An Epidemic Of Insurance Claim Denials

A Kaiser Foundation survey on 9-29-23 makes it clear– we are seeing a large increase in insurance claim denials. 

When insurance companies deny claims, patients eventually pay the price. These bills can easily turn into medical debt, with troubling consequences; people take steps that put their health at further risk. 

  1 in 7 people with medical debt have even been denied medical care because of their debt.

 The insurance companies themselves admit that 41 million in-network claims were declined during the 2021 plan year.

Among the for-profit insurers who sell on Healthcare.gov,  17% of  patient’s claims were denied.

According to Kaiser, about a quarter (27%) of non-senior insured adults say there was a time in  the past year when their health insurance paid less than they expected for a medical bill, and about one in six (18%) say there was a time when their insurance did not pay anything for care they received and thought would be covered. 

  Among adults who say their insurance problem has been resolved, either satisfactorily or not, 27% say it was resolved the same day it occurred, 25% say it took more than one day but less than one week, 31% spent one to four weeks, and 17% spent more than one month.

Among insured adults whose problems were not resolved, 12% say they were still trying and have been doing so for up to four weeks, and 35% are still trying and have been doing so for longer than one month. But 54% say they had given up and are no longer trying to fix it. 

 I have been personally slow to recognize the claim-denial problem. The reason is that my own medical experience has been blissfully free of insurance hassles. I have had three surgeries in the last decade, and over fifty claims have been filed on my behalf – counting diagnostic tests, hospital stays, and follow up care. Many thousands of dollars have been paid to my providers.

My rate of claim denial is 0% — everything goes through.

 I have had a Medicare Advantage plan with Blue Cross of Minnesota, and their network includes 98% of Minnesota doctors. 

Medicare inpatient claims in general are denied only about 1%, of the time, and there is only a 1.8% denial of Medicare outpatient claims.  Plus I am in Minnesota in the first place, where insurers are well-regulated.

In other words, we have a nonprofit federal program with almost no denials — versus for-profit insurers declining 17% of all claims.  

For advocates of Single Payer, this is a very damning statistic…..

Insurance Company Claims

The insurance companies counter that some claim denials can be traceable to provider errors, for example:

 Data discrepancies:  Sometimes, a provider may code the submission wrong, leave information out, misspell your name or have your birth date wrong.  If you find an error, ask your provider to correct the information and submit your claim again. These denials are usually reversed and the claim is paid. This segment appears to be about 8-10% of all denied claims.

 Prior Approval. Some procedures, like CT scans, MRIs and certain surgeries, usually require prior authorization. If a claim isn’t covered because it wasn’t authorized in advance, talk to the provider who ordered it. Your provider may be able to submit patient records that show you needed the service. 

Care that isn’t covered. Your health plan may not provide that benefit. For example, your plan may not cover weight-loss surgery. In that case, it doesn’t undergo medical review. If your plan doesn’t cover it, the procedure won’t be approved. 

 Medical necessity. These denials are less common, but usually involve major sums of money

The insurance company may feel that the right level of care wasn’t provided given your condition; that the treatment hasn’t been proven effective; or is considered experimental for your condition.

 (Brief case study: Dean Peterson of Los Angeles said he was “shocked” when payment was denied for a heart procedure to treat an arrhythmia, which had caused him to faint with a heart rate of 300 beats per minute. After all, he thought he had the insurer’s preapproval for the expensive ($143,206) intervention.  

That seems to me a ridiculous price for one intervention.  In this case,  I have some tiny sympathy for the insurance company.)

 Ominous Trend With Artificial Intelligence

 Doctor review takes a lot of time and money, so some insurance companies have turned to AI algorithms to do the work instead. 

One former doctor at Cigna said claims are denied 50 at a time, taking no more than 10 seconds per batch.  If doctors rely too  heavily on the batching of claim denials, they may not understand the nuanced conditions of each patient

The nH Predict AI Model has a database of 6 million patients compiled over years. The program uses it to analyze a patient’s diagnosis, age, living situation, and physical function, then predict how much post-acute care a patient “should” require.

It pinpoints the moment when UnitedHealthcare will cut payment for care, according to a lawsuit.

Interesting note: when patients appealed, they won more than 90% of the time, either by internal appeal or through federal administrative law judge rulings. Classic bully behavior by the insurers.

 Where To Get Help If Your Claim Is Denied

Among Medicaid enrollees who had a problem with their insurance, 28% say they contacted their state Medicaid agency in order to resolve the problem. 

About one in five adults with employer-sponsored insurance say they asked someone in human resources at their employer for help (21%);  a smaller share of those with a Marketplace plan say they asked a Navigator or broker for help (11%).

 About one in ten people with Medicare with insurance problems contacted 1-800-Medicare or their State Health Insurance Assistance Program (12%).

Kaiser  also described the free consumer assistance programs (CAPs) –which are operating in some states to help people file appeals and resolve problems with their health insurance.

 Federal law authorized the establishment of these programs in every state, but Congress has not provided funding for CAPs since 2010, and some that were initially established have since closed. 

Important note:

It is still possible to get sued over medical debt. A North Carolina survey of debt lawsuits found the following:

• Hospitals used the court system to charge 8% annual interest on medical debt judgments, burdening some patients with more than a decade of accumulated interest. 

•  Interest charges, attorney fees and court fees accounted for 35.4% of the total value of all judgments against patients.

Five  “non-profit” hospital systems were responsible for 96.5% of all lawsuits.   This is clearly not why we grant them non-profit status, which is worth billions nationwide. These five hospitals are clearly overdue for audits and penalties.

 Even worse — hounding patients who cannot afford to pay does very little for hospital budgets.  

 Garnishing the wages of patients found that this practice collected, on average, 0.1% of hospital revenue. 

In other words, why bother? The hospitals are being thoughtless and cruel.