UnitedHealth Group, two Blues plans had highest denial rates for ACA health plans in 2023

A new report finds Eden Prairie-based UnitedHealth Group and two Blue Cross Blue Shield nonprofit insurers had the highest claim-denial rates among individual market health plans sold in 2023 on the federal government’s HealthCare.gov platform.

Overall, insurers in the market denied nearly 1 out of every 5 claims for payment, or 19%, for in-network services, according to the report from KFF, a California-based health policy group. It found significant variation between companies, with denial rates ranging from as low as 1% to as high as 54%.

Among insurers with a high volume of claims, Blue Cross and Blue Shield of Alabama had the highest denial rate for in-network claims at 35%, followed by UnitedHealth Group at 33%. Illinois-based Health Care Service Corp., which runs nonprofit Blue Cross plans in five states, had the third-highest denial rate at 29%.

UnitedHealth Group called the findings “grossly misleading” if applied to the entirety of its UnitedHealthcare insurance business, because the report is based on a small sample representing just 2% of the company’s total claims volume.

“Across UnitedHealthcare, we ultimately pay 98% of all claims received that are for eligible members, when submitted in a timely manner with complete, non-duplicate information,” the company said in a statement. “For the 2% of claims that are not approved, the majority are instances where the services did not meet the benefit criteria established by the plan sponsor, such as the employer, state or Centers for Medicare & Medicaid Services.”

Researchers say it’s hard to compare companies based on the results because the underlying data collected by the federal government lacks key information. The most common reason cited for the denials is “other,” according to the report, which echoes findings from previous studies that also highlighted transparency problems.

“The impact of claims denial is widely recognized by enrollees,” the report says. It cited survey results showing a majority of insured adults experienced an issue using health insurance, including denied claims. And 39% who had trouble paying medical bills said denied claims contributed to their problem.

The new study is important for analyzing one of the only public data sets about denials, a topic that’s commanded extraordinary public interest since the Dec. 4 murder of Brian Thompson, who was chief executive of UnitedHealth Group’s massive health insurance business, UnitedHealthcare.

The accused gunman in the killing did not have UnitedHealthcare coverage, yet one of the bullet casings recovered from the scene had the word “deny” written on it. The gunman’s apparent outrage at large health care companies has prompted questions about whether big insurers too often block needed patient care to boost profits.

Yet Kaye Pestaina, KFF’s director of Program on Patient and Consumer Protections, said: “In the big picture, we’re still operating from a scarce amount of information about how carriers review claims.”

All told, insurers reported receiving 425 million claims in 2023. About 92% (392 million claims) requested payment for in-network services. Of those, 73 million were ultimately denied, resulting in an average in-network denial rate of 19%. Claims that were re-submitted and eventually paid were not included in the denial rate.

But the report found consumers rarely appealed denied claims, doing so for just 1% of in-network claims. When they did appeal, insurers upheld their original decisions in 56% of cases.

Insurers denied 37% of claims for out-of-network services, according to the report. It didn’t show a clear difference with denial rates between for-profit and nonprofit insurers, Pestaina said.

The federal data on the individual market doesn’t distinguish between denials for medical services vs. medications, Pestaina said. So there’s no way to know if an insurer’s denial rate stems primarily from one popular drug moving off the health plan’s formulary.

And the dataset does not include information about denials in employer-sponsored health plans, Medicare or Medicaid — each of which is a much larger source of health insurance for Americans than the subset of the individual market covered by the new report.

“There’s no benchmark for ... the performance standard in this space,” Pestaina said. “We hear anecdotal stories about certain treatments that are denied, that arguably should not have been denied. How often is that happening? It’s difficult to come to a conclusion with the kind of ‘reason’ information we have here.”

UnitedHealth Group is a much larger insurer overall than Blue Cross of Alabama, but the companies had a similar volume of claims during 2023 in the individual market. Blue Cross of Alabama is a major player in its home state, whereas UnitedHealthcare largely dropped all individual market sales for a five-year period beginning in 2017, after famously warning of unsustainable financial losses in the market.

UnitedHealth Group said in its statement that half of 1% of all claims are denied due to clinical evidence and patient safety.

The company said a lack of industry standardization about reporting denials data means some claims might be reported as denied even when there is no impact on a member’s costs or health care. For example, UnitedHealthcare said a claim for a routine vaccine where the administrative fee was paid might show up as being denied because the claim also lists the serum for the vaccine, which does not require payment.

In December, UnitedHealth Group chief executive Andrew Witty acknowledged that health insurers, along with the employers and governments that hire them, must do more to explain the reasons behind denials.

In a statement, Blue Cross and Blue Shield of Alabama said denials can occur for a variety of reasons ranging from incorrect/missing data and use of an out-of-network health care provider to patients seeking noncovered benefits. The insurer will deny claims when they are duplicates or missed the filing deadline.

“More than 20% of 2023’s denied claims were related to filing errors, such as inaccurate administrative information, incorrect contract codes and claims filed for patients who are not Blue Cross and Blue Shield of Alabama members,” the insurer said in a statement.

In 2023, Health Care Services Corp. (HCSC) was selling to individuals in Illinois, Montana, Oklahoma and Texas. When coverage is denied for services, the company says it provides information on the reason to patients and health care providers along with guidance on how to submit an appeal.

“We put members first when reviewing claims to help them receive appropriate, covered services while being good stewards of their premium dollars,” HCSC said in a statement. “Most claims are approved.”

The new report does not draw on information about Minnesota’s individual market, because people use MNsure rather than HealthCare.gov to connect with private insurers selling coverage subsidized under the federal Affordable Care Act.

The findings about Blue Cross insurers do not apply to Eagan-based Blue Cross and Blue Shield of Minnesota, which is a separate company.

The KFF report says that following Thompson’s slaying, a national survey of 1,310 people in January showed 55% of respondents said it should be a top priority for the government to more closely regulate insurer decisions to approve or deny claims.

“While the prospect for significant changes in response to the public outrage may be limited, interest in providing the public with more transparency about how insurer claims review and appeals operate could ... better enable consumers and employers to make more informed choices when purchasing private coverage,” the report says.