Your doctor says you need expensive treatment, but your health insurer says it won’t pay for it.
It is not clear how often consumers are faced with this dreaded scenario. When it happens, patient advocates say you shouldn’t always accept the health plan’s denial of coverage as the last word.
They recommend asking insurers and health care providers two questions: Why isn’t the service covered? And can the decision be reversed?
If this returns unsatisfactory responses, there are more options, including filing a formal appeal, calling regulators, and asking employers to step in if it’s work-based coverage.
“I think the first step is to try to see, informally, if it can be fixed,” said Karen Pollitz, co-director of the Kaiser Family Foundation’s Patient and Consumer Protection Program. “When a problem arises, I usually pick up the phone, wait on hold for how much music on hold they can play for me, and ask if they can reconsider.”
In July, the California-based foundation published a annual report that’s one of the most prominent, albeit limited, assessments of health insurance coverage denials.
Using 2020 data from health plans sold in the federal government HealthCare.gov market, the researchers calculated that insurers rejected an average of about 18% of in-network claims that year. Denial rates varied substantially between insurers, from as low as 1% to as high as over 80%.
The Kaiser report only looked at denials of coverage sold to individuals, estimated to be less than 6% of the US population. Meanwhile, the federal market data covers enrollees in just 33 states, a group that does not include Minnesota.
“The reported denial rate for marketplace plans seems substantial to me,” Pollitz said. “We don’t have any kind of benchmark comparison, like [the] rate on employer-sponsored coverage, which is what most people have.
Why some claims are denied
The rates, however, don’t reflect whether claims are ultimately paid, said Kristine Grow, a spokeswoman for America’s Health Insurance Plans, a trade group for health insurers. Denials can occur because health care providers did not provide enough information, the claim did not have prior authorization, or a referral or a particular service is excluded from coverage, said Lucas Nesse, executive director of the Minnesota Council of Health Plans, a trade group for the state-owned not-for-profit insurers.
“Denials often result in delayed payments to providers and sometimes require physicians to resubmit claims,” Nesse said in a statement.
However, there is a subset of denials in which patients are financially responsible for huge medical bills, said Jonathon Hess, CEO of Athos Health. Neither health care providers nor insurers publicly report these denials, Hess said, making it impossible for outsiders to know exactly how many people are left facing tens of thousands of dollars in uncovered costs.
That’s why Cancer Legal Care, an Oakdale-based nonprofit organization that provides free legal services to Minnesotans with cancer, launched a program a few years ago to help oncology patients seek reversals when plans health providers deny coverage.
Since 2020, the program has helped 31 patients obtain coverage for about $1.8 million in care.
“Their denials were for a wide variety of reasons and our clients and their providers were unable to get the denials overturned,” said Bill Foley, a health insurance advocate with Cancer Legal Care. The nonprofit group “committed to this by hiring a pair of exceptionally qualified attorneys to help develop and manage the program.”
Where to start if you are denied
Not all medical services will be covered, Foley said. But patients who review their health plan’s contract language and think coverage was denied in error have options to dispute it.
Even before an appeal, patients should talk to their health plan and health care providers to see if there is a way to resolve the situation, as denials can be due to billing errors that can be corrected.
Insurers have a process for internal and then external appeals. To make their case, consumers should obtain and review health plan materials that explain the details of their coverage, Foley said. These are detailed documents that routinely exceed 100 pages, she noted, not the few-page benefit summaries that members often see.
“If you keep running into dead ends, you need someone who can defend you,” Foley said. “Your CFO calling the insurer, or your benefits administrator on the phone to the broker who signed up your business with the insurer — those aren’t the first places to go, but they may be able to get your claim reviewed for a senior executive in the health plan.
What happens if an internal appeal fails?
After attempting an internal appeal with the insurer, people with fully insured health plans can seek external appeals by Send a solicitude to the Minnesota Department of Commerce or subjecting him to the Minnesota Department of Health. Some employer plans are regulated by the federal government.
The state Department of Commerce has staff to help consumers determine which agency regulates their health plan and therefore should address their concern, said Julia Dreier, deputy commissioner of the department’s division of insurance.
Federal data suggests that relatively few people attempt formal appeals in response to denied claims, said Amy Monahan, an employee benefits law expert at the University of Minnesota. That’s potentially a missed opportunity for people with fully insured health plans in Minnesota, Monahan said, because state court rules here for external appeals are more consumer-friendly than in other states.
Why coverage may differ
With fully insured plans, insurers bear the financial risk for the cost of claims. While individuals, as well as many small and medium-sized businesses, purchase fully insured coverage, many employers, particularly large multi-state employers, run self-insured plans regulated by the federal government.
Increasingly, health insurers are adopting guidance documents that specify the circumstances in which they will provide coverage for emerging and expensive treatments, Monahan said. This “medical necessity rulemaking,” she said, is a growing problem for patients because they are forced to argue “about whether it meets the list, not whether this is appropriate medical treatment.”
“You really want to make sure you see that document … because it will tell you the basis on which the insurer is evaluating your claim,” Monahan said. He added, “There are no excellent comprehensive sources that I know of that tell you the average percentage of medical claims that are denied.”
How Minnesota Insurers Compare
The Kaiser Family Foundation report found that Bloomington-based Bright Health had denial rates greater than 18% in individual market coverage in six of the eight states where it operated during 2020. The insurer did not respond to questions about the findings.
Minnetonka-based Medica had above-average denials for its individual market business in Kansas, Missouri and Oklahoma, Kaiser reported.
Using the foundation’s methodology, Star Tribune analyzed Minnesota providers’ regulatory filings in the individual market and found they were less likely to deny claims in 2020. The lowest rate was 6.4% at HealthPartners, based in Bloomington, as reviewed by the Star Tribune. while the maximum was 15.5% in Medica.
Insurers said they couldn’t verify the Star Tribune’s calculations.
Overall, Medica said it wouldn’t be surprising if the insurer’s denial rate was lower in Minnesota than other states because health care providers here have worked with the nonprofit health plan for many years. Through experience, doctors and hospitals learn Medica’s rules for submitting a bill, the insurer says, and when an authorization or referral is required.
“In states where we are developing relationships with providers, we see more denials for incorrect or incomplete billing, missing referrals, or for out-of-network services,” Medica said in a statement. “Not all denials are clinical decisions. Many, if not most, are administrative.”
At HealthPartners, officials said they are working proactively with members and health care providers to avoid unexpected denials, which in 2021 resulted in a 3.5% claim denial rate for all health plans in the individual market. A portion of HealthPartners subscribers receive care from hospitals and clinics owned by the nonprofit insurer.
“Contracted providers and health plans operate under administrative contracts and policies,” the insurer said in a statement. “If a contracted provider’s claim is denied for coding or shipping issues, the provider cannot request payment in full from their patient. Claims denied for other reasons may be billed to the patient.”