Few patients challenge claims denials despite high prevalence

Photo: Jose Luis Pelaez Inc/Getty Images

Almost half of insured, working-age adults in the U.S. say they've received a medical bill, or copayment for a service, they expected to be covered by insurance. But despite the fact that one in five were denied coverage for a doctor-recommended service, few patients challenge these denied claims.

That's according to a new Commonwealth Fund survey, which found that among those who reported billing errors or coverage denials, fewer than half challenged them, mostly because they weren't aware they had the right to do so.

Yet challenging coverage denials and medical bills often works. Half of adults who challenged coverage denials reported success in getting some or all denied services approved. Similarly, more than one-third (38%) of those who disputed medical bills saw their balances reduced or eliminated. 

Success rates were even higher for people enrolled in Medicare and Medicaid. Among Medicare recipients, 61% had bills reduced or eliminated after challenging them, while 46% of Medicaid beneficiaries achieved the same result.

Among those who did not challenge their billing errors, over half (54%) said it was because they were not sure they had the right to do so. This uncertainty was most prevalent among people with low and moderate incomes, those under age 50 and Hispanic respondents.

Younger people, particularly those ages 19–34, were most likely to be unaware of their rights, with 60% not knowing that they could challenge a bill. Additionally, those under 50 also were the most likely to be unsure of whom to contact to address billing errors.

Coverage denials led to delays in care for almost 60% of those affected, with nearly half (47%) reporting worsened health conditions as a result.

WHAT'S THE IMPACT

The Commonwealth Fund noted several areas in which policy interventions could significantly improve consumer protections.

According to the authors, the Department of Health and Human Services could better fulfill the requirements of the Affordable Care Act to monitor rates of claim denials in all commercial insurance plans, including those offered through the marketplaces and individual market, as well as group plans offered by employers and insurers.

Policies that penalize insurers who repeatedly wrongfully deny coverage or send erroneous bills could help mitigate the problem. Public reporting of these incidences would also foster greater accountability and incentivize insurers to limit such practices, they added.

Authors also advocated for heightened consumer awareness. Enhancing state or federal consumer information systems could help increase public awareness of an individual's right to appeal insurance decisions, and establishing consumer support systems could simplify the appeals process, they said.

"Our findings highlight a troubling reality: Even with health insurance, many Americans are struggling to navigate a complex and often opaque healthcare system," said Dr. Joseph R. Betancourt, president of the Commonwealth Fund. "As a primary care doctor, this is something I and my patients live with every day. Having care improperly denied and fighting to get what is needed for patients' health and well-being is exhausting and demoralizing for patients and doctors alike. Especially as some commercial insurers are reporting record profits, we must ensure that health insurance fulfills its promise of protecting people's health and financial well-being."

THE LARGER TREND

Nearly 15% of all claims submitted to private payers for reimbursement are initially denied, including many that were pre-approved to move forward through the prior authorization process, according to a national survey of hospitals, health systems and post-acute care providers conducted in March by Premier.

An average of 3.2% of all claims denied included those that were pre-approved via the prior authorization process.

Despite the initial denial, more than 54% of claims rejected by private payers were ultimately paid. Many others may have been ultimately paid but were not fully pursued for payment due to issues such as resource constraints.

Denials tended to be more prevalent for higher-cost treatments, with the average denial pegged to charges of $14,000 and up.
 

Jeff Lagasse is editor of Healthcare Finance News.
Email: jlagasse@himss.org
Healthcare Finance News is a HIMSS Media publication.