- UnitedHealth is being sued over allegations that it used an algorithm to deny rehabilitation care for Medicare Advantage beneficiaries, despite knowing the algorithm’s high error rate.
- The lawsuit, filed Tuesday in a Minnesota district court, cites a recent investigation by Stat News finding UnitedHealthcare, the largest MA payer in the U.S., pressured employees to use the algorithm to predict patients’ length of stay, and deny payment if their rehab care extended beyond that date.
- UnitedHealth denies using nH Predict for coverage determinations. “Coverage decisions are based on CMS coverage criteria and the terms of the member’s plan. This lawsuit has no merit, and we will defend ourselves vigorously,” a spokesperson told Healthcare Dive.
The lawsuit alleges that the health insurer and its subsidiary, NaviHealth, used an algorithm called nH Predict to systematically deny medical claims from patients recuperating from illnesses in nursing homes.
UnitedHealth and other NaviHealth clients, including health insurer Humana, used nH Predict to deny claims, despite the algorithm having a steep error rate, plaintiffs allege. More than 90% of patient claim denials from nH Predict were overturned following appeal, according to the suit.
UnitedHealth has used the tool since at least 2019. It acquired NaviHealth the following year.
The suit accuses UnitedHealth of breaking state law in more than 20 jurisdictions and breaching its contracts with members, resulting in unjust enrichment.
High levels of denials mean payers don’t have to pay for as many medical claims and can retain more money as profit, especially since almost no one appeals denied claims. A KFF analysis found members appealed only 0.2% of denials in 2021. In addition, payers can save labor costs by not having to pay doctors to conduct a manual, individualized review of claims to determine coverage, according to the suit.
“The fraudulent scheme affords [UnitedHealth] a clear financial windfall in the form of policy premiums without having to pay for promised care, while the elderly are prematurely kicked out of care facilities nationwide or forced to deplete family savings to continue receiving necessary medical care, all because an AI model ‘disagrees’ with their real live doctors’ determinations,” the suit says.
The lawsuit was filed on behalf of two deceased UnitedHealthcare Medicare Advantage beneficiaries that allegedly did not receive appropriate post-acute coverage following major medical events. It aims for class-action status to represent others affected by UnitedHealth’s alleged care denials.
One beneficiary, 91-year-old Gene Lokken, fractured his leg and ankle after a fall in spring 2022, and was admitted to a skilled nursing facility to recover.
UnitedHealth cut off Lokken’s coverage after two-and-a-half weeks at the facility, against the advice of his physicians, according to the suit. His family was forced to pay out-of-pocket for his care — up to $14,000 a month — until Lokken passed away one year later.
The legal team representing the plaintiffs is also behind a case levied against Cigna over similar allegations the health insurer used an algorithm to deny claims. That lawsuit, filed in California in July, alleges Cigna used an algorithm called PxDx to deny claims en masse, instead of individually reviewing each case. Cigna was also sued in Connecticut over the claims automation software. Cigna denies wrongdoing in those cases.
Payers are facing intensifying criticism over their use of algorithms in coverage determinations, including from Congress.
Regulators have taken steps to try to curb improper denials, including finalizing a rule in April requiring MA plans to comply with coverage rules in traditional Medicare.