According to reporting last year by KFF (the independent source for health policy research, polling, and journalism formerly known as the Kaiser Family Foundation) data from insurers for Affordable Care Act Marketplace plans show nearly 17% of in-network claims were denied in 2021.
The Centers for Medicare & Medicaid Services (CMS) says that for in-network claims, about 14% were denied because the claim was for an excluded service, 8% were denied due to a lack of preauthorization or referral, and about two percent were denied based on medical necessity. More than three-quarters of denials (77%) were for other reasons.
Few consumers appeal their denied claims, and the majority of insurers uphold their original denial decision on appeal. For HealthCare.gov consumers, in 2021, less than two-tenths of one percent of in-network claim denials were appealed. For those that were, insurers upheld the denial in 59% of cases.
Nevertheless, as a health insurance broker, you may be called upon by an Individual & Family Plan (IFP) customer, an employee enrolled in an employer-sponsored health plan, or an employer client acting on behalf of themselves or an employee concerning a claims appeal. If that happens, there are some claims handling best practices you should consider.
Be Prepared for Health Insurance Claims Handling
It is important you understand the claims process generally, and the specific policies and procedures that apply for each of the insurers/carriers/health plans that you represent. Claims can relate to a variety of treatment types: doctor visits and primary care, inpatient care, outpatient care, urgent care, emergency care, surgery, palliative care, mental health care, rehabilitation, prescription drugs, and other services.
According to the CMS, National Health Expenditure Accounts (NHEA), Office of the Actuary, and National Health Statistics Group, $4.5 trillion was spent on health care for calendar year 2022. This amount includes all plan types (e.g., commercial, public, Medicare, Medicaid, etc.), with a breakdown on spending as shown below:
- Hospital care, 30%
- Physician and clinical services, 20%
- Prescription drugs, 9%
- Government administration and net cost of health insurance, 7%
- Health residential and personal care, 6%
- Public health activities, 5%
- Investment, 5%
- Nursing care facilities, continuing care retirement communities, 4%
- Other, 14% (durable and non-durable medical equipment and products, home health care, dental services, and other professional services)
Historically, California HMO enrollment exceeded other plan enrollment for many years. In fact, a KFF study from two decades ago found more than half of the Golden State’s residents with health coverage were enrolled in an HMO. In some counties, HMO enrollment neared or topped 70%.
Even as recently as 2022, California HMO enrollment outpaced other plan participation. For commercial health plan enrollment, according to the California Health Care Foundation, PPO enrollment was about one-third of HMO enrollment (2.9 million versus 10.8 million).
Nationally, according to the KFF 2023 Employer Health Benefits Survey, for all workers, PPOs are the most common plan type. Forty-seven percent are enrolled in PPOs, followed by 29% in High Deductible Health Plans, 13% in HMOs, 10% in Point of Service (POS) plans, and one percent in conventional (indemnity) plans. Regionally, HMO enrollment is much higher (26%) in the West, and lower in the Midwest (4%).
You need to be aware of the claim procedures for all plan types, and the options for getting help from a consumer assistance program. In California, the Office of the Patient Advocate is one resource. In Nevada, the Office for Consumer Health Assistance (a part of the Governor’s Consumer Health Advocate) offers claims appeal help.
Insurance Claims Process and Procedures
Insurers/health plans/administrators must tell the insured why a claim is being denied.
If your client’s health insurer or health plan refuses to pay a claim or denies all coverage for a claim, he/she/they have the right to appeal the decision. They may even be able to have the appeal reviewed by a third party.
There are two ways to appeal a claim denial or declined coverage decision:
- Internal Appeal: Your client may ask the insurance company or administrator to conduct a full and fair review of its decision. If the case is urgent, the insurance company must accelerate this process.
- External Review: Your client may have the right to take their appeal to an independent third party for an external review. With an external review, the insurance company no longer gets the final say over whether to pay a claim.
If the insurance company requests paperwork in connection with an appeal, there is usually a timeframe by which the paperwork must be submitted. Forms can often by submitted online, which is usually the fastest way. If not submitted online, forms can be mailed or faxed to the plan or administrator.
When a claim is submitted, it will be reviewed by a claim processor, who will check the claim for accuracy, completeness, and whether the service is covered under the insurance contract. The processor will also review other information, such as correct application of the plan copay, coinsurance, whether a deductible might apply, and whether the insured is near or at the plan’s out-of-pocket maximum.
Always advise your clients to ask questions if they are unsure of why a claim is being denied, or if the insurer’s amount paid is at a lower-than-expected amount. The Explanation of Benefits (EOB) sent to the insured should provide details on how each claim is processed and what portion of costs are paid by the health plan and what costs are subject to balance billing by the provider.
Be Responsive
As noted previously, health insurance policies usually set forth procedures for filing a claim or appealing a rejected claim. They often include a timeline for appeal. It’s important that you and your client file the necessary paperwork related to any appeal in a timely manner.
If you get a request for assistance, be responsive and do what you can to support the request and inquiry. Failing to do so could lead to a consumer complaint about you – to the sponsoring employer (your client) or state authorities.
If you work with a General Agent, you may want to ask your representative if the GA can do anything to expedite a client’s claim or a claim reconsideration.
