Health insurance claim denials are on the rise — and getting weirder
Posted at 6:36 a.m. on Friday, May 26, 2023
Elisabeth Rosenthal
May 26, 2023
Over the past few years, millions of Americans have had this experience: filing a claim for health insurance that could have been paid immediately but is just as quickly denied. If the insurer’s experience and explanation often seems arbitrary and nonsensical, it may be because companies seem increasingly likely to use computer algorithms or people with little relevant experience to issue quick claim denials – sometimes grouped at once – without reviewing the patient’s record. Medical charter. A job title at one company was “denial nurse.”
It’s a convenient way for insurers to keep revenues high — and it’s exactly the kind of thing the Affordable Care Act provisions were meant to prevent. Because the law prohibited insurers from deploying previously profit-protecting measures, such as denying coverage to patients with pre-existing conditions, the authors feared that insurers would compensate by increasing the number of denials.
Thus, the law instructed the Department of Health and Human Services to monitor denials both by health plans in the Obamacare marketplace and those offered by employers and insurers. He did not fulfill this mission. Thus, denials have become another predictable and miserable part of the patient experience, with countless Americans being unfairly forced to pay out of pocket or, faced with the prospect, forgo needed medical help.
A recent KFF study of ACA plans found that even when patients received care from in-network doctors — doctors and hospitals approved by those same insurers — companies in 2021 still declined, on average, 17% of claims. One insurer denied 49% of claims in 2021; another’s denials reached an astonishing 80% in 2020. Despite the potentially disastrous impact denials have on patients’ health or finances, data shows that people only appeal once in a while. 500 cases.
Sometimes insurers’ denials defy not only medical standards of care, but also old human logic. Here’s a sample collected for the joint KFF Health News-NPR “Bill of the Month” project.
Dean Peterson from Los Angeles said he was “shocked” when payment was declined for heart surgery to treat an arrhythmia, which caused him to pass out with a heart rate of 300 beats per minute. After all, he had pre-approval from the insurer for the costly procedure ($143,206). More confusingly, the denial letter stated that the application was denied because he had “requested coverage for injections into the nerves in your spine” (he had not) which were “not medically necessary”. Months later, after dozens of calls and the help of a patient advocate, the situation is still unresolved. A letter from the insurer was sent directly to a newborn denying coverage for his fourth day in a neonatal intensive care unit. “You’re drinking from a bottle,” the rejection notice read, and “you’re breathing on your own.” If only the baby could read. Deirdre O’Reilly’s college-age son, suffering from a life-threatening anaphylactic allergic reaction, was saved by epinephrine injections and intravenous steroids in a hospital emergency room. Her mother, completely relieved by this news, was less pleased to be informed by the family’s insurer that the treatment was “not medically necessary”.
O’Reilly happens to be a critical care physician at the University of Vermont. “The worst part wasn’t the money we owed,” she said of the $4,792 bill. “The worst thing is that the rejection letters made no sense – mostly pages of gibberish.” She has filed two appeals, so far without success.
Some denials are, of course, well thought out, and some insurers deny only 2% of claims, according to the KFF study. But the rise in denials and the often bizarre justifications offered could be partly explained by a ProPublica investigation of Cigna, an insurance giant with 170 million customers worldwide.
ProPublica’s investigation, published in March, found that an automated system, called PXDX, allowed Cigna medical reviewers to sign 50 records in 10 seconds, presumably without reviewing patient records.
Decades ago, insurer reviews were reserved for a tiny fraction of expensive treatments to ensure providers weren’t ordering based on profit rather than patient need.
These reviews – and denials – have now trickled down to the most mundane medical interventions and needs, including things like asthma inhalers or heart medications that a patient has been taking for months or years. years. What is approved or denied may be based on an insurer’s changing contracts with drug and device manufacturers rather than the patient’s optimal treatment.
Automation makes reviews cheap and easy. A 2020 study estimated that automated claims processing saves U.S. insurers more than $11 billion annually.
But challenging a denial can take patients and doctors hours. Many people lack the knowledge or stamina to undertake this task unless the bill is particularly high or the treatment is obviously life saving. And the process for larger claims is often fabulously complicated.
The Affordable Care Act clearly stated that HHS “shall” collect denial data from private health insurers and group health insurance plans and is expected to make this information publicly available. (Who would choose a plan that denies half of patient claims?) The data is also supposed to be available to state insurance commissioners, who share oversight duties with HHS and try to crack down on abuse.
To date, such information gathering has been random and limited to a small subset of shots, and the data is unaudited to ensure it is complete, according to Karen Pollitz, senior researcher at KFF and one of the KFF authors. study. Data-driven federal monitoring and enforcement is therefore more or less non-existent.
HHS did not respond to requests for comment for this article.
The government has the power and the duty to put an end to the fire hose of reckless denials that harm patients financially and medically. Thirteen years after the adoption of the ACA, it may be time for the mandatory investigation and enforcement to begin.
KFF Health News is a national newsroom that produces in-depth journalism on health issues and is one of KFF’s main operating programs – an independent source of health policy research, polling and journalism. Learn more about KFF.
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