I'll have our last ACS chart later, but in the meantime I happened to run across some actual data about health insurer claim denial rates, the topic du jour since UnitedHealthcare CEO Brian Thompson was gunned down in broad daylight, allegedly in part because of his company's astronomical denial rate.
These figures come from ACA transparency data and is limited to insurers who participate on Healthcare.gov. This means it's unclear how well it represents the rest of the industry, but I'll bet it's not miles off. Here it is:
Those denial rates sure seem high in general, but at least they're going down a little. There's no reason to think there's been a recent explosion in denials.
Even more interesting, though, is the unbelievably vast difference in denial rates among different insurers:
This is mind boggling. The worst insurer denies half their claims. Half! The best insurer denies only 2% of claims but apparently stays in business anyway. What possible explanations could there be for this disparity?
- Some insurers are just bad actors, full stop.
- There's some kind of weird pricing tradeoff happening. Some insurers charge low premiums to attract customers and make up for it with lots of claim denials. Other insurers charge high premiums in order to provide better service.
- Different insurers specialize in different things. This seems unlikely since Obamacare sets pretty comprehensive rules for minimum service levels.
- Maybe the high denial companies operate mostly in areas with little competition where they can get away with being lousy service providers.
Obamacare requires insurers to report denial rates and provide a bit of explanation for them, but it doesn't set any required standards. Nor does it require data from non-ACA employer insurers even though that's in the law. Maybe someday.
In any case, this sure seems like something that ought to be more widely publicized. I for one would be mighty reluctant to sign up for a Celtic plan in any state given their sky-high denial rates. But until I looked this up I had no idea they were so bad.
Thanks for this, very interesting, lots to mine here.
"Optimum"? Far from it.
"Ambetter"? No you amn't.
I’ve never heard of any of these companies. Oscar? Bright? Celtic? What about like Blue Shield or Blue Cross? Kaiser? Companies I’ve actually heard of.
these are companies on the ACA exchange and not your typical commercial insurer like United, Elevance or Aetna
What does "denial" mean? What does it translate into, in reality? Anybody know?
Is it "provider submits a bill and insurer 'denies' it and so the provider comes back later with a lower price"?
Is it "My doctor put me on this chemo drug and my insurer says it's not necessary and now I'm on the hook for the $34,000 it's already cost and I'm also looking at a $190K out of pocket if I want to continue this particular therapy"?
Or is it "My doctor recommended this treatment, and so they put in a claim with my insurer to make sure it was covered, but the latter said no, so we have to figure out an alternative"?
Or is there a mixture of forms the "claims denial" takes? It's never happened to me so I honestly don't know.
> provider submits bill and insurer denies it so the provider comes back with a lower price.
This doesn't happen. The price the insurance company pays has practically nothing to do with the charge submitted by the provider. The provider submits a charge and the insurance company pays whatever the contracted rate is.
> "chemo drug"
This type of "approved drug" or "medically necessary" denial happens but is usually known before hand. The insurance company has a list of approved drugs that the doctors' offices have access to and also a set of documents for how to show "medical necessity" for certain treatments.
> "recommended treatment" not accepted
This isn't a denial. The prior authorization of the treatment would be denied before the claim is incurred.
Most likely, the high denial companies are using a claim system that automatically denies claims for all sorts of technical problems (provider address doesn't match the insurers address, etc.) that will eventually be accepted after resubmission(s). The low denial companies are probably fixing these technical issues on the initial submission by calling the provider and getting the information corrected the first time.
Denials for "not covered" are pretty straight forward. Things are covered if the insurance document says they are and whatever diagnostic hoops the insurance company requires have been met. Otherwise they are denied. There are very few avenues for appeal here. If you need 6 weeks of physical therapy before your insurance will let you get knee surgery, then you have to do the 6 weeks.
I've run into the requirement for PT before treatment twice now, and I don't understand it (or maybe I do).
Once they required PT before even getting and MRI. How does this make any sense? The PT had no idea what to do without the diagnostics, and actually made the situation worse. And 5 weeks of PT costs more than an MRI, so how does this make any sense? Unless they're getting kickbacks from the PT. That would make sense.
The second time was a requirement for PT before surgery. There was ZERO likelihood the PT would improve the situation. Again, this makes no sense.
The only way this makes any sense is if they assume people won't follow through with the PT, saving them from paying for both the PT and the treatment. This is nothing more than making people jump through hoops. And they wonder why people get mad enough to start shooting.
If you're in MA as your handle suggests, check your insurance portal for EOBs. You'll probably see denied claims in there. You never hear about them because they're disputes between provider and insurer that get worked out according to their contract. This whole 'debate' is bunk. There are no widespread cases of necessary care being rendered and the insured customer ending up on the hook for a bill.
Can the denied claims be re-submitted?
There's a constant game being played between providers and insurance companies. So the ER will be in-network, but the doctor won't be. The doctor's office is now an extension of a hospital, so they can bill more. Can someone say " upcoding"? And, of course, the insurance companies make filing a claim sooo easy.
These games has caused consolidation in both provider and insurance industries--each trying to dominate the other and dictate pricing.
Yes, this is why this whole debate is stupid. This is 95% a game between providers and insurers. The providers wrongly code and try to overbill for services. The claims end up being resubmitted, or if the claim is partially paid because some lines were not valid, the provider simply accepts this.
A claim denial is a dispute between provider and insurer. It has nothing to do with the customer. Denied claims for services rendered are not then billed to the customer. Providers obtain prior authorization for services that require it.
Technically one should specify denials in number of claims versus denials in terms of $$$ for a particular treatment. Denying 2 claims of a treatment worth $25,000 is worse than denying 10 claims of treatments costing $100. There should be external arbitrators on claim denials to resolve disputes as fast as possible.
Ultimately, it is a terrible oversight that the ACA did not impose some kind of upper bound on the rate of claim denial. It should be imposed on all companies, not just from the exchanges. This in bad need to legislation. Oh well, we will have to wait several years to have a slim chance to see this happen.
More easily seen comparison factors in plans I've found are copays and in-network providers.
Looking to the very next post by Mr Drum, where he lists the "denial rates" for each and every insurer on Healthcare.gov, a commenter pointed out that Healthcare.gov only covers the states that don't have their own Obamacare exchanges.
That's why so many weird names are listed that many of us have never heard of. Also, it's possible that the Federal system has higher standards than the (or some) states?
And how do these numbers look compared to the numbers of health insurance fraud convictions?
https://www.ussc.gov/sites/default/files/pdf/research-and-publications/quick-facts/Health_Care_Fraud_FY18.pdf
Thank you, Kevin.
I wish we had data, perhaps from audits, that provided the following: how many claims, based on the rules of the policy and standards of medical care, should have been declined by insurance company.
Clearly some claims should be denied. Further, I imagine, that valid claims denials are not equally distributed because the customer base of insurance companies is varied (geography, age, military affiliation etc).
The real issue is inappropriate claims denials, versus all denials.
To paraphrase The Princess Bride: That regression line does not mean what you think it means.
The simplest and most likely explanation is a price-quality tradeoff. You buy a cheap plan, you get crappy coverage. In a competitive market, ripoffs and bargains are both uncommon, most of the time you get what you pay for.
It is also possible that the low denial companies are much more restrictive in who they accept into their network and don't have as big a problem with doctors ordering extra procedures to bump up their revenue (for example maybe they don't have in network doctors who order screening colonoscopies for their 83 year old patient with Alzheimer's)
I think you're really missing the point here by not defining what a claim denial is and means. A claim denial doesn't mean that the customer doesn't get served or ends up with a bill. When I log into my health insurance portal, I see plenty of denied claims and I have NEVER been billed or contacted about any of them.
It may be as simple as an administrative issue between providers and insurers - providers submit claims that are wrongly coded, duplicative, or boderline fraudulent (billing itemized things for something their contract with the insurer says should be covered under another submitted code). The insurer denies the claim and sends the provider a denial code explaining why and the provider resubmits a properly coded claim.
Medical billing is complicated. The reason for the differential in denial rates may be that some insurers have simpler contracts with providers and provide better guidance to providers on how to submit claims properly. This whole debate is all much ado about nothing.