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Millions of Americans in recent years have stumbled upon this experience: filing a claim for health insurance that once might have been paid immediately but is instead just as quickly denied. If the insurer’s experience and explanation often seems arbitrary and absurd, it could be because companies seem increasingly willing to employ computer algorithms or people with little relevant experience to issue rapid-fire claim denials, sometimes packets at a time, without reviewing the patient’s medical record. One job title in one company was “denial nurse”.
It’s a practical way for insurers to keep revenues up, and just the kind of thing provisions of the Affordable Care Act were meant to prevent. Because the law prohibited insurers from implementing previously profit-protecting measures, such as refusing to cover patients with pre-existing conditions, the authors feared that insurers would compensate by increasing the number of refusals.
And so, the law mandated the Department of Health and Human Services to monitor denials of both market-based health plans Obamacare and those offered through employers and insurers. He failed to fulfill that assignment. Thus, denials have become another predictable and miserable part of the patient experience, with countless Americans unfairly forced to pay out of pocket, or faced with the prospect, forego much-needed medical care.
A recent KFF study of ACA plans found that even when patients received care from in-network doctors and hospitals approved by these same insurers, the companies still denied, on average, 17 percent of claims in 2021. One insurer denied 49% of claims in 2021; another’s denials reached a staggering 80% in 2020. Despite the potentially disastrous impact denials have on patients’ health or finances, data shows people appeal only once in every 500 cases.
Sometimes, denials from insurers defy not only medical standards of care, but plain old human logic. Here is a sample collected for the joint KFF Health News-NPR “Bill of the Month” project.
- Dean Peterson of Los Angeles said he was “shocked” when he was denied payment for a cardiac procedure to treat an arrhythmia, which had caused him to pass out with a heart rate of 300 beats per minute. After all, he had the insurer’s pre-approval for the expensive $143,206 surgery. Even more confusing, the denial letter stated that the application had been denied because he had “asked for coverage for spinal nerve injections” (he hadn’t) that were “not medically necessary.” Months later, after dozens of phone calls and the assistance of a patient lawyer, the situation is still not resolved.
- A letter from the insurer was sent directly to a newborn denying coverage on his fourth day in a NICU. “You’re drinking from a bottle,” said the rejection notice, and “you’re breathing on your own.” If only the child could read.
- Deirdre O’Reilly’s college-aged son, suffering from a life-threatening anaphylactic allergic reaction, was saved by injections of adrenaline and intravenous steroids in a hospital emergency room. Her mother, wholly relieved by the news, was less pleased to be told by the family 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,” he said of the $4,792 bill. “The worst part was that the denial letters were meaningless, mostly gobbledygook pages.” He filed two appeals, so far without success.
Some rejections are, of course, well regarded, and some insurers deny just 2 percent of claims, the KFF study found. But the increase in denials, and the often strange reasons offered, could be explained, in part, by a ProPublica investigation into the insurance giant Cignaan, with 170 million customers worldwide.
ProPublica’s investigation, released in March, found that an automated system, called PXDX, allowed Cigna’s medical reviewers to sign off on 50 charts in 10 seconds, presumably without examining patients’ medical records.
Decades ago, insurer reviews were reserved for a small fraction of expensive treatments to make sure providers weren’t ordering with an eye to profit instead of patient needs.
These reviews and denials have now come down to the most mundane medical interventions and needs, including things like asthma inhalers or heart medicine that a patient has been taking for months or years. What is approved or denied may be based on an insurer’s changing contracts with drug and device manufacturers rather than optimal patient treatment.
Automation makes reviews cheap and easy. A 2020 study estimated that automated claims processing saves US insurers more than $11 billion annually.
But disputing a denial can take patients and doctors hours of time. Many people lack the knowledge or stamina to take on the task, unless the bill is particularly large or the treatment obviously life-saving. And the process for larger claims is often fabulously complicated.
The Affordable Care Act clearly stated that HHS “must” collect denial data from private health insurers and group health plans and should make that information publicly available. (Who would pick a plan that denied half of patient claims?) The data should also be available to state insurance commissioners, who share oversight duties with HHS and seek to curb abuse.
To date, that information gathering has been haphazard and limited to a small subset of plans, and the data isn’t verified to ensure it’s complete, according to Karen Pollitz, a senior member of KFF and one of the authors of the KFF study. Data-driven federal oversight 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 duty to put an end to the fire hose of reckless denial that harms patients financially and medically. Thirteen years after the approval of the ACA, perhaps the time has come to begin the investigation and enforcement of the mandate.
KFF Health News 2023
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