Denied by design
A patient gets discharged from the hospital after a stroke. Her physician orders inpatient rehabilitation, but her Medicare Advantage (MA) plan denies the request. Then when she appeals, the plan reverses the denial.
This sequence, according to two reports released last week by the HHS Inspector General, plays out with striking frequency: MA plans overturned 95% of appealed denials for skilled nursing facility care, and denial rates for long-term acute care and inpatient rehab ranged from 8-80% across insurers. Prior authorization is intended to ensure that care is medically appropriate and covered. But when nearly every successful appeal suggests the first decision was wrong, the process isn't working as intended. The reports pointed to wide variation across insurers and raised the possibility that financial incentives may be driving many of those differences.
Last year, HHS announced commitments from major insurers to fix prior auth practices, but the pledges haven’t visibly moved the needle. Meanwhile, the economics of MA are tightening from the other direction: insurers are pulling back supplemental benefits, and companies built around MA’s growth—like GoHealth, which recently filed for bankruptcy—are feeling the effects.
With more than half of all Medicare beneficiaries now enrolled in MA plans, the realities of prior auth practices impact a large and growing share of aging adults. For digital health companies, the near-term opportunity is now less about enrollment and more about operations: tools that help patients understand and pursue appeals, platforms that streamline communication between providers and health plans, and solutions that support care transitions from hospital to post-acute settings. The companies best positioned are those that can reduce friction for patients, providers, and plans alike—and demonstrate that doing so improves outcomes, not just processes.
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