When the insurer says ‘no’
Health insurance companies appear to be denying a growing share of patient claims. Why?
How often do insurers deny coverage?
Health insurance firms process some 5 billion claims each year for reimbursement or for pre-authorization of treatment, of which about 850 million are denied. While data from the National Association of Insurance Commissioners shows that denial rates have remained static for five years, other evidence suggests they’re rising fast. In Maryland, regulators report claim denials are up 40 percent since 2019. And in a nationwide survey last year of doctors and other health-care providers, 73 percent said denials are becoming more common.
Denials for payment and treatment can be devastating for a patient’s finances and health. Miranda Yaver, a health-policy expert at the University of Pittsburgh, interviewed a patient with immunodeficiency who was denied medication because her multiple infections were bad, but not yet life-threatening in the view of the insurer. It was “a mind-boggling assessment,” said Yaver. Anger at this process has become so widespread that after United Healthcare CEO Brian Thompson was shot dead last year, social media was flooded with users praising the killer and telling their own denial stories. “The fact that we pay into the system and then when we need it, we can’t access the care we need makes no sense,” said Robin Ginkel, a special-ed teacher in Minnesota who had a claim for back surgery denied three times. It feels like insurance companies “do this on purpose in hopes you’re going to give up.”
How do companies assess claims?
They’re typically reviewed by insurer-employed nurses—sometimes the nurses are in the U.S., sometimes overseas—to make sure claims are “medically necessary” and don’t involve “unproven procedures.” In some states, a doctor must sign off on a denial. Insurance firms say this process ensures that care is appropriate, efficient, and cost-effective. But critics argue the process is more about reducing costs for insurers than providing quality care. Dr. Debby Day, a former claims reviewer at Cigna, said that in 2021 she was told by her bosses to work faster or risk being fired. Day said she wasn’t meeting the company’s productivity standards, which allow for a few minutes per claim, because she was spending time fixing error-filled denials from nurses in the Philippines. In one case, a nurse recommended denying treatment for a neck ultrasound because the treatment wasn’t medically necessary; Day noticed the nurse had gotten the body part wrong. “Deny, deny, deny. That’s how you hit your numbers,” Day, who retired from Cigna in 2022, told ProPublica. Cigna called Day a “disgruntled former employee” and said its doctors did not “rubber-stamp” nurses’ denial recommendations.
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Do many patients appeal denials?
Because so many people are daunted by the complexity of the process, which often requires making long phone calls and collecting evidence from medical studies, fewer than 1 percent of denied claims are appealed. “It’s hard to fight a big insurance company,” said Larry Levitt, of health research nonprofit KFF. “To even begin, you need to understand the gobbledygook in the paperwork.” Many patients end up paying for care out of their own pocket, or simply forgoing treatment. Yet of those claims that are appealed, up to three-quarters are approved. Doctors told Missouri resident Edward Stratton, 65, in 2023 that he needed a transplant after cancer treatments destroyed his liver. His insurer, Elevance Health, denied the claim, saying a new liver doesn’t improve outcomes for colorectal cancer patients—even though Stratton no longer had cancer. He appealed again in 2024, copying regulators, Elevance board members, and journalists on his email, and stating that another denial would lead to his death. Elevance overturned the denial. “This appeal saved my life,” said Stratton.
How do insurers justify denial rates?
They blame doctors and other providers, for submitting often incomplete or inaccurate paperwork and for recommending expensive or unnecessary treatments and procedures. A 2018 study of claims from 1.3 million patients in Washington state found that in a single year, more than 600,000 patients underwent a treatment they didn’t need—at a collective cost of $282 million. Insurance companies also dismiss the argument that they make money by nixing claims, noting the industry’s relatively small profits. In 2021, the sector had a 4 percent net-profit margin, compared with nonprofit hospitals’ nearly 11 percent margin and for-profit hospitals’ 12 percent. “I’m glad people are voicing their anger against insurers,” said Rice University economist Vivian Ho. “But they should be directing equal anger against hospitals, particularly since so many are nonprofit.”
Are lawmakers trying to reform the process?
Ten states passed legislation last year aiming to limit pre-authorization requests, improve data about their usage, or shorten delays in processing. New Jersey now mandates that insurers decide requests within three days, or 24 hours if marked urgent. The 2010 Affordable Care Act also authorized state-level Consumer Assistance Programs to help residents appeal denials, but no funding has been allocated for them in recent years. Still, many states have set up offices without federal grants: Maryland’s program helped consumers file 11,466 appeals in 2023, half of which were successful. A similar state program launched in Pennsylvania last year has so far succeeded in overturning and reinstating coverage in about 50 percent of cases. But across the U.S., many patients are on their own or don’t know whom to turn to when a claim is denied. “It’s exhausting,” said Ginkel, the Minnesota teacher, who recently switched insurance companies in a bid to get her back surgery approved. “I can’t keep going like this.”
Automating rejections
Insurers are increasingly turning to artificial intelligence to speed up the claims process. But several recently filed class-action lawsuits claim that the technology is also being used to push up denial rates. Humana and UnitedHealthcare are both accused of using an AI model called nH Predict—developed by UnitedHealth subsidiary NaviHealth—to wrongly deny coverage of essential care to disabled and elderly patients covered under Medicare Advantage. One suit alleges that UnitedHealthcare used the technology despite knowing it had a 90 percent error rate. Meanwhile, a suit filed against Cigna in California says the insurer denied over 300,000 claims in two months—about 1.2 seconds per claim—instead of individually reviewing cases as required under state law. The three companies deny any wrongdoing and say a human is always involved in claim decisions. But Amber Lynch, a former NaviHealth case manager who was fired for failing to meet performance goals, said she was expected to precisely follow the algorithm’s coverage decisions. “By the end of my time at NaviHealth,” said Lynch, “I realized I’m not an advocate, I’m just a moneymaker for this company.”
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