Millions of Americans in the past few years have run into this experience: filing a health-care insurance claim that once might have been paid immediately but instead is just as quickly denied. If the experience and the insurer’s explanation often seem arbitrary and absurd, that might be because companies appear increasingly likely to employ computer algorithms or people with little relevant experience to issue rapid-fire denials of claims — sometimes bundles at a time — without even reviewing the patient’s medical chart; a job title at one company was “denial nurse.”
It’s a handy way for insurers to keep revenue high — and just the sort of thing that provisions of the Affordable Care Act were meant to prevent. Because the law prohibited insurers from deploying a number of 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.
And so, the law tasked the Department of Health and Human Services with monitoring denials in both plans on the Obamacare marketplace as well as those offered by employers and insurers. It hasn’t fulfilled that assignment. Thus, denials have become yet 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.
A recent study by the Kaiser Family Foundation (KFF) of plans on the Affordable Care Act marketplace found that even when patients received care from in-network physicians — doctors and hospitals approved by these same insurers — the companies in 2021 nonetheless denied, on average, 17 percent of claims. One insurer denied 49 percent of claims in 2021; another’s turndowns hit an astonishing 80 percent in 2020. Despite the potentially dire impact that denials have on patients’ health or finances, data shows that people appeal only once in every 500 cases.
Sometimes, the insurers’ denials defy not just medical standards of care but also plain old human logic. Here is a sampling collected for the “Bill of the Month” joint project of KFF Health News, where I work, and NPR.
• 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 had the insurer’s preapproval for the expensive ($143,206) intervention. More confusing still, the denial letter said the claim had been rejected because he had “asked for coverage for injections into nerves in your spine” (he hadn’t) that were “not medically needed.” Months later, after dozens of calls and a patient advocate’s assistance, the situation is still not resolved.
• An insurer’s letter was sent directly to a newborn child denying coverage for his fourth day in a neonatal intensive care unit. “You are drinking from a bottle,” the denial notification said, and “you are breathing on your own.” If only the baby could read.
• Deirdre O’Reilly’s college-age son, suffering a life-threatening anaphylactic allergic reaction, was saved by epinephrine shots and steroids administered intravenously in a hospital emergency room. His mother, utterly relieved by that news, was less pleased to be informed by the family’s insurer that the treatment was “not medically necessary.”
As it happens, O’Reilly is an intensive-care physician at the University of Vermont. “The worst part was not the money we owed,” she said of the $4,792 bill. “The worst part was that the denial letters made no sense — mostly pages of gobbledygook.” She has filed two appeals, so far without success.
Some denials are, of course, well-considered, and some insurers deny only 2 percent of claims, the recent KFF study found. But the increase in denials, and the often strange rationales offered, might be explained, in part, 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 off on 50 charts in 10 seconds presumably without even examining the patients’ records.
Decades ago, insurers’ reviews were reserved for a tiny fraction of expensive treatments to make sure that providers were not ordering with an eye on profit instead of patient needs.
These reviews — and the denials — have now trickled down to the most mundane medical interventions and needs, including things such as asthma inhalers or the heart medicine that a patient has been or for months or years. Automation makes the reviewing cheap and easy. A 2020 study estimated that automated claims-processing saves U.S. insurers more than $11 billion annually.
Worse still, what’s approved and what’s denied can be based on an insurer’s shifting contracts with drug and device manufacturers rather than optimal patient treatment.
Challenging a denial can take hours of patients’ and doctors’ time — the process for larger claims is often fabulously complicated. Many people don’t have the knowledge or stamina to take on the task, unless the bill is especially large or the treatment obviously lifesaving.
