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Exchange Policy Claim Denials

By March 5, 2019Commentary

A centerpiece of the federal reform law, now almost ten years old, was to create insurance exchange marketplaces where individuals who otherwise couldn’t find health insurance, and who were now mandated to get it, could buy policies.  The theory was that insurers would just be so eager to compete for these new customers and premiums were promised to be lower and stay low.  Of course, none of that happened, as several prominent critics had pointed out would likely be the case.  The plans participating on the exchanges are required to provide periodic data on denials of claims and appeals from those denials.  The Kaiser family foundation did a summary of this information from 2015 to 2017 on the federal exchanges.   (KFF Report)   There were 180 insurers in those exchanges, of those 130 reported complete data.  According to Kaiser’s analysis of the data, 19% of in-network claims were denied in 2017, with a very wide range of from less than 1% to 40%.  You have to wonder what is going on with those high rates, and you wonder even more when less than 1/2 of one percent of those denials were appealed and 14% of appeals resulted in overturning the denial.   Forty of the 130 reporting plans had a denial rate of 10% or less, and 47 denied more than 20% of in-network claims.  And if these statistics are at all accurate for in-network claims, what is happening with out-of-network ones, which typically see much higher denial rates.  But as Kaiser notes, there is no explanation of why a claim was denied in the data and it is very possible insurers aren’t even using common definitions of what a denial is.  For example, it is very common for providers to file a claim without all the information needed or required on the claim form.  That is not really a denial.  Duplicate claim filing by providers is also a common occurrence.  I suspect many of the denials are because the person wasn’t actually covered by the insurer–they never paid their premium, or otherwise lost or never had eligibility.  What would be more useful data is how many claims are denied for lack of medical necessity or other supposed clinical reasons; that would help you understand the extent to which plans were just trying to dodge legitimate obligations.  So while the headline seems alarming, I suspect the reality, while not great for consumers, is much better.

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