Claim Denial Rates as High as 80% for Some Marketplace Payers

Claim denial rates varied significantly among Healthcare.gov marketplace payers, with some insurers racking up rates as high as 80 percent, according to a new analysis from Kaiser Family Foundation.

Marketplace payers must report claims denial data under the Affordable Care Act. The Kaiser Family Foundation analysis tapped into the data from 2020 to uncover current claim denial rates based on more than 230 million claims submitted to 144 payers selling marketplace coverage that year.

The analysis found that, overall, nearly one out of every five claims submitted for in-network services in 2020 was denied by marketplace payers. However, depending on the payer, average claim denial rates ranged from just 1 percent to 80 percent.

Claim denial rates also varied significantly by location, the analysis showed. For example, the average claim denial rates were highest in states such as Indiana (29 percent) and Mississippi (29 percent), while rates were just 6 percent in South Dakota and 7 percent in Oregon. But just because a state had a middle ground claim denial rate does not mean that rate did not vary by payer operating within the state. For example, Florida's average claim denial rate for in-network services was 15 percent in 2020. However, researchers reported that the three payers with the largest market share by enrollees had denial rates of 10.5 percent (Florida Blue Cross Blue Shield), 11.1 percent (Health Options), and 27.9 percent (Celtic Insurance).

Marketplace payers with higher overall claim denial rates for in-network services in 2020 included Celtic in five states (Arizona, Indiana, Missouri, Tennessee, and Texas), Molina in six states (Missouri, Mississippi, Ohio, South Carolina, Utah, and Wisconsin), QualChoice in Arkansas, Ambetter in North Carolina, Oscar in seven states (Arizona, Florida, Mississippi, Missouri, Tennessee, Texas, and Virginia), and Meridian in Michigan.

Marketplace payers denied claims for various reasons in 2020, the analysis found. Among denials for in-network services, about 10 percent of denials were for services that lacked prior authorization or referral, 16 percent were for excluded services, and 2 percent were for medical necessity reasons. The majority of claim denials for in-network services—72 percent—were for “other” reasons.

While difficult to pinpoint what exactly caused an “other” claim denial, researchers said these claims were likely denied because of administrative or paperwork errors.

Claim denial rates have been on the rise for providers. A 2020 survey found that the healthcare industry saw a 20 percent increase in claim denial rates over the previous five years. The COVID-19 pandemic pushed many hospitals to a “denials danger zone” where denial rates were 10 percent or more of claims.

Kaiser Family Foundation also pointed out that their latest numbers also spell trouble for consumers, of which very few challenge denials even when they received in-network services. Marketplace payers also upheld initial denials in most cases, according to the analysis.