KFF: Issuers denied 19% of in-network claims in 2017

Stack of health insurance application forms with stethoscope on top
Health.gov issuers denied 19% of all in-network medical claims in 2017. (Getty/vinnstock)

In 2017, 19% of in-network claims were denied by issuers, according to a new study.

In addition, the study found that consumers rarely appealed denied claims and if they did, issuers typically upheld the first decision, reported the Kaiser Family Foundation (KFF). The report was based on data released by the Centers for Medicare & Medicaid Services (CMS) from Healthcare.gov.

Of the reported health.gov issuers, 229.8 million in-network claims were received in 2017, of which 42.9 million were denied and less than 200,000 were appealed. 

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However, the rate of denials varied significantly depending on the issuer, from less than 1% to more than 40%. Of consumers on Healthcare.gov, less than 0.5% appealed denied claims and issuers overturned 14% of those denials.

Specifically, 40 of the 130 reporting Healthcare.gov issuers had a denial rate for in-network claims of 10% or lower. Another 43 issuers denied between 11% and 20% of in-network claims in 2017, and 47 issuers denied more than 20% of in-network claims. 

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However, the data in the CMS system did not reveal why a claim was denied, making it difficult to speculate why the big variation in rates, the researchers said. The large variation across issuers could be attributed to factors such as provider knowledge about which claims should be covered, how to correctly submit claims and issuer reporting methods. 

To offer a comparison, a recent report by the Office of Inspector General (OIG) of the Department of Health and Human Services examined claim denial rates in Medicare Advantage plans and found that 8% of claims, between 2014 and 2016, were denied by issuers. In addition, the report found that 1% of denied claims were appealed by consumers, and 75% of appeals resulted in overturn. 

KFF warns that the quality of data collected can be questioned as CMS is not currently collecting information for all categories in the Affordable Care Act (ACA), including out-of-network claims that are submitted and denied and consumer responsibility for out-of-network claims. Plus, CMS only collects information from issuers offering individual plans through the Federal Marketplace. 

However, in the latest CMS transparency data collection notice, the group stated that it will work with the Department of Labor and state-based exchanges to extend transparency data reporting after 2021.

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“The initial collection and release of ACA transparency data offers a glimpse of what can be known about how health plans work in practice, though limitations raise questions about how to interpret data, what may underlie the results, and how regulators might use transparency data,” the report stated. 

Starting in 2019, CMS will require Healthcare.gov issuers to report six new denial reason categories for collection. 

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