Aetna Sued Over Medicare Advantage Prior Authorization Denials: 200 of 207 LTCH Requests Refused

Aetna Medicare Advantage prior authorization denials are now the subject of a federal lawsuit. Select Medical, one of the largest operators of long-term acute care hospitals in the country, sued Aetna in October 2026 over a pattern of refused preauthorizations for its Medicare Advantage members in Pennsylvania. The complaint says Aetna denied preauthorization for 200 of 207 patients referred to Select's Pennsylvania long-term acute care hospitals in one period spanning 2025, and 108 of 114 patients in early 2026. That is 308 denials out of 321 requests. Only 13 patients got in.

The case moved to the U.S. District Court for the Middle District of Pennsylvania on November 6, 2026. Select says Aetna's admission rate was the lowest among the main payers in the Pennsylvania market during those periods, and it calls the pattern a breach of contract. Aetna declined to comment.

If your practice refers patients to post-acute care, or you fight Medicare Advantage denials every week, this case puts numbers on what you already feel. The rest of this article gives you the complaint, the federal data behind it, the math on the denials nobody appeals, and a checklist for the next denial that lands on your desk.

Table of contents

• What Select Medical alleges in the lawsuit
• Why Aetna's numbers stand out from the pack
• The appeal gap: 2.9 million denials that should have flipped
• What the rules already say, and what changes January 1
• What a denied post-acute referral costs
• Your checklist when a Medicare Advantage plan says no
• What happens next
• Frequently asked questions

Key takeaways

• Select Medical sued Aetna in October 2026 over Medicare Advantage preauthorization denials for long-term acute care hospital admissions in Pennsylvania. The case moved to federal court on November 6, 2026.
• The complaint alleges Aetna denied 200 of 207 requests in one 2025 period and 108 of 114 in early 2026. That is 308 of 321 in total, a 95.9% denial rate.
• The HHS OIG reported in June 2026 that CVS Health, Aetna's parent company, denied 80% of long-term acute care admission requests in June 2024, the highest rate among the 19 largest Medicare Advantage plans.
• Medicare Advantage plans made 52.8 million prior authorization determinations in 2024 and denied 4.1 million. Only 11.5% of denials were appealed, and 80.7% of appeals were overturned, per KFF.
• Since January 1, 2026, CMS-0057-F requires plans to decide expedited requests in 72 hours and standard requests in 7 calendar days, and to give a specific reason for every denial.

What Select Medical alleges in the lawsuit

Select Medical is based in Mechanicsburg, Pennsylvania. As of March 31, 2026, it operated 103 critical illness recovery hospitals in 28 states, 41 rehabilitation hospitals in 15 states, and 1,912 outpatient rehabilitation clinics, per a company release. Critical illness recovery hospitals are licensed as long-term acute care hospitals. The company was taken private on June 30, 2026 for $3.9 billion, per Becker's Hospital Review.

The lawsuit concerns admissions for Aetna's Medicare Advantage members referred to Select's Pennsylvania long-term acute care hospitals. Becker's Payer Issues reported on November 12, 2026 that Select filed the case in October and that it moved from state court to the U.S. District Court for the Middle District of Pennsylvania on November 6.

The complaint's numbers are stark. In one period spanning 2025, Aetna denied preauthorization for 200 of 207 patients. That is a 96.6% denial rate. In early 2026, it denied 108 of 114 patients. That is a 94.7% denial rate. Put the two periods together and 308 of 321 referred patients were refused. Thirteen got in.

Select claims Aetna's admission rate was the lowest among the main payers evaluated in the Pennsylvania market during those periods. The complaint alleges breach of contract. It says Medicare Advantage rules bar plans from using coverage criteria stricter than traditional Medicare, and it asks the court to order Aetna to rescind the alleged policy. Medicine World Foundation reported the same figures on November 13, 2026.

Aetna declined to comment. Keep that in mind when you read the numbers. Everything in the complaint is an allegation until a court rules. The pattern is what makes the case worth your attention, and the federal data behind it is where the pattern stops looking like one company's problem.

Why Aetna's numbers stand out from the pack

The complaint leans on two reports the HHS Office of Inspector General published on June 11, 2026. The OIG examined prior authorization decisions from June 2024 by the 19 largest Medicare Advantage organizations. Those 19 plans covered 29.3 million enrollees, about 86% of all Medicare Advantage enrollment.

One report covered long-term acute care hospitals and inpatient rehabilitation facilities. The other covered skilled nursing facilities. The findings land hard.

For long-term acute care admissions, denial rates across the 19 plans ranged from 8% to 80%. The three largest plans by enrollment denied at higher rates than most of their peers. CVS Health, Aetna's parent company, denied 80% of long-term acute care admission requests. Humana denied 72%. UnitedHealthcare denied 71%. Across all 19 plans, the overall denial rate for long-term care hospital admissions was 65%, and 54% for rehabilitation facility admissions, per a summary of the OIG reports.

For inpatient rehabilitation, UnitedHealthcare denied 66% of requests, Humana denied 54%, and CVS Health denied 51%. When enrollees appealed, the plans overturned 36% of long-term acute care denials and 43% of rehabilitation denials.

The skilled nursing report is worse in one way. The 19 plans denied 12% of skilled nursing admission requests in June 2024, with denial rates ranging from 0.4% to 23% by plan. Enrollees and their providers appealed 18% of those denials. When they did, the plans overturned 95% of them in favor of the enrollee. The OIG wrote that the extremely high overturn rate indicates some enrollees were first denied medically necessary care, and it raises concerns about denials that were never appealed.

Two more findings from the skilled nursing report deserve your attention. The contractor naviHealth processed half of all skilled nursing admission requests and denied 14% of them, against 11% for plans that processed requests internally and 9% for other contractors. And the plans denied requests for nursing home residents 40% of the time, against 11% for all other enrollees.

The OIG also found that for-profit Medicare Advantage plans denied more often than nonprofit plans. Its recommendation is blunt: CMS should regularly collect request-level prior authorization data that includes service type and contractor information, assess why denial and overturn rates vary so widely, and act. CMS did not explicitly concur or nonconcur with the recommendations in the skilled nursing report.

Read those numbers next to Select's complaint. Aetna's alleged 95.9% denial rate in Pennsylvania sits above even the 80% national figure the OIG tied to its parent company. That gap is the core of the lawsuit. The AMA's summary of the OIG reports and the OIG skilled nursing data brief carry the full figures, and JD Supra's analysis walks through both reports in detail.

The appeal gap: 2.9 million denials that should have flipped

The OIG reports cover post-acute care. The wider picture comes from KFF. Its analysis of CMS data, published January 28, 2026, found Medicare Advantage insurers made 52.8 million prior authorization determinations in 2024, up from 49.8 million in 2023. They denied 4.1 million requests in full or in part. That is a 7.7% denial rate.

Only 11.5% of those denials were appealed. Of the appeals, 80.7% were overturned in full or in part. ASGE summarized the KFF analysis in February 2026.

Now run the math nobody else has published. It is simple arithmetic on the KFF numbers, and it shows the size of the gap your practice sits in.

Four out of five appealed denials get overturned. Nine out of ten denials are never appealed at all. If the unappealed denials had flipped at the same 80.7% rate as the appealed ones, about 2.9 million of them would have been reversed. That is the cost of not fighting: close to 3 million denials stood in 2024 that probably should not have.

The OIG's 2022 report backs up the same point from a different angle. It reviewed a sample of 2019 denials from 15 large Medicare Advantage organizations and found 13% of the denied prior authorization requests met Medicare coverage rules. Those requests likely would have been approved under traditional Medicare.

Your revenue cycle management process has to treat the appeal as part of the claim, not as extra work after the claim fails. A denial that is never appealed is revenue your practice already earned and then gave back. Our claim denials post covers the denial rates practices are seeing across payers, and the same logic applies here: the first answer from a plan is a starting point, not a verdict.

What the rules already say, and what changes January 1

Medicare Advantage plans must cover what traditional Medicare covers. They cannot use coverage criteria stricter than traditional Medicare. That rule sits at the center of Select's breach of contract claim, and it is the rule your appeals should cite first.

The deadlines changed this year. Under the CMS Interoperability and Prior Authorization rule, CMS-0057-F, impacted payers have had to decide expedited requests within 72 hours and standard requests within 7 calendar days since January 1, 2026. They also have to give a specific reason for each denial since 2026. Our CMS-0057-F post covers the full timeline, including the Prior Authorization API deadline that lands January 1, 2027.

The first public metrics under that rule were due March 31, 2026. The early data shows wide gaps between plans. A FREOPP analysis of the insurer disclosures notes UnitedHealthcare posts a 95.4% approval rate for Medicare Advantage prior authorizations, while insurer-posted 2025 data across 14 large companies shows about 12% of standard requests denied. Same program, same rules, very different answers by plan. That variation is exactly what the OIG asked CMS to investigate.

Congress has a bill in play. The House Ways and Means Committee approved the Improving Seniors' Timely Access to Care Act of 2026 in July 2026. It would reform and closely monitor prior authorization use in Medicare Advantage. It still needs a full House vote.

States are moving too. California SB 1120 bars an AI, algorithm, or software tool from denying, delaying, or modifying care based on medical necessity. That decision stays with a licensed physician or a competent licensed health care professional. As of April 2026, at least nine states had enacted laws on AI in prior authorization or claims review.

The physician survey numbers explain why doctors are pushing for all of this. In the AMA survey of 1,000 physicians fielded in December 2025, 79% said prior authorization at least sometimes leads patients to abandon treatment, 95% said it delays care, and 26% reported a serious adverse event. Sixty percent are concerned that AI increases or will increase denial rates. Only 24% agree that medical necessity denials are reviewed by a licensed and qualified clinician. And only 33% think the insurer pledge announced in June 2025 will make a meaningful difference. The AMA's 2024 survey found practices complete 39 prior authorizations per physician each week, consuming 13 hours of physician and staff time. Two in five physicians employ staff who do nothing else.

AI is now part of the denial pipeline, and doctors want proof, not promises. Our WISeR post covers CMS's own AI prior authorization pilot, and our AMA survey post prices the labor that prior authorization eats every week.

What a denied post-acute referral costs

Long-term acute care is expensive care, and a denied referral holds that care up. LTCH stays averaged about $49,000 in 2023, per OIG figures cited in coverage of the reports. That number frames the Select math.

Take the complaint's own figures. In the two periods Select cites, 308 admissions were denied. Multiply 308 by the $49,000 average stay and you get $15,092,000, about $15.1 million in care value held up across those two periods. That is arithmetic on a published average, not a damages figure. Nobody has put a dollar value on the case yet.

Now run the same math on a single referring hospital. The numbers below use sample figures, labeled as samples, built from the published OIG average and the complaint's alleged denial rate.

A denied LTCH admission does not just move a patient. It keeps an acute care bed occupied by a patient who should have moved on, it pushes the family into a second round of phone calls and paperwork, and it starts the appeal clock on your team. The patient stays in the wrong bed while the plan takes up to 7 calendar days to answer a standard request.

The labor cost runs alongside the care cost. Thirty-nine prior authorizations per physician per week at 13 hours means your highest-paid staff spend a full workday and a half every week asking plans for permission to treat. Every denial that goes unappealed adds to that pile, because the patient still needs care and the claim still needs a next step. Our medical billing services take that follow-up work off your team, including the appeal letters and the payer calls that eat the 13 hours.

Your checklist when a Medicare Advantage plan says no

Work this list in order. It takes an afternoon to set up, and it pays off on every denial after that.

First, appeal every denial. Only 11.5% of Medicare Advantage denials were appealed in 2024, and 80.7% of appeals were overturned. The appeal is where the money is. Build the habit now: no denial sits unappealed past 48 hours.

Second, log the decision time on every request. Since January 1, 2026, plans must decide expedited requests in 72 hours and standard requests in 7 calendar days. Write down the date and time you submitted and the date and time the answer came back. A late decision gives you grounds to escalate, and a dated log is the evidence that proves it.

Third, demand the specific reason in writing. Plans have had to state a specific reason for each denial since 2026. A one-line denial with no reason is not a finished answer. Ask for the reason, the criteria used, and the name of the reviewer.

Fourth, put the medical necessity case in the note with literal language. Do not write "patient needs LTCH." Write this shape instead: "Patient meets Medicare coverage criteria for LTCH admission: [diagnosis] requires daily physician management and [specific service, for example ventilator weaning or complex wound care]. Request peer-to-peer review with a physician in the same specialty." Fill in the diagnosis and the service. Leave out any line that calls the stay routine or custodial. A routine stay reads as a non-covered service to a plan reviewer.

Fifth, track denial rates by payer and by service. The OIG found LTCH denial rates ranging from 8% to 80% across plans. If one payer denies your LTCH referrals far more often than the others, that pattern is your evidence. A medical billing audit pulls your last 90 days of claims and shows which payer denies what, so you can see the pattern instead of feeling it.

Sixth, escalate past the plan when the plan says no twice. The Medicare Advantage appeal path runs from plan reconsideration to an independent review entity, and then to an administrative law judge. Most practices stop at the first no. The data says the first no is the weakest answer in the chain.

What happens next

Three things to watch. First, the case itself. It now sits in the U.S. District Court for the Middle District of Pennsylvania. Select wants an order that forces Aetna to rescind the alleged policy. Watch whether other providers file similar cases, because a second or third lawsuit turns one complaint into a pattern a court cannot ignore.

Second, CMS. The OIG asked the agency to collect request-level prior authorization data and to assess why denial rates vary so widely. CMS has not yet acted on that recommendation. The January 1, 2027 Prior Authorization API deadline will put more plan data in public view, and that data will show which plans deny most.

Third, Congress. The Improving Seniors' Timely Access to Care Act cleared the House Ways and Means Committee in July 2026. A full House vote would put real reporting and timing rules behind the deadlines that already exist.

Payment disputes are moving into federal venues on more than one front. Out-of-network disputes moved into the federal IDR Gateway on November 13, 2026. This lawsuit moves a prior authorization fight into federal court. The direction is the same: denials are becoming court cases, not just phone calls.

For your practice, the move is simple. Appeal the denials, log the decision times, and track the rates by payer. A free audit pulls your last 90 days of claims and shows where your money leaks. It takes 48 hours.

Frequently asked questions