Medicare Advantage denials prompt federal rebuke; report finds 'shocking' rate of refusals for long-term care
UnitedHealthcare, CVS Health and Humana, often rejecting, more than 70% of requests
Two new reports from the Department of Health and Human Services inspector general found that some of the largest Medicare Advantage insurers are denying prior authorization for long-term and rehabilitative care at rates investigators called “shocking,” NBC News reported.
UnitedHealthcare, CVS Health and Humana had the highest denial rates, with some plans rejecting more than 70 percent of requests. Denial rates across companies ranged from 8 percent to 80 percent for long-term care. When patients appealed, plans overturned 95 percent of initial denials.
The HHS inspector general’s office urged the Centers for Medicare & Medicaid Services to collect prior-authorization data more often and investigate the variance.
“The variation in denial rates, ranging from 8 percent to as high as 80 percent among different companies for long-term care, is quite shocking,” an HHS official identified in the report as Erin Bliss, an assistant inspector general at HHS, said.
Mary Barthomew, who led the reports, said the 95 percent reversal rate “indicates an extremely high rate of reversals” and “raises serious concerns that there is a failure occurring at the initial request stage.”
Stakes are high
The financial stakes for households are large. A long-term acute care hospital stay averaged about $49,000 in 2023, and inpatient rehabilitation about $24,000, NBC reported.
Nearly 20 million Americans are enrolled in Medicare Advantage plans run by the three companies named in the report.
Miranda Yaver, an assistant professor of health policy management at the University of Pittsburgh, said the gap in denial rates “underscores the frustration many Americans have expressed — that healthcare decisions are being influenced by profit motives rather than medical needs.”
HHS Secretary Robert F. Kennedy Jr. has pledged authorization reforms, and the New York Times reported that federal investigators have raised concerns about external contractors used by insurers to determine eligibility for specialized care.
A series of unmet promises
The program now called Medicare Advantage was created by the Balanced Budget Act of 1997 under the name “Medicare+Choice” (Medicare Part C). It expanded a smaller managed-care option that had existed since the 1980s, when Congress first allowed Medicare beneficiaries to enroll in risk-bearing HMOs.
The pitch to seniors at the time was straightforward: in exchange for accepting a narrower network of doctors and hospitals and tighter utilization controls, beneficiaries would get extra benefits — vision, dental, hearing aids, gym memberships, lower out-of-pocket costs — that traditional fee-for-service Medicare did not cover. The federal government would pay private insurers a per-member capitated rate, and the insurers would manage the care.
Enrollment was modest. Medicare+Choice plans struggled financially through the late 1990s and early 2000s, with many insurers withdrawing from counties they considered unprofitable. By 2003, roughly 5 million seniors were enrolled, down from a peak of 6.3 million in 1999.
In 2003, the program was “rebranded” as Medicare Advantage and numerous benefits were added, including higher payments to doctors and hospitals and lower out-of-pocket spending.
Over the following decade, Medicare Advantage roughly doubled its market share. Enrollment crossed 50 percent of all Medicare beneficiaries in 2023, meaning that for the first time, a majority of America’s seniors received their Medicare coverage from a private insurer rather than directly from the federal government.
By 2025, more than 33 million Americans were enrolled. UnitedHealthcare, Humana and CVS Health (which acquired Aetna in 2018) emerged as the three dominant carriers.
The promises that drove that growth — promises plans made directly to seniors in television ads, mailers and call-center pitches — generally included:
No or low monthly premiums beyond Part B.
Extra benefits not covered by traditional Medicare: dental, vision, hearing aids, fitness memberships, over-the-counter drug allowances, transportation, sometimes groceries or utility allowances for chronically ill members.
Out-of-pocket caps that traditional Medicare lacks.
Care coordination — a single plan managing primary, specialist and prescription care.
Prescription drug coverage bundled in.
The trade-offs that drew scrutiny
The trade-offs were always there, but they became more visible as the program grew. Medicare Advantage plans use prior authorization, narrower networks, and managed-care utilization tools that traditional Medicare does not.
Independent researchers and the Medicare Payment Advisory Commission (MedPAC) repeatedly found that the federal government pays Medicare Advantage plans more per beneficiary than it spends on comparable traditional Medicare enrollees — by roughly $83 billion in 2024 according to MedPAC estimates — driven in part by “risk-adjustment” coding practices that make enrollees appear sicker on paper.
The Department of Justice has pursued multiple False Claims Act cases against the largest Medicare Advantage carriers alleging inflated risk-coding. The Department of Health and Human Services inspector general has published a series of reports — including today’s — finding that plans deny prior authorization at far higher rates than traditional Medicare would, and that 95 percent of those denials are overturned on appeal, suggesting the initial denials are systematically wrong.
Where the program stands now
As of 2026, Medicare Advantage covers a majority of Medicare beneficiaries, is the single largest line of business for UnitedHealth Group and Humana, and faces converging pressure: federal rate cuts, tightened risk-adjustment rules, slower star-rating bonuses, and growing congressional and inspector-general scrutiny of marketing practices and care denials.
The promises that built the program — extra benefits, lower out-of-pocket costs, simpler care — remain the marketing message. The newer questions are whether seniors who become seriously ill find those promises hold up when they need long-term, rehabilitative or specialized care, and whether the federal government’s premium payments to plans deliver value commensurate with their cost.