It’s a common scenario: an 82-year-old member is recovering from a total knee replacement, and she needs post-surgical rehabilitation. Deciding on the right setting for her, whether that’s inpatient rehab, skilled nursing, or home health, depends on her entire clinical picture: comorbidities, home support, mobility, fall risk.
If her post-surgical care is too restrictive, she lands in a setting that can’t support her recovery and her risk of readmission risk goes up. If her care is too permissive, she sits in a higher-cost setting she doesn’t clinically need. Neither outcome favors the member.
Since high-deductible plans are the norm in commercial coverage and daily cost-sharing is common in Medicare Advantage, members are shouldering more of the cost, no matter where they end up receiving care.
The right level of care is a clinical decision. It’s now a financial one for members, too. With an accurate first-pass determination, the member gets clinically appropriate care and isn’t paying for a setting she didn’t need, or being pushed to self-fund care she did.
When the First Determination Fails at Scale
New evidence from the Office of Inspector General (OIG) (published June 2026) found Medicare Advantage organizations (MAO) denied 65% of prior authorization requests for long-term care hospital (LTCH) stays and 54% of requests for inpatient rehabilitation facilities (IRFs) in June 2024.
When members and providers appealed, the pattern raised harder questions. MAOs overturned 36% of LTCH denials and 43% of IRF denials on appeal, with IRF overturn rates ranging from 14% to 86% across plans. A companion report on SNF admissions found MAOs overturned 95% of appealed denials in favor of the enrollee.
In one contractor-driven pattern documented by OIG, a single vendor processed roughly half of all SNF requests and denied at higher rates than plans reviewing internally. On appeal, 97% of that vendor’s denials were overturned.
America’s Health Insurance Plans (AHIP) noted the OIG data couldn’t distinguish clinical denials from denials tied to missing paperwork, out-of-network care, or excluded services. That distinction matters. It reinforces the underlying issue: the first-pass review must be comprehensive and apply criteria correctly, or the appeal process ends up doing the clinical work the initial review was supposed to do.
How Well-Run UM Puts Members in the Right Setting Before Discharge
The OIG findings describe what a determination process looks like when the clinical rigor and incentive structure behind it breaks down. A well-run utilization (UM) program does the opposite of what the data documents.
Prior authorization exists as a clinical quality tool. Applied well, it’s the mechanism that matches a member to the setting her clinical picture supports, before she’s discharged into the wrong one. An orthopedic member with strong home support and low fall risk may recover better at home with skilled nursing visits than in a facility. A member with limited mobility and complex comorbidities may need the intensive rehab a facility provides. At the end of the day, determinations need to reflect the clinical reality of each member.
But clinical determination is only as strong as the clinical judgment and independence behind it. An evidence-based review conducted by a same-specialty physician produces a decision that holds up, rather than one reversed on appeal after the member has already lost days or paid out of pocket. While technology can streamline intake and route cases efficiently, the determination itself belongs to a credentialed physician reviewer.
The framing matters. UM performed for cost containment produces the patterns OIG documented. UM built as clinical quality assurance produces the opposite: a first-pass decision that supports the member’s recovery and the treating physician’s plan of care.
Three Ways to Reach the Right Care, the First Time
1. Independent, incentive-free review. The reviewer making the determination should have no financial stake in the outcome. The contractor pattern OIG documented is instructive: reviewers whose incentives are tied to volume or denial rates make different decisions than reviewers whose only accountability is clinical accuracy. An independent review organization removes misalignment and evaluates the case on clinical merit.
2. Same-specialty, same-state physician matching. The right level of care for a post-surgical orthopedic member is a question best answered by a physician who practices in that specialty and ensures the determination leverages the standards applied in the member’s real-life clinical environment. Generalist review at scale produces the kind of variation OIG measured across MAOs — IRF overturn rates ranging from 14% to 86% aren’t random. They reflect who’s reviewing the case and how.
3. Evidence-based criteria applied consistently, with clinical accountability on every determination. Consistency is what keeps the first determination from becoming an appeal. Current, evidence-based criteria applied by a physician reviewer accountable for the decision produces a determination that holds up under scrutiny. Technology enables the workflow; the clinical decision stays with the clinician.
Getting the First Determination Right
The right level of care, determined correctly the first time, matters to members’ wallets. It matters even more to their health.
That’s the point of getting UM right, and it’s what the OIG data suggests too many post-acute reviews are getting wrong.
