes more on the continuation of care.”

For now, CMS did not formally agree or disagree with the recommendations but said it would continue monitoring Medicare Advantage plans through audits and other oversight activities.

Clif Porter, president and CEO of the American Health Care Association and National Center for Assisted Living (AHCA/NCAL), said OIG’s findings confirm what the skilled nursing community has been saying for years.

“[L]arge, insurer-led Medicare Advantage plans too often deny and delay access to care, but especially post-acute care. It’s unconscionable that insurers are making frail seniors and their families jump through numerous hoops at a critical time for their recovery,” he said in an emailed statement to SNN. “It is time for lawmakers to act and hold these large Medicare Advantage organizations accountable. Our nation’s seniors deserve timely, consistent access to care, pure and simple.”