Slowly but surely, Marlene Nathanson was recovering. She suffered a stroke at her Minneapolis home in November 2022 and was hospitalized for a week. When she arrived at the Episcopal Home in St. Paul for rehabilitation, she was unable to walk. With weakness in her right arm and hand, she was unable to feed herself and her speech remained somewhat slurred.
But after three weeks of physical, occupational, and speech therapy, “she was doing well,” said her husband, Iric Nathanson. “The therapists were very encouraging.” Nathanson, then 85, had started walking with the aid of a walker. Her arms were stronger, and her speech was almost back to normal.
Then, on Wednesday afternoon, one of the therapists told the Nathansons that their Medicare Advantage plan had refused to cover any further costs for her care. “She has to leave our facility by Friday,” the therapist said apologetically.
Nathanson, then 82, felt anxious and angry. He didn't think he could arrange for home care help and equipment within 48 hours. “It seems odd that therapists and specialists can't decide how she should be cared for and they have to follow the directions of the insurance company,” he said. “But it seems like it's pretty common.”
That's right. Traditional Medicare rarely requires so-called prior authorization to get a service. But virtually all Medicare Advantage plans require prior authorization before they agree to cover certain services, especially expensive ones like chemotherapy, hospitalization, nursing home care, and home health care.
“Most people who are in a Medicare Advantage plan will encounter this at some point,” said Jeannie Fuglesten Biniec, associate director of the Medicare Policy Program at KFF, a nonprofit health policy research institute.After years of rapid growth, more than half of Medicare beneficiaries are now enrolled in Advantage plans run by private insurers.
In 2021, these plans received more than 35 million pre-approval applications and rejected about 2 million of them, or 6%, in whole or in part, according to the KFF analysis.
“The rationale the plans use is they want to prevent unnecessary, rash or wasteful treatment,” says David Lipschutz, vice president of the nonprofit Medicare Advocacy Center, which frequently hears complaints about prior authorization from both patients and providers. But, he adds, it's also a “cost-containment measure.” Insurers can save money by limiting what's covered. They also find that few beneficiaries appeal coverage denials because, even if they have the right to do so, they usually win.
Medicare Advantage plans are flat-fee, meaning they receive a set amount of public funding per patient per month, and can keep more of that money if prior authorizations cut expensive services. “The plans are making financial decisions, not medical decisions,” Lipschutz said. (Medicare Advantage has never saved money for the Medicare program.)
These criticisms have been circulating for years and have been reinforced by two reports from the Department of Health and Human Services' Office of Inspector General. The 2018 report found “widespread and persistent” problems related to denials of prior authorizations and refusals to pay providers. Advantage plans reportedly overturned 75 percent of those denials when challenged by patients or providers.
The second inspector general report, issued in 2022, found that 13% of rejected prior authorization requests met Medicare coverage rules and would likely have been approved under traditional Medicare.
At that point, the percentage of prior approval denials being overturned on appeal had reached 82 percent, according to the KFF analysis, raising the possibility that many of them “should never have been denied in the first place,” Dr. Biniec said.
But only a small percentage of people — only about 11 percent — have the ability to appeal denied claims. A KFF survey last year found that 35 percent of all Medicare beneficiaries didn't know they had a legal right to appeal, and 7 percent mistakenly believed they didn't have such a right.
Moreover, the appeals process can be complicated and burdensome for people already suffering from a health crisis. “Insurance companies may be more aggressive in denying claims because they know people won’t appeal,” Dr. Biniec added.
Patients who face denials may end up paying out of pocket for care that would otherwise be covered by their insurance. When they can't afford it, some give up. “People aren't getting the care they deserve,” Lipschutz said.
In response to the inspector general's report and a growing number of complaints, the federal Centers for Medicare and Medicaid Services enacted two new rules to protect consumers and streamline prior authorization.
Among other measures, the agency clarified that Medicare Advantage plans must cover the same “medically necessary treatments” as traditional Medicare. In an email to The Times, the agency said “CMS will use its oversight to ensure compliance,” and that enforcement mechanisms will include fines.
Starting in 2026, another new rule will speed up the process, shortening the time insurers have to respond to prior authorization requests from 14 days to seven days (72 hours for “emergency requests”). The rule also requires health plans to post prior authorization information on their websites, including the number of requests, review time, denials, and appeals. Next year, plans will have to implement new digital systems to help plans and providers share information about prior authorization reviews more efficiently.
Patients and advocacy groups have powerful allies in their efforts to reform prior authorization. Health care providers have also complained. The American Medical Association, the American Hospital Association and other professional and trade groups have called for reform, and lawmakers from both parties have introduced bills.
“Medicare Advantage puts so many hurdles on us,” said Dr. Sandeep Singh, chief medical officer at Good Shepherd Rehabilitation Network in Allentown, Pa. “It's put a lot of strain on the health care system.” A few years ago, his organization had one “insurance verification specialist” who handled prior authorization requests and appeals; now it employs three.
Prior authorization delays hospital admissions, Dr. Singh said. It steers patients away from specialty hospitals like Good Shepherd, which have intensive care schedules, to general nursing homes and home care, where treatment times are shorter and readmission rates are higher, he added — taking time away from staff who could be devoted to patient care.
On a recent weekend, Dr. Singh spent two hours coordinating and filing a claim for a patient who had a spinal cord injury and brain injury. After 19 days at Good Shepherd, “she's made a lot of progress, but she's not safe to be at home alone,” Dr. Singh said. But her insurance company “is telling us to discharge her now.” He decided instead to extend her hospital stay while the pre-approval claim proceeds. “Unfortunately, we have to cover the costs,” he said. The cost is about $1,800 a day.
Will Medicare's new rules make a difference? So far, Good Shepherd has “continued to see the same level of resistance from Advantage plans,” Dr. Singh said.
“The intention is clear, but the jury is still out on whether it's working,” said Lipschutz, of the Medicare Advocacy Center.
“It all comes down to enforcement,” he said, but he noted one lesson he learned from his researchers: There's value in appeals.
That's normal. In early 2022, Nathanson was diagnosed with prostate cancer. His oncologist ordered a special MRI scan that his Advantage plan denied. But his doctor contacted the insurance company, and after some back-and-forth, the company agreed to cover the cost of the scan. Nathanson is in remission, but he's still upset that his treatment was delayed by two to three weeks.
But when Nathanson appealed for further rehabilitation at Episcopal Homes, the insurance company refused. She was hospitalized for two more days, and the couple had to pay $1,000 out of pocket, which they consider lucky they could afford.
Nathanson broke her hip last fall and now lives in Episcopal Homes. She, too, is upset that the insurance company ignored medical experts' advice. “I wish I could have stayed with them longer,” she said in an email. “But I had to go home before I was ready.”
