Hospital system sues UnitedHealth over ‘denied, delayed’ Medicare Advantage reimbursement
A Tennessee-based rural hospital system, Ballad Health, announced Tuesday that it filed a lawsuit against UnitedHealth Group, alleging the company's insurance arm “systematically denied, delayed or underpaid” for medically necessary care delivered to patients.
The conflict centers around individuals covered by UnitedHealthcare Medicare Advantage plans, which are subsidized by the federal government. In a statement, Ballad said it’s frequently been denied reimbursement for sick patients, despite the company “overstating to the federal government how sick its members are to collect higher taxpayer-funded payments” through the privatized Medicare program.
That is a reference to an ongoing U.S. Department of Justice investigation into allegations of upcoding by UnitedHealth and associated providers. To date, no charges have been filed. The company denies any wrongdoing.
Ballad added that this is the first time it’s sued any insurance company, having been forced to take action after “years of attempting to resolve payment and patient care issues without success.”
“Ballad Health has worked in good faith for years to ensure patients receive the care they need and that providers are treated fairly,” Anthony Argiropoulos, the Baker Donelson attorney representing the hospital group in the lawsuit, said in a statement. “Unfortunately, UnitedHealth’s practices have made it increasingly difficult to sustain access to care in rural communities, and a safety net system like Ballad Health has no choice but to fight back on behalf of its hospitals.”
To justify the claim it’s a safety net hospital chain, Ballad pointed to its patient population, 55% of whom it said are covered by Medicare. Of them, “nearly three-quarters” are enrolled in Medicare Advantage plans.
Most of its Medicare Advantage patients, it added, are members of plans managed by UnitedHealth.
Delayed care, longer stays
According to Ballad’s complaint, denied claims from UnitedHealth are leading to longer hospital stays, which not only creates health risks but also raises expenses. More filled beds means more money burned every day and admission delays for those waiting.
This impacts both the emergency department and inpatient care delivery, Ballad argued. Many of the denials are for post-acute therapy, such as physical rehabilitation, that has been deemed necessary for recovery by a physician.
Further, Ballad argues that UnitedHealth is legally and contractually required to reimburse such services—which is why it filed a lawsuit.
“When a major Medicare Advantage insurer manipulates doctors, hospitals and patients in order to avoid living up to the agreement they made to pay for care for seniors, it puts seniors' access to doctors in rural communities and community hospitals at risk,” Argiropoulos stated. “These practices have led to longer hospital stays, delayed discharges and unnecessary strain on hospital capacity—all of which hurt patients.”
Ballad’s contract to accept UnitedHealthcare Medicare Advantage insurance plans is set to expire on June 30, 2027, the health system noted. At which time, it will opt not to renew. However, it confirmed that residents covered by other UnitedHealth plans, as well as traditional Medicaid, will still be in-network at Ballad.
The health system said it will work with the insurer on renewal contracts that do not include privatized Medicare coverage.
“Rural systems like ours can’t keep contracting with companies like UnitedHealth on Medicare Advantage when the math no longer works,” Alan Levine, chairman and CEO of Ballad Health, added in the statement. “Our mission is simple—to keep care local, keep hospitals open and ensure access to needed specialists and services.”
Ballad Health was created in 2018 through a merger of Mountain States Health Alliance and Wellmont Health Systems. It now has facilities in 29 counties, primarily in Tennessee and Virginia. However, it also has hospitals in North Carolina and Kentucky.
Many of the counties it serves are rural. According to statistics from the health system, only 25% of people in its service area have commercial insurance. The rest are covered by Medicaid, Medicare or uninsured.
In 2023, the hospital network posted losses of $40 million.
Ballad’s full court filing against UnitedHealth can be found here. HealthExec reached out to the insurer for comment and will update this story with any statement we receive.
Chad is an award-winning writer and editor with over 15 years of experience working in media. He has a decade-long professional background in healthcare, working as a writer and in public relations.