Medicare Advantage Denials Are Rising Before 2026 — How to Respond

The warnings come as new state-level data reveals the scope of the problem. California's Department of Insurance reported that prior authorization denial rates among the state's largest Medicare Advantage insurers rose by 18 percent between 2023 and 2025, with certain plans denying more than one in four requests for specialty care referrals. New York's analysis found that appeals of coverage denials increased by 31 percent over the same period, with beneficiaries prevailing in nearly half of all cases that reached external review, a figure that regulators say suggests many initial denials lack adequate clinical justification.

State Regulators Sound the Alarm on Rising Denials

Florida's Office of Insurance Regulation documented a 24 percent increase in complaints related to Medicare Advantage coverage disputes in the first three quarters of 2025 compared to the same period in 2024, with post-acute care and skilled nursing facility stays accounting for the largest share of contested decisions. The surge in denials has prompted regulators to question whether plans are adhering to federal standards for coverage determinations and 2026 cost management.

Illinois regulators noted that while Medicare Advantage plans are required to make coverage determinations within specific timeframes, an increasing number of beneficiaries report experiencing delays that effectively function as denials, forcing them to either forgo recommended treatments or pay out of pocket while awaiting resolution. Texas officials highlighted geographic disparities, finding that denial rates in rural areas significantly exceeded those in urban markets, raising concerns about equitable access to care for beneficiaries with fewer provider options.

What State Data Reveals About Denials in 2023–2025

Industry analysts and health policy researchers point to several converging factors driving the uptick in denials as plans prepare for the 2026 coverage year. Financial pressures on Medicare Advantage insurers have intensified following a series of changes to the risk adjustment model that the Centers for Medicare and Medicaid Services began phasing in during 2024. These modifications, designed to address concerns about upcoding and inflated diagnoses, have reduced payments to plans for certain patient populations, creating incentives to tighten utilization controls.

At the same time, medical costs have risen sharply across the healthcare sector, with hospital prices, specialty drug spending, and post-acute care expenses all climbing faster than Medicare Advantage capitation rates in many markets. These pressures have led plans to implement stricter prior authorization requirements as a cost containment strategy.

Why Denials Are Increasing Ahead of 2026

The growing use of artificial intelligence and algorithmic tools for utilization management has also drawn scrutiny from regulators and consumer advocates. Several major Medicare Advantage insurers have deployed predictive models to screen prior authorization requests and flag claims for additional review, a practice that critics say prioritizes efficiency over individualized clinical assessment.

The Role of AI and Algorithmic Review

The sheer volume of claims and prior authorization requests has also strained plan operations. Medicare Advantage enrollment has grown to more than 35 million beneficiaries in 2025, representing well over half of the eligible Medicare population, and the administrative burden of processing coverage decisions has scaled accordingly. Some plans have responded by outsourcing utilization review functions to third-party vendors, raising questions about consistency and accountability when coverage determinations are made by entities with no direct relationship to the beneficiary or treating physician.

Understanding how Medicare Advantage networks work becomes crucial when navigating these denial patterns, as network adequacy and provider access vary significantly across plans and regions.

Where Denials Are Most Common

Certain categories of care have emerged as particular flashpoints in the denial surge. State data and complaints to consumer assistance programs indicate that imaging services, including MRIs and CT scans, are among the most frequently denied prior authorization requests, with plans often requiring additional documentation or suggesting lower-cost alternatives before approving advanced diagnostics.

Post-Acute Care

Post-acute care has proven especially contentious, with beneficiaries and providers reporting that plans are cutting skilled nursing facility stays shorter than clinically recommended and denying coverage for continued home health services despite ongoing medical needs.

Imaging and Diagnostics

Advanced imaging services face heightened scrutiny, with plans requiring extensive documentation before approving MRIs, CT scans, and other diagnostic procedures that physicians have already ordered.

Specialty Care and DME

Inpatient rehabilitation, durable medical equipment, and certain specialty medications have also seen elevated denial rates according to insurance department analyses.

How Rising Denials Affect Medicare Advantage Members

For current Medicare Advantage members, the practical consequences extend beyond coverage disputes. Delays in obtaining prior authorizations can mean postponed surgeries, interrupted therapy regimens, and uncertainty about financial liability when providers proceed with care that has not yet received plan approval.

Beneficiaries who receive denial notices must navigate appeal processes that, while federally mandated, can be time-consuming and confusing, particularly for those managing serious or complex health conditions. Understanding Medicare appeals rights and resources becomes essential when facing coverage denials. The regional variation in denial practices adds another layer of difficulty, as beneficiaries in some states and markets face considerably higher barriers than those enrolled in the same plan in other areas.

Major CMS Reforms Coming in 2026

Federal regulators have responded with a suite of reforms set to take effect in 2026 that are intended to rein in inappropriate denials and improve transparency. Under the final rule issued by CMS in early 2025, Medicare Advantage plans will be prohibited from using prior authorization requirements that are more restrictive than those under Original Medicare for the same services, a significant change that could curtail some of the most aggressive utilization management practices.

Plans will also be required to ensure that prior authorization requests are reviewed by professionals with relevant clinical expertise, particularly in cases involving behavioral health and other specialty services. New transparency requirements will compel plans to publicly disclose their prior authorization approval and denial rates, the average time to decision, and the frequency with which initial denials are overturned on appeal, giving beneficiaries and regulators better tools to compare plan performance.

Additionally, CMS has announced enhanced monitoring and enforcement efforts, including more frequent audits of plan compliance with coverage determination rules and heightened scrutiny of outlier plans with unusually high denial rates. The agency has indicated that it will use its authority to impose sanctions, including civil monetary penalties and enrollment suspensions, against plans that demonstrate patterns of inappropriate denials or fail to make timely coverage decisions.

State Regulator Guidance for Consumers

In their recent advisories, state regulators have emphasized that beneficiaries who receive denial notices should take action rather than simply accepting the plan's decision. Commissioners have urged consumers to contact their State Health Insurance Assistance Program, known as SHIP, which provides free counseling on Medicare coverage issues, or to file complaints with their state insurance department if they believe a denial was improper.

Regulators have also reminded beneficiaries that they have the right to request expedited appeals in urgent situations and that independent external review is available when internal appeals are unsuccessful. While these pathways exist, officials acknowledge that the complexity of the process can be a barrier, particularly for beneficiaries without family support or access to advocacy organizations.

Understanding Medicare enrollment and switching options may also help those considering plan changes due to denial experiences.

What Analysts Say About the Future of Medicare Advantage

Health policy analysts view the denial surge and the resulting regulatory response as part of a broader inflection point for the Medicare Advantage program. The rapid growth of private plans has delivered certain benefits, including lower premiums, capped out-of-pocket costs, and supplemental benefits like dental and vision coverage that are not available under Original Medicare.

However, the rising denial rates have intensified longstanding concerns about whether the managed care model's financial incentives are aligned with beneficiaries' healthcare needs. Some researchers have suggested that the current trajectory could erode trust in Medicare Advantage among beneficiaries and policymakers alike, potentially slowing enrollment growth or prompting more aggressive structural reforms.