If there’s one thing you can count on in the American healthcare system, it’s claim denials.
At least, that’s what the research tells us.
According to a recent Kaiser Family Foundation (KFF) study of Affordable Care Act (ACA) plans, in 2021, insurance companies denied, on average, 17 percent of in-network claims, with one insurer denying 49 percent of claims. Are we expected to believe nearly half of medical services obtained by members were “unnecessary”?
An article from PBS News describes how these denials actually play out. In one example, Deirdre O’Reilly’s college-age son experienced a life-threatening anaphylactic allergic reaction. A trip to the emergency room, where he was administered epinephrine shots and steroids, saved his life. The family’s insurer, however, had other concerns, stating “that the treatment was ‘not medically necessary.’” O’Reilly also happens to be an intensive-care physician. Even though two appeals have been filed, the treatment still hasn’t been approved by her insurance company.
O’Reilly isn’t alone. Claim denials have become commonplace: “Thus,” writes PBS News, “denials have become another predictable, miserable part of the patient experience, with countless Americans unjustly being forced to pay out-of-pocket or, faced with that prospect, forgoing needed medical help.”
Here at Un-covered, we’ve talked about claim denials extensively. Some insurance companies even have algorithms built to deny claims. Claim denials save insurers lots of money. In fact, a 2020 study by Hyperscience found that automated claims processing — which many see as a driver of auto-denials — saves U.S. insurers more than $11 billion annually.
Similar to prior authorizations, claim denials started out with good intentions. According to PBS News, decades ago, insurers used claim denials to make sure that physicians weren’t ordering tests and procedures just to make a profit. And we get it — it’s fair to be cautious. But just like prior authorizations, claim denials are now used for everything — from surgeries to inhalers to heart medicine.
Claim denials have morphed into a profit-saving methodology benefiting commercial insurers more than patients. And as our healthcare system moves away from fee-for-service and more toward value-based care, it could be argued that claim denials are less necessary than they used to be.
But the ACA didn’t intend for it to be this way: “Because the law prohibited insurers from deploying previously profit-protecting measures such as refusing to cover patients with preexisting conditions, the authors worried that insurers would compensate by increasing the number of denials,” writes PBS News. The lawmakers were right — and the data is there to prove it.
So, what can be done?
Government intervention is the next step.
What the ACA hoped to prevent is happening — and only lawmakers can stop it.