‘People don’t know they have rights in this process’
Chances of reversing Obamacare claim denial in Pa. are good
Health insurers deny thousands of claims every year and consumers appeal very few of them, which is unfortunate.
That’s because consumers have a better than a 1-in-2 chance of overturning a denial in Pennsylvania and getting a claim paid with an appeal, according to a new report by the state Insurance Department that focused on the Obamacare marketplace. Moreover, a separate federal government review found an even greater chance of success for seniors with Medicare Advantage coverage, with a 75% chance of overturning a denial.
“People simply don’t know they have rights in this process,” said Patrick Keenan, director of consumer protections and policy at Pennsylvania Health Access Network, a Philadelphia-based nonprofit. “And if they do know, and if the bill is small, many people report
paying it.”
The biggest risk when claims are denied is a delay in care that may be critical.
“Denied requests that meet Medicare coverage rules may prevent or delay beneficiaries from receiving medically necessary care and can burden providers,” the Office of Inspector General found in a 2022 review.
The reluctance to appeal a denied claim is happening as the number of rejections rises, up more than 56% among Obamacare policyholders in Pennsylvania between 2020 and 2022 alone, the Insurance Department found. Last year, more than 2 million claims were denied by Obamacare insurers in Pennsylvania and just 2,165 — a paltry .11% — were appealed.
“Most people are kind of timid about taking on their insurance company,” said Mr. Keenan. “People simply don’t know, they don’t know they have rights in the process.”
Moreover, a law enacted last year requires that Pennsylvania consumers be told about their appeal options when a claim is denied, which covers Obamacare and commercial insurance plan members alike.
Some 372,000 Pennsylvanians have Obamacare health insurance through Pennie, the state’s online marketplace. Open enrollment for Affordable Care Act coverage begins Nov. 1 and continues through Jan. 15.
How aggressively an insurer denies a claim in the Obamacare market can be a consideration when shopping for coverage, state Insurance Commissioner Michael Humphreys said in a prepared statement.
“This report provides unprecedented insight into companies’ claims denials and appeals processes that consumers may consider in preparing for upcoming health care services and underscores the importance of Pennsylvanians knowing that the appeals process is available to them,” he said.
Among the potential benefits of
winning an appeal is avoiding the credit report smudge that comes with an unpaid medical bill, Mr. Keenan said.
“If the bill is bigger, often those bills show up as unpaid medical debt on credit reports,” Mr. Keenan said. “About 1-in-3 Pennsylvania consumers reported having trouble paying medical bills in the last year.”
A remarkable finding of the Insurance Department report was that the percentage of UPMC’s claims rejected in 2022 was lowest in Pennsylvania among Obamacare health insurers and a fraction of the statewide average.
Two UPMC companies sold plans on the Affordable Care Act exchange last year — UPMC Health Coverage Inc., and UPMC Health Options Inc. — had claim denial rates of 2.77% and 3.68% respectively, the lowest among eight insurers that sold coverage through Pennsylvania’s online marketplace. The statewide aggregated claim rejection rate was 13.6%.
UPMC Health Plan officials said they were reviewing the report’s findings.
In 2022, Cigna Health and
Life Insurance Co. had the highest claim denial rate at 23.9% followed by Independence Blue Cross’ Keystone
Health Plan East, 21.3%; and Centene Corp.’s PA Health & Wellness, 20.3%, according to the Insurance Department.
Nationwide, the claims denial rate in 2021 for all health insurance lines ranged between 2% and 49% for reasons including lack of pre-authorization or referral for the care, the claim was for care provided out of network or the service wasn’t covered by the policy or deemed medically necessary, according to Kaiser Family Foundation, a nonprofit research group based in San Francisco. And like Pennsylvanians with Obamacare, less than two-tenths of 1% of denied in-network claims were appealed, even though 59% of appeals that were pursued were successful.
The Affordable Care Act requires insurers to report transparency data for most employer sponsored health plans sold on and off online exchanges. The U.S. average in-network claims denial rate in 2021 was 16.6%.
The success rate in overturning rejected claims was even higher for seniors with
Medicare Advantage plans, according to a 2018 review by the Office of Inspector General, which found an appeal success rate of 75% between 2014 and 2016. At least 216,000 U.S. denials each year were overturned.
“The high number of overturned denials raises concerns that some Medicare Advantage beneficiaries and providers were initially denied services and payments that should have been provided,” the review found. “This is especially concerning because beneficiaries and providers rarely used the appeals process, which is designed to ensure access to care and payment.”
Appealing an adverse benefit determination by your health insurer needn’t be intimidating.
Start with an internal appeal, which has to be filed within six months of receiving notice of a claim being denied. The Insurance Department advises consumers to keep a detailed log of communications with your insurance company, including dates, times and names of company representatives you spoke with along with the nature of the conversation.
If the internal appeal is denied, the insurer must explain the reasons why in writing, plus provide instructions about how to file an external review, which is performed by an independent party.
Consumers have four months from the date of the internal rejection to file a request for an external review. Then, consumers have 10 days to submit supporting documentation, such as medical records, to the external reviewagency.
Questions about the process can be directed to the Insurance Department at www.insurance.pa.gov at the “ask a question or file a complaint” link on the department’s home page. The department can also be reached by phone at 1-877881-6388.
Pennsylvania’s online marketplace for Affordable Care Act health insurance is https://tinyurl.com/ 5n7n5se9. Enrollment opens Nov. 1.