Johnson City, Tenn.-based Ballad Health is suing UnitedHealth Group for alleged “Medicare Advantage manipulation” that has led to denied care and underpayment for services.
The lawsuit was filed Oct. 21 in a Tennessee federal court and claims that UnitedHealth’s actions have caused harm to patients and providers across its 19 hospitals, particularly in rural Appalachia. Ballad said the complaint marks the first time it has sued an insurer.
“Taking legal action was our last resort,” Alan Levine, chairman and CEO of Ballad, said in a news release. “This is not our first choice; it’s not a choice we’ve had to make before. But we had to take action because we believe UnitedHealth’s behaviors are so harmful to patients, doctors and community hospitals.”
The complaint accuses UnitedHealth of overstating the severity of illnesses among its members to secure higher Medicare Advantage payments, while at the same time denying medically necessary care. Ballad, which serves a predominantly rural population with high rates of Medicare and Medicaid enrollment, says those alleged practices have led to prolonged hospital stays, unnecessary delays in care, and a financial strain on its facilities. More than 55% of Ballad’s patients are covered by Medicare, with the majority enrolled in Medicare Advantage plans, many of which are provided by UnitedHealth.
Ballad claims that the insurer has used various tactics, including systematic denials of post-acute care and aggressive coding practices, to avoid paying for the care of older adults. The health system said that those alleged actions have resulted in millions of dollars in unpaid claims over the last five years. Ballad is seeking compensation for damages exceeding $65 million, as well as punitive damages, and is asking the court to invalidate arbitration provisions in its contract with UnitedHealth.
In addition to the financial harm, Ballad claims that UnitedHealth’s refusal to honor its obligations has contributed to longer hospital stays, which increase the risk of hospital-acquired conditions and burden emergency and inpatient services. Despite UnitedHealth’s agreement to reimburse for longer inpatient care in certain cases, Ballad claims the insurer has failed to make those payments, amounting to more than $7.1 million in owed funds.
Ballad also said it will not renew its Medicare Advantage contract with UnitedHealth when it expires on June 30, 2027. The system will continue to contract with the insurer on its commercial, Medicaid, and ACA plans.
UnitedHealth is the nation’s largest MA insurer, with more than 8 million members. The company has been challenged recently with financial turbulence and ongoing federal investigations into its MA business.
Nationally, dozens of health systems in recent years have opted to end or not renew contracts with some MA plans over administrative challenges, often citing excessive prior authorization denial rates and slow payments from insurers.
Becker’s has reached out to UnitedHealth for comment and will update this article if more information becomes available.
