Category: Strategies

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Eligibility or rescinded health plan – 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.  

Is our Health Insurance Literacy improving?

Is our Health Insurance Literacy improving?

Health insurance literacy or HIL is a foreign concept to most people, but if understood and achieved at even basic levels, one can yield long-lasting effects on their health. The greater one’s understanding of health insurance the higher the likelihood for access to health care, getting medical treatment and ultimately staying healthy.  Nevertheless, health insurance literacy continues to remain at low levels in the United States.  

Defined by the Health Insurance Literacy Expert Roundtable, health insurance literacy is the degree to which individuals have the knowledge, ability, and confidence to find and evaluate information about health plans, select the best plan for their own or family’s financial and health circumstances, and use the plan once enrolled.  The degree of HIL that one possesses falls on a spectrum from none to high.

In 2003, the U.S. Department of Education conducted a National Assessment of Adult Literacy and found that one’s overall health (from poor to excellent) is a function of the level of health literacy, and that your level of HIL correlates with which type of insurance you have: employer-sponsored, military, Medicare, Medicaid or uninsured. However, the average literacy scores of those with poor health compared to those with excellent health varied, but not significantly.  53 percent of adults had Intermediate health literacy. About 22 percent had Basic and 14 percent had Below Basic health literacy.

In 2010, shortly after the Affordable Care Act’s (ACA) went into effect, the Kaiser Family Foundation conducted a survey to shed light on Americans’ understanding of basic health insurance terms and concepts. Over half (52 percent) answered at least 7 out of 10 answers correctly, with only 4 percent answering all 10 questions correctly.  Using a grade-school scoring method, the remaining 44% would not have received a passing grade.

(Take the Kaiser Family Foundation 10-question quiz to identify your level of literacy with health insurance terms and compare yourself to others who took the quiz. You may be surprised to learn you’re as smart as a sixth grader.)

With several years of enrollment and experience in ACA health insurance exchanges, the expectation is HIL would increase.  Think again. In an analysis performed by the Institute for Healthcare Advancement in 2019, they found more than one-half (51%) of survey respondents had inadequate HIL as measured by knowledge of health insurance terms, and close to one-half (48%) had inadequate HIL as measured by confidence in health insurance use.  

If people are not grasping even the basics of health insurance or feeling confident in using it, how can we expect them to be active consumers of health care services?  Knowing how to find a doctor, fill a prescription, obtain and pay for a medication, understand the medical provider’s explanations, as well as insurance EOBs are all measures of health literacy.

HIL is not taught in school. Often, people learn about health insurance through a baptism by fire experience. If we receive a significant charge or invoice in the mail from our doctor, a common thought is “I thought my insurance covered this?”  Unwittingly, people put a lot of reliance and trust on a medical community who is driven by revenue and on an insurance system designed to minimize their risk.  Motivated financially, people become investigative sleuths navigating an itemized billing labyrinth to only discover they didn’t meet their deductible or went out-of-network not by conscious choice.

The healthcare system is flanked by healthcare providers on one side and health insurance plans on the other leaving employees figure out how it all works. If they’re lucky, their employers can step in to help.

Political efforts attempt to fix problems in our healthcare system to make it fair for people, like surprise medical billing, but legislation cannot address unintended consequences. Our healthcare system is financed by fee-for-service players driven to maximize revenue through itemized billing, and with minimal or no upfront transparency to the patient in any consolidated manner.

HIL continues to be an uphill battle for employees.  

Years ago, High Deductible Health Plans (HDHP) with Health Savings and Health Reimbursement Accounts were designed to be the great equalizer motivating people (begin treated like consumers) to take more ownership in their healthcare decisions.  Now, with over 40% of Americans enrolled in a HDHP, you would expect HIL to have increased.

A study published in Health Affairs, March 2019 illustrated how most people are not engaged in consumer behaviors.  Only one in four enrollees (24.9 percent) had even talked with a medical provider about how much a service would cost. Fewer had compared prices for a service at different facilities (14.4 percent), compared quality for a service at different medical facilities (14.0 percent), or tried to negotiate a price for a medical service (6.5 percent).  The perception of futility fuels a lack of engagement in consumer behaviors.

Employers, insurance companies, the government and even non-profits offer tools and resources for people to learn about health insurance. Ultimately, people need to take action to learn how to be active consumers and increase their health insurance literacy, and not wait for a health care system to change.

Telemedicine: Overcoming barriers

Telemedicine: Overcoming barriers

People looking for alternative ways to get treatment for health issues are discovering telemedicine.  Working-from-home and social distancing practices in recent months has increased awareness of telemedicine. Even before the onset of COVID-19, over 60% of health insurance plans, health institutions and hospital systems were offering telehealth as a viable, cost-effective and convenient option to treat patients for non-urgent medical issues.

A recent survey by the National Business Group on Health (NBGH) estimates that virtually all large employers (96 percent) are making telehealth services available in states where it is allowed. In addition, more than half of employers (56 percent) offer telehealth for behavioral health services, which is more than double the number in 2017.1

Access is to a virtual medical provider is convenient.  Providers are available 24/7, including after hours, nights, weekends and even holidays.  You can typically access one within 30 minutes for a wide-range of non-urgent conditions, and they are able to prescribe medications.  The cost of a telemedicine visit is can be less expensive than an actual in-office visit.

A recent study in JAMA found that the average time for an in-office medical visit is 121 minutes, including time for travel, waiting, paying and completing paperwork. Within these two hours, only 20 minutes is actually spent face-to-face with the doctor. The entire encounter costs patients $43 in lost productivity.1

The global telehealth market expects to grow to $19.5 billion by 2025.2

Regardless of these statistics, telemedicine continues to have low utilization rates mainly because of number of barriers.

Quality of Physician

The practitioner using telemedicine technologies must be licensed to practice medicine in the jurisdiction where the patient receives treatment as dictated by current law.  Generally, telemedicine providers require practitioners be board-certified which raises the level of quality.Apprehensive may still exist if you’re used to seeing your own doctor.  Telemedicine providers, who maintain private practices, are professionally trained just like your own doctor to evaluate and treat patients.  Telemedicine providers are experienced in handling telemedicine; they can quickly develop rapport and engage in the medical evaluation.   At the end of the day, it’s up to you whether to implement their treatment recommendation.

Unclear on Conditions Treated

Telemedicine can support the evaluation and treatment of a wide range of non-urgent medical issues including:

Allergies Earache Pink eye
Bronchitis Fever Respiratory
Cold, Flu, Cough Headache Sinus infections
Constipation & Diarrhea Insect Bites Skin and rash problems

If the medical condition is not something they can treat, they will provide recommendation for follow up with your own provider or referral to an emergency room if urgent/life threatening.

A number of telehealth providers offer specialty services to treat chronic conditions, as well as behavioral health.

Used to seeing doctor in the office

The in-office experience often includes a series of steps such as check-in with the front office, interview by the nurse including check of your vitals, and then an interaction/meeting with the actual doctor.
The telemedicine process has similar steps, but instead you’re going through the process virtually.

Essentially, the doctor will first have a conversation with you about your situation to understand and evaluate.  If needed, they will ask for visual confirmation of the body part with the medical issue.  This can be done either by uploading a photo or sharing via two-way video chat through your mobile device or PC.

A telemedicine visit can be seen as a low-cost way to triage your situation starting small before embarking upon more time intensive, costly medical appointments that require in-person visits.

 
IT/Technology limitations

Mobile devices are ubiquitous.  While you can access telemedicine through your computer, you have the option to download the telemedicine App to your mobile device utilizing all of the same features and tools as the web browser access.  Therefore, access to telemedicine is limited by your own access to the internet or mobile service.

Laws are also in place to protect privacy. The HIPAA Privacy Rule is designed to be a minimum level of protection. Some states have even stricter laws in place to protect your personal health information. Telemedicine providers can share your information with your primary care physician in accordance with applicable state and federal laws.

Other Concerns

Underutilization of telehealth is widely attributed to a gap in benefit literacy or a lack of awareness.  People also express an apprehension to use a credit card when paying for telehealth services.

Keep in mind that the cost of a telemedicine visit through your regular doctor may cost the same as if you were to visit your doctor in their office.   Telemedicine providers like Teladoc, MDLIVE and AmWell who offer access 24/7 are different, and may charge significantly less than what your regular doctor would charge.

Ask your health insurance company or your employer whether telemedicine is available.

Medical offices, like where your regular doctor practices medicine, may provide access to virtual medical visits, which may include access to your own primary care doctor or others within the same practice.  MyChart, an online health connection for patients, provides for face-to-face video sessions with doctors.  Check with your medical provider to see if they offer MyChart.   Keep in mind the cost of a telemedicine visit through your regular doctor may cost the same as if you were to visit them in person for an office visit.  Ask up front what the cost of the visit may be to avoid surprises later.

Telemedicine is here to stay.  Access to healthcare is important. Learning how to use telemedicine can be a viable, cost-effective alternative to support our healthcare needs. To learn more about the telehealth industry, visit the American Telehealth Association website.

References

  1. https://www.mdlive.com/wp-content/uploads/2018/03/MDLIVE_Telehealth-Utilization_Whitepaper.pdf
  2. Transparency Market Research. Telehealth market: global industry analysis, size, share, growth trends, and forecast 2017–2025 Mar 2018p1–2240 Rep Id: TMRGL41591 accessed 11/1/18.