Payers Denied 17% of 2019 In-Network Claims on ACA Marketplace

Certain Affordable Care Act marketplace policies need to be tweaked in order to support greater consistency across transparency data reporting processes, a recent Kaiser Family Foundation (KFF) issue brief found.

Examining CMS data from 2018 and 2019 regarding individual health insurance market health plans both on and off the exchange, the KFF researchers identified the rates of claim denials and appeals in order to determine whether transparency data regulations were effective.

Research showed that the average rate of denials—which differed significantly from payer to payer—increased slightly from 2018 to 2019. In 2018, payers denied around 14 percent of in-network claims on average. The following year, however, typically around 17 percent—or more than 40 million—of in-network claims were denied.

The difference in denials per payer was significant. In some cases, payers denied one percent of claims, while among other payers the denial rate was over 50 percent. Put another way, approximately 34 of the 122 reporting major payers on the exchange in 2019 denied less than 10 percent of their claims.

Denials were highest for catastrophic plans. One out of every five claims in a catastrophic plan received a denial. Silver plans trended similarly, however, with payers denying 18 percent of silver plan claims.

According to current transparency data reporting policies, there are six possible causes for a payer to deny a claim, one of which is the catchall category—“all other reasons.”

When payers denied a claim in 2019, they often reported doing so because the service was not covered. Less than one-tenth of 2019 claims on the individual health insurance marketplace were denied due to a prior authorization or referral issue.

However, most of the claims that the researchers studied were denied for other reasons that the report does not specify (72 percent).

“That nearly three-quarters of in-network claims (more than 25 million in 2019) were denied for ‘some other’ reason indicates there is more to learn about why plans deny in-network claims,” the researchers stated.

Although 17 percent of in-network claims received a denial in 2019, the number of claims that consumers appealed did not even constitute one percent, amounting to a little over 63,300 out of 40.4 million. Of those that were appealed, six in ten were still denied.

Once the payer upheld the denial, consumers could take the appeal to an independent party for review if the claim was denied because the service or product was deemed as not medically necessary. However, fewer than one in 20,000 denied claims took that step, possibly because only 0.1 percent of claims are denied for medical necessity.

The report identified seven payers that had the highest denial rates, all of them Anthem and Blue Cross Blue Shield (BCBS) companies: BCBS of Tennessee, Anthem BCBS of Georgia, Anthem BCBS of Maine, Anthem BCBS of Ohio, Anthem BCBS of Virginia, Anthem BCBS of New Hampshire, and Anthem BCBS of Kentucky.

“On average, claims denial rates are similar to those reported in earlier years, although for some issuers, reported denial rates have varied over time,” the report explained.

Tennessee and New Hampshire had the highest denial rates across the 50 states, each with payers that denied on average over 30 percent of their claims.

The results indicated that transparency data reporting methods need to be modified in order to better protect data transparency, the report concluded.

“Recently federal policymakers have taken other steps to promote price transparency within private health plans, to protect patients and require annual reporting on surprise medical bills, and to promote the transparency and accuracy of health plan provider networks and directories,” the researchers noted.

The Trump Administration proposed the Transparency in Coverage rule which would require payers to disclose pricing and cost-sharing information. Payers responded in opposition to the rule, saying it would not accomplish this goal and, instead, would pose a security risk.

On some occasions, private payers can face legal consequences for denying the claims inappropriately. For example, when Aetna violated California law by failing to reimburse for emergency room claims, the payer paid the price—a $500,000 fine.

However, the KFF researchers saw reforming Affordable Care Act data reporting as key to any present or future transparency policies.

“For each of these policy priorities, ACA transparency data reporting could be implemented more completely to yield information helpful to regulators and to consumers,” the researchers argued.