About 125,000 nursing home residents (12%) get their Medicare coverage through institutional special needs plans (I-SNPs), a type of Medicare Advantage plan that is limited to beneficiaries who require, or are expected to need, institutional long-term care for 90 days or more. UnitedHealth Group operates I-SNPs for 70,000 of the 125,000 residents. In May 2025, The Guardian reported that UnitedHealth secretly paid skilled nursing facilities participating in its I-SNPs not to send residents to the hospital. UnitedHealth used additional methods “to track and cut expenses in its nursing home initiative,” including persuading residents to change their code status to Do Not Resuscitate “even when patients had clearly expressed a desire that all available treatments be used to keep them alive.”
In an August 6, 2025 letter to UnitedHealth Group’s Chief Executive Officer Stephen J. Hemsley, Senators Ron Wyden (D, OR) and Elizabeth Warren (D, MA) express concern with multiple reports about UHG’s “maximizing profits at the expense of patients’ health and wellbeing.” Focusing on UHG’s I-SNPs’ “incentive schemes [that] may drive delays in medically-necessary hospitalizations and emergency room visits, poor health care outcomes, and even permanent harm among enrolled residents who suffer strokes and other major health events without being hospitalized,” the Senators ask for answers by September 8 to nearly 50 detailed questions about “UHG’s incentive programming and its impact on residents.” The questions are listed under four broad categories: hospitalization policies, advance directives, marketing practices, and federal oversight.
The Medicare Payment Advisory Commission (MedPAC) discussed I-SNPs in 2013, reporting that I-SNPs “have higher rates than regular MA plans for the use of potentially harmful drugs among the elderly and the use of drug combinations with potentially harmful interactions.” MedPAC excused these higher rates of inappropriate drugs and drug combinations by noting I-SNPs’ “higher rates of monitoring of persistently used drugs suggest that drugs with potential interactions or adverse effects are also being closely monitored.” MedPAC did not provide any evidence that I-SNPs’ “close monitoring” of high drug use among covered residents was successful in actually reducing the high use of inappropriate drugs or their adverse effects on residents.
MedPAC’s second observation in 2013 was that I-SNPs have “fewer hospital readmissions than would be expected given the clinical severity of their enrollee.” MedPAC concluded that “I-SNPs’ performance in hospital readmissions rates is an important measure of whether they provide a more integrated delivery system.” However, I-SNPs might simply be denying hospitalization for residents who needed to be hospitalized or they might not be paying for hospital care that is medically necessary. MedPAC’s only support for its 2013 conclusion was the statement that “I-SNPs attempt to reduce hospital and emergency department utilization through care management and by emphasizing the provision of primary care.” MedPAC provided no evidence of “a more integrated delivery system” in facilities with I-SNPs. Citing I-SNPs’ use of nurse practitioners, MedPAC then ended its brief analysis of I-SNPs with the statement, “Achieving readmission rates that are lower than expected demonstrates that I-SNPs are meeting their goal to reduce hospitalization for beneficiaries who are institutionalized.” From the Center’s perspective, MedPAC’s 2013 report defended I-SNPs’ lower rates of hospitalization (even for residents whose clinical severity may suggest a medical need for hospital care) solely because these lower rates achieved I-SNPs’ goal of reducing hospitalization. That statement was circular and conclusory and not persuasive. The Guardian’s article has now revealed a very different view of I-SNPs’ operations.
Another Center concern is nursing facilities’ operating their own I-SNPs for their residents, which the Center considers a conflict of interest.
August 14, 2025 – T. Edelman
References:
Eric Rollins and Carol Carter, MedPAC, “Institutional special needs plans,” PowerPoint (Mar. 7, 2025)
George Joseph, “Revealed: UnitedHealth secretly paid nursing homes to reduce hospital transfers,” The Guardian (May 21, 2025).
Aug. 6, 2025 letter to UnitedHealth Group’s Chief Executive Officer Stephen J. Hemsley from Senators Ron Wyden (D, OR) and Elizabeth Warren (D, MA)
MedPAC, Report to the Congress: Medicare Payment Policy, “Medicare Advantage special needs plans” (Chapter 14, p. 322) (Mar. 2013), https://www.medpac.gov/wp-content/uploads/import_data/scrape_files/docs/default-source/reports/chapter-14-medicare-advantage-special-needs-plans-march-2013-report-.pdf
“Nursing Homes Operate Managed Care Programs for Their Residents – A Conflict of Interest” (CMA Alert, Mar. 23, 2023).