18% of Health Plan Claims Get Denied:  What action can you take to remedy?

18% of Health Plan Claims Get Denied: What action can you take to remedy?

I believe it’s fair to say people take their health insurance for granted.  They expect health insurance to be there when they really need it. Nonetheless, a misalignment exists between people’s expectations of what health insurance should do and what it actually does. This point is most apparent when a claim is denied by your health insurance company.

The Kaiser Family Foundation analyzes the transparency data released by the Centers for Medicare and Medicaid Services (CMS) on claims denials and appeals for ACA Marketplace plans annually where over 140 health plans provide health insurance coverage for about 17 million people in the United States.

On average 18% of medical claims submitted to these health insurance plans  are denied.

(Listen to an extended version of this article on the author’s podcast available on most podcast platforms)

Based upon our expectations, denials shouldn’t happen, but they do.  A glimpse at the different denial categories sheds light on the misalignment between the health care and health insurance industries raising the question WHY?

Let’s take a look at the major buckets for the denial reasons and try to shed some light on what might be happening, and whether you can do anything to avoid or fix if you have a denied claim.

Contractual denial – coverage excluded for a specific service 16%

The service performed just isn’t covered or included in the plan.

Prior authorization or referral not obtained. 10%

You or your doctor did not obtain (or did not complete the process) for prior approval from the health insurance carrier.

Claim or service was not medically necessary – 2%

Health care services or supplies needed to diagnose or treat an illness, injury, condition, disease or its symptoms did not meet accepted standards of medicine. This is still kind of vague, but is the guiding principle.  Here’s a deeper definition from BCBS of Massachusetts.

Experimental or investigational – <0.1%

The use of a service that is not recognized by the Plan as standard medical care for the condition, disease, illness or injury being treated.

Eligibility or rescinded health plan – <0.1%

The patient was not actively enrolled in the health plan for the date(s) of service.

Other Reasons – 59%

While this category appears to be a catch-all, it does include incorrect claim submissions, adjudication or administrative errors. This category interests me the most. While health insurance is technology intensive, it still relies upon manual intervention. People still need to complete a form or performing a task on a timely basis. Additionally, the technology that connect or holds processes together from different vendors or suppliers still needs to work properly. If one of those connections breaks, the downstream impact can be significant.

Most Claims are Not Appealed

In their analysis of the claims transparency data, Kaiser Foundation discovered how the vast majority of people do not appeal their denied claims. Approximately 1/10th of 1% of all claim denials were appealed. Surprisingly, in 2020 37% of ACA plan appeals were overturned.  That’s nearly 2 out of 5 which are pretty are good odds. I would venture to guess that if your claim was denied for an administrative error, nearly 100% of those claims would be overturned by appeal assuming they were eligible services to begin with.

It is unfortunate claims are denied and that we as covered members have to pursue and take action to reverse errors or gaps in care. All we want to do is get treated by our doctor and to have our health insurance help finance that service. We end up having to navigate a healthcare and health insurance system which are not always setup for success.  There are many hidden barriers, roadblocks, and snafus which are out of our control.

If you get your health insurance through an employer or group plan, not through the Open Market plans, I wouldn’t necessarily think you’re out of the woods; your plan could be denying the same percentage of claims.    Let me point out some information to support why we should take pause and believe that the high denial rate is prevalent in all types of health plans:

  • Healthcare providers, doctors who are In-network are the same providers for the most part who participate in the networks offered to employer plans.  Same doctors.
  • Type or kind of healthcare treatment received by people enrolled in these affordable care act plans through healthcare.gov are the same kinds of treatment people get who are covered by employer plan (and probably Medicare).
  • The process to submit medical claims to insurance companies is the same as that for employer plans.
  • The people who work at these insurance companies are the same.
  • The computer systems, logistics, internal networks, pharmacy systems are the same.
  • We’re all using the same healthcare and health insurance system.

Employer health plans are not required by law to report on their claims activity. One could only project that the same percentage and types of denials are occurring with claims that come from employer group or union plans.   It’s the same insurance companies who administer.

In 2021, the number of people covered by health insurance from their employer sits at around 156 million, or 49% of the country’s population.  This is according to research done by Kaiser Family Foundation. That’s a lot of people. This means a lot of claims are flowing through the insurance companies systems.  18% of claims, if accurate for employer plans, is a lot more claims and a lot more healthcare costs being passed on or paid for by the very same people the health insurance is supposed to health in their financing.

What actions can you take to avoid or handle your denied claims?

  1. Ask up front whether the treatment your doctor is about to provide or recommends is covered by your health plan. 
  2. If referred to a specialist for a special procedure ask up front if you need a referral.
  3. Retain and provide your latest health plan ID Card to your healthcare provider at the time of service.
  4. Verify timely that the claim was processed/paid by the insurance plan as expected
  5. Read the Explanation of Benefits statement (EOB) online before you make any payments to your doctor. 
  6. Engage your In-Network provider to go to bat for you.
  7. File an appeal. It’s the official way to put the insurance carrier on noticed and they have to respond.  
  8. If you get health insurance through your employer, ask your HR or Benefits contact for assistance. Can they get someone at the insurance company (account rep) to help intervene.
  9. After you’ve exhausted other measures timely, you can contact your local state insurance department, they may have an ombudsmen or insurance complaint department who investigates. They will at the very least send a letter to the insurance company requesting details on your situation.  Insurance companies are accountable to these entities at least in providing visibility and getting an accurate assessment.

In summary:

  • Pay attention to your claims on a timely basis
  • Use the insurance website to track your claims
  • Ask up front if your treatment is covered
  • Don’t assume what you’re billed by the doctor is accurate or what you owe
  • Keep notes

To learn more about how to improve your health insurance literacy, listen to the Maximize Your Health Insurance Podcast series which is based upon the book Maximize Your Health Insurance authored by William J. Pokluda available on Amazon.com.  

Health Insurance Literacy workshops offered in Connecticut: October 2022

Health Insurance Literacy workshops offered in Connecticut: October 2022

Want to increase your knowledge about health insurance literacy?

Join a live, in-person session to learn about foundational health insurance literacy skills that can help you gain control, make more informed decisions and potentially save money.

Register for one of three sessions offered in October in the Fairfield County, CT area through a local continuing education program. Click the link below to access and register for the course.

Trumbull, CT. October 11. 6:30 – 8:00 pm Search the school website for Health Insurance in the Fall/Spring Courses tab.

Greenwich, CT. October 19. 6:30 – 8:00 pm Click here to access the school website. Search for the course in their catalog for Health Insurance.

Ridgefield, CT. October 26. 6:30 – 8:00 pm Click here to access the school website. Search for the course in their catalog for Health Insurance.

Focused primarily for people who get their health insurance through an employer or Healthcare.gov / open market, the course will review how the health insurance industry works, identify best practices you can put into action right away and cover top five HIL skill sets:

  • Health insurance terms & concepts
  • How to understand what your plan covers
  • How to choose a health plan
  • Navigate tools and resources
  • Managing your claims questions

This course is taught by William Pokluda, a certified benefits professional (CEBS) with over 30 years of experience managing corporate benefits and working in the insurance industry. William has proven/demonstrated experience working with employees and their families helping them learn about and get the most from their health insurance. He is the author of the book “Maximize Your Health Insurance, Keep more money in your pocket”.

*A copy of the book Maximize Your Health Insurance will be available for purchase at a discount or offered on a complimentary basis. Depends on the particular program. The book can be purchased on Amazon for $9.99.

Surprise Medical Billing – What You Need to Know

Surprise Medical Billing – What You Need to Know

How would you feel if you received a bill related to a recent emergency room visit, but you don’t recall who the physician was? And that the amount due on the bill was an astronomical dollar amount which your insurance plan isn’t covering? Academic researchers have found that millions of Americans receive these types of surprise bills each year, with as many as one in five emergency room visits resulting in such a charge.

The U.S. government and more than a dozen states have passed laws to help protect people against surprise medical billing. While insurance companies and physicians should work together when such bills arise, you need to know what to expect if such a thing happens.

First, let’s clarify surprise medical billing.
Surprise bills happen when an out-of-network provider is unexpectedly involved in a patient’s care. Patients go to an In-Network hospital or emergency room facility and receive services from a physician, anesthesiologist or specialist who is not in the insurance plan network. Essentially, you don’t have any control over who is involved in your case.

Physicians are not always employees of a hospital. The hospital itself may be a free-standing building considered In-Network by your insurance plan. The actual treatment you receive may be delivered and billed by individual physicians and specialists who work at the hospital, but are not actual employees of the hospital, and are potentially considered out-of-network.

Federal and state laws have been passed to ensure that insurance companies cover such surprise bills from out-of-network providers, that prior authorization is not required, that insurance companies pay those providers a fair price. In the end, you would not owe any more than you would if those providers were all in-network, which includes costs related to copayments, coinsurance and deductibles.

Visit the Health and Human Services website to read more about protections from surprise medical billing.

All of us may get surprised when we receive a bill from a health care provider. We expect our health insurance to cover things, but it can be fuzzy as to what we truly owe. You must continue to view your insurance plan’s explanation of benefits (EOB) statement once they process the claim to determine what you owe. If you believe you’ve been wrongly billed, contact your insurance plan.

When does the Surprise Medical Billing provision no longer apply?

Once you are discharged from the hospital, emergency room or ambulatory care facility, you are back to being a regular citizen responsible for choosing your own providers. Often, patients receive discharge orders that require them to schedule follow up visits with a surgeon or a specialist. While you can continue to see the same provider who treated you in the emergency room or hospital, it’s your responsibility to know if that provider is In-Network. If you continue to receive treatment from out-of-network physicians after you are discharged, the surprise medical billing provisions no longer apply.

Your employer or medical plan is required to provide a model notice or a written explanation of the requirements of surprise medical billing laws. These notices must be made public, such as on a public website of the plan or insurer. Contact your employer or insurer to read your plan’s specific notice.

Save Money Researching the Cost of Healthcare

If you have the time, researching the cost of a healthcare procedure before your appointment may save you money, or at the very least ensure you aren’t surprised when you get the bill.

When dealing with a health condition, people can be consumed with their health as it may be a crisis or unexpected news. We’re more concerned with the implications of a diagnosis on our health than what it may cost us. For some, it’s the cost that will prevent them from taking the next step and getting the necessary treatment. That’s the time to pause and confirm what may be ahead of us financially. Having a clear picture of out-of-pocket costs can help to remove stress and allow you to focus on making the right decisions about our treatment.

Take radiology for example. The cost of an of x-ray can vary by provider. Health insurance plans negotiate the cost of procedures by provider in a given region further modifying the cost of a procedure. Many factors influence the negotiated price such as volume of care, clout and geographic area.

You may find if you’re willing to do a little research, you could save yourself a few bucks. You may need to travel a few miles, but the cost difference may be worth it. Often, we’re referred by our primary care doctor or specialist to a particular facility because they may be part of their network or practice. Don’t feel obligated to go where your doctor says you should go if your research uncovers a better negotiated price at another facility. Let your doctor know your situation; they should be understanding.

Use the Cost of Care Search Tool Offered by Your Insurance Plan

Most health insurance companies provide a search tool on their website allowing you to search for the cost of care for a particular procedure, and also give you a listing of providers in your zip code area who offer that procedure along with the cost. It’s essential that you ask your doctor for the full description and CPT Code of the procedure. The search tools require you be specific in your search. Otherwise, you may get incorrect results.

When you find the cost estimate from the online search tool, it typically applies the negotiated rate and any plan design features including whether you’ve met your deductible, giving you an estimated out-of-pocket cost for the procedure. If getting that test or procedure at another facility can save you money, go back to your doctor and ask them to give you the referral to that new facility. Your doctor will still get the results of the test sent back to them.

Use your EOB for Prior Costs

If you’re planning to get a test or procedure you received in the past, check out how much it cost. The EOB, or Explanation of Benefits, is the statement created when a claim is processed by your insurance plan. Log into your account on the insurance plan to search for old EOBs. If more than a year or two ago, the cost could go up due to inflation or other factors, but at least it can give you a ballpark to estimate the potential cost if performed by the same provider.

Price Transparency Tools

Over the past few years, efforts to increase price transparency to patients has yielded new sources of information the cost of care. While your insurance plan will provide the most accurate estimate on cost of care, there are other sources which can offer estimates which are not necessarily based on your specific health plan, but will offer an average cost of care.

Fair Health provides provides tools to estimate the cost of care based on claims for medical and dental services paid for by private insurance plans, including the country’s largest insurers.

Clear Health Costs is a journalism company from New York City bringing transparency to the health care marketplace by telling people what stuff costs using shoe-leather journalism, data journalism, investigative reporting and crowdsourcing.

Guroo.com was created by the Health Care Cost Institute (HCCI), an independent, nonprofit research organization. Guroo is powered by claims data contributed by some of the nation’s key health insurance providers. 

GoodRx helps you search for drug prices at different pharmacies and provides coupons. Insurance is often not used in conjunction with GoodRx.

Blink Health and BlinkRx offers discounted prescription prices on medications and can analyze your insurance, copay, and deductible to find your lowest prescription price.

Review and Compare

At the end of the day, you are in the drivers seat of your health care. Being health insurance literate means understanding your choices, finding the right care and knowing what your costs will be. You may not have the luxury of time to research costs in advance. Ask the doctor’s office or treatment facility what the potential cost may be. They should be able to provide that, especially if they are In-Network with your insurance. You can always call your insurance plan and ask them for insights on costs.