Healthcare.gov marketplace insurers denied 18% of all claims — nearly 1 out of every five — submitted for in-network services in 2020. But the reasons behind the high denial rates and the ultimate consequences for consumers are difficult to determine, according to a new analysis by the Kaiser Family Foundation (KFF).
The Affordable Care Act (ACA) requires insurers to report data about claims denials and appeals to encourage transparency about how insurance coverage works for enrollees. KFF's analysis examined data released by the Centers for Medicare and Medicaid Services on more than 230 million claims submitted to 144 insurers selling marketplace coverage in 2020, the most recent year for which data is available.
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Researchers found a huge variation across insurers, finding average denial rates as low as 1% and as high as 80%. Denial rates also vary by state, though insurers within the same state often show wide variations, as well. The data did include some information about why in-network claims are denied: lack of prior authorization or referral (10%), an excluded service (16%), or lack of medical necessity (2%). And among claims denied for reasons of medical necessity, about 1 in 5 involved behavioral health services.
Yet the vast majority of denials (72%) fall into a broad category of "all other reasons" — likely including administrative or paperwork errors and other issues, according to the KFF.
"Twelve years after enactment of the ACA, limited transparency in coverage data collected by the federal government is notable for what it doesn't show, perhaps even more than for what it does reveal," noted the authors of KFF's report. "These data reporting requirements were enacted to show regulators and consumers key features of health plans that are not otherwise transparently obvious — whether they reliably pay claims for services the plan contracted to cover, how often out-of-network care is sought, how often claims are subject to preauthorization or medical necessity review, and how claims payment and utilization review practices operate differently for different types of services or diagnoses. However, agencies have not fully implemented this provision, limiting data that could be used to conduct oversight and enforcement of consumer protections, including Mental Health Parity and the No Surprises Act."
Consumers appealed few of the denied in-network claims in 2020, with fewer than 61,000 appeals in 2020, reflecting just over one-tenth of 1% of all denials. Following those appeals, insurers usually upheld their initial denials (63%), and consumers rarely took the next step to file an external appeal.
"More robust transparency data reporting, while potentially more burdensome to insurers, could provide data useful to both regulators and consumers," KFF researchers concluded. The analysis, as well as data files with insurer- and state-specific information, is available online.
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