Aetna faces lawsuit over long-term acute care preauthorization denials
Select Medical has taken Aetna to court over a pattern of alleged preauthorization denials for admissions to long-term acute care hospitals in Pennsylvania, a dispute that sits at the intersection of utilization review, Medicare Advantage contracting, and patient access to higher-acuity post-acute care. The Mechanicsburg, Penn.-based provider filed the case in October, and on Nov. 6 the matter moved from state court to the U.S. District Court for the Middle District of Pennsylvania.
The dispute centers on admissions for Aetna’s Medicare Advantage members referred to Select’s Pennsylvania LTCHs. In the complaint, Select said Aetna denied preauthorization for 200 of 207 patients in one period spanning 2025 and for 108 of 114 patients in early 2026. Those figures, if proven, describe a denial pattern that is unusually steep for a setting designed to care for medically fragile patients who are not yet ready for a lower-intensity discharge destination.
Aetna declined to comment.
The access question inside post-acute medicine
Long-term acute care hospitals occupy a narrow but clinically important space in the post-acute continuum. They generally treat patients who still need prolonged hospital-level care after an acute hospitalization, often because of complex respiratory needs, multi-organ instability, severe wounds, or other conditions that cannot safely move to a standard skilled nursing facility. When preauthorization is withheld, the practical consequence is not an administrative delay alone; it can force a different care trajectory, often toward a less intensive setting that may not match the patient’s medical needs.
Select argues that those delays and redirects carry direct patient risk. The complaint says delayed approvals and discharges to lower levels of care may endanger patients, a contention grounded in the clinical reality that premature step-down can increase the chance of deterioration, transfer back to the hospital, or prolonged recovery. In a population already vulnerable to respiratory decompensation, wound progression, or hemodynamic instability, the wrong placement can become a bedside problem quickly.
One sentence in the case captures the dispute sharply: Aetna’s alleged admission rate was the lowest among the principal payers evaluated in the Pennsylvania market during the periods at issue.
Contract language meets Medicare Advantage rules
Select’s legal theory goes beyond a single set of denied cases. The complaint alleges breach of contract and contends that Medicare Advantage plans are barred from applying criteria more restrictive than traditional Medicare. That point matters because LTCH placement decisions are not simply payer preference questions; they are supposed to be tethered to the coverage framework that governs Medicare beneficiaries.
If a plan applies a stricter internal screen than the one allowed under Medicare rules, it can effectively narrow access to a level of care that patients have already been judged to need. In post-acute medicine, that kind of mismatch can create a downstream cascade: transfer delays, prolonged hospitalization while placement is contested, or discharge to a setting that requires rapid escalation once the patient’s condition outstrips the available services. The clinical harm is often indirect at first and then abrupt.
Select is seeking an order requiring Aetna to rescind the alleged policy. The lawsuit also describes the challenged practice as unpublished but systematic, a formulation that suggests the provider believes the denials reflect a durable operational approach rather than isolated utilization-management calls.
The broader pressure point in Medicare Advantage utilization review
The complaint draws support from an HHS Office of Inspector General report that examined how Medicare Advantage payment incentives may shape denial behavior. That report said MA’s capitated payment model may encourage care denials in an effort to improve plan profits. The same report found that CVS Health, Aetna’s parent company, had an 80% denial rate for long-term acute care hospitals in June 2024.
Those figures sit at the center of the policy debate around Medicare Advantage. Capitation can reward efficient care management when it steers patients to the right setting at the right time, but it can also create a structural incentive to limit access to expensive sites of care. LTCHs are particularly exposed because they are high-cost facilities with a narrow referral base and a patient population that is often too sick for routine post-acute services yet not sick enough to remain in an acute care bed indefinitely.
The biological and clinical stakes are straightforward. Patients needing LTCH-level care are often in a fragile state of physiologic recovery, where respiratory support, prolonged antibiotics, complex wound management, or intensive rehabilitation must be coordinated without interruption. Removing that level of structure too early can destabilize recovery even when the immediate discharge summary looks tidy on paper.
What the denial pattern may mean for patients and hospitals
A denial rate of 200 out of 207, followed by 108 out of 114, is not the sort of variation hospitals usually treat as routine utilization friction. It suggests a near-blanket obstacle to admission rather than selective screening of marginal cases. If the allegations hold, the result is a clinical bottleneck that forces hospitals and families to navigate placement without a reliable path into the destination most suited to the patient’s needs.
For hospitals, the consequences are operational as well as clinical. Beds remain occupied longer, discharge planning becomes more adversarial, and care teams must justify a higher level of service against a payer that may be applying a narrow lens to medical necessity. For patients, the impact is more immediate: missed transfer windows, treatment delays, and the possibility of leaving a hospital before the next setting can safely absorb the full complexity of care.
The complaint frames Aetna’s conduct as a violation of contractual obligations to Select. Whether the court accepts that framing will turn on the evidence behind the denial pattern, the exact plan criteria used, and how those criteria compare with traditional Medicare requirements. The litigation also raises a broader question for post-acute care systems across the country: how often do utilization controls intended to manage costs cross the line into access restrictions for patients who genuinely need the most intensive form of rehabilitation and medical oversight available after an acute hospitalization?
For now, the case places Aetna’s LTCH authorization practices under judicial review and keeps attention on a part of healthcare where coverage policy and bedside acuity meet in the same decision.