Ballad Health this week filed a federal lawsuit against UnitedHealth Group, alleging that the insurer has systemically denied, delayed, or underpaid for care that physicians determined was medically necessary. The nonprofit health system said it will not review its Medicare Advantage contract with UnitedHealth when it expires in 2027.
The health system, which operates in northeast Tennessee and southwest Virginia, claims that the insurer has manipulated the Medicare Advantage program for its own benefit and overstated how sick patients are to collect higher payments.
The nonprofit system claims the insurer’s business practices have led to longer hospital stays, delayed care, and an unnecessary strain on hospital capacity. The system says it has lost $65 million over the last five years, as UnitedHealth improperly and systemically denies claims for medical necessary care that it provides to elderly, low-income, and vulnerable patients.
In an emailed statement to RISE, UnitedHealth said it is aware of the lawsuit but has not been formally served. "We believe the allegations are without merit and intend to vigorously defend ourselves against them," the statement said.
Ballad Health serves a largely rural region and most of its patient population is significantly older than the national average. Health system leaders say more than 75 percent of their patients rely on government programs such as Medicare or Medicaid or have no insurance at all. Roughly 55 percent of its patients are covered by Medicare, and nearly three-quarters of those are enrolled in Medicare Advantage plans–most with UnitedHealth.
Health system officials said they are turning to the courts after years of no success attempting to resolve payment and patient care issues with UnitedHealth. “Taking legal action was our last resort,” said Alan Levine, chairman and CEO of Ballad Health, in an announcement about the lawsuit. “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.”
Ballad Health said UnitedHealth’s denials of post-acute care for seniors can leave patients hospitalized longer than needed, increasing the risk of hospital-acquired conditions, contributing to longer wait times for emergency and inpatient services and, ultimately, costing patients and hospitals more money.
Anthony Argiropoulos, of Baker Donelson, who represents Ballad Health in the lawsuit, said that UnitedHealth has acknowledged the added cost of prolonged hospital stays and agreed to reimburse Ballad Health for caring for patients who require longer inpatient care. However, he said, the company has failed to honor that commitment and has withheld millions of dollars it agreed to pay.
The complaint also cites national reports alleging that UnitedHealth subsidiaries have acquired physician practices and used aggressive coding tactics to increase payments from Medicare, while simultaneously pressuring providers to see more patients and reduce spending on care.
“It’s wrong to tell the federal government that patients are sicker to get more taxpayer money and then deny those same patients the care they need,” Argiropoulos said. “That behavior harms seniors, physicians and the very communities these programs are meant to serve.”
Ballad Health said it will not renew its Medicare Advantage contract with UnitedHealth when it expires on June 30, 2027. The decision applies only to that contract; Ballad Health will continue to work with UnitedHealth on its commercial, Medicaid and exchange insurance plans when those contracts come up for renewal.
“Rural systems like ours can’t keep contracting with companies like UnitedHealth on Medicare Advantage when the math no longer works,” said Levine. “Our mission is simple–to keep care local, keep hospitals open and ensure access to needed specialists and services.”