Denial Rates for Medical Claims are as High as 80% for Some Payers Participating in the Marketplace

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Research shows that denial rates for in-network services among Healthcare.gov payers varied significantly, with denials as high as 80%.

Payers participating in the Marketplace must report claims denial rate data under the Affordable Care Act. Research by The Kaiser Family Foundation looked into the denial data from 2020 to determine what the current denial rates on claims based on more than 230 million claims submitted to 144 payers.

Research found that almost one out of every five claims submitted for in-network services in 2020 was denied by payers in the marketplace. Depending on the payer, average denial rates on claims ranged from 1 percent to 80 percent.

Denial rates for claims drastically varied by location based on the research. As an example, the average denial rates were highest in states such as Indiana and Mississippi with a 29% denial rate however, South Dakota had 6 percent and Oregon had 7 percent. The states that had a middle ground denial claim rate did not mean that the denials did not vary by the payer within the same state. Florida's had an average denial rate for in-network services of 15 percent in 2020. Analyst reported that the three payers with the largest market share of insured lives which was Florida Blue Cross Blue Shield, Health options and Celtic Insurance ranged from 10.5 to 27.9 with Celtic Insurance being the highest.

Payers with higher denial rates for in-network services in 2020 in Arizona, Indiana, Missouri, Tennessee and Texas were all Celtic Plans Six states Missouri, Mississippi, Ohio, South Carolina, Utah, and Wisconsin we Molina Oscar in seven states Arizona, Florida, Mississippi, Missouri, Tennessee, Texas, and Virginia, and Meridian in Michigan.

The denials were for various reasons by in-network payers researchers found. Most denials we for “other” reasons which was 72 percent of the denials, 16 percent were for excluded services. Prior authorizations and lack of referrals was 10 percent and 2 percent were denied for medical necessity.

It is hard to determine exactly what caused the “other” denial reasons however, researchers believe these claim denials were due to administrative or paperwork errors.

Claim denials have been on the rise for providers and researchers indicated that the healthcare industry saw a 20 percent increase in claim denial rates over the previous five years. The COVID-19 pandemic drove a lot of hospitals to a claim denial danger zone where denial rates were 10 percent or more of claims.

Analysts also pointed out that denials also made trouble for consumers, of which very few patients challenge denials even when they received in-network services. Payers also upheld initial denials in most cases, according to the analysis but a good Revenue Cycle Company would have sent through a second level of appeal with documentation supporting the service

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