Payer Claim Denial Rates as High as 80% in ACA Marketplace

A new report finds a wide range of denial rates and low appeal rates for HealthCare.gov insurers in 2020.

Claim denial rates were as high as 80% among HealthCare.gov marketplace insurers in 2020, according to a report by Kaiser Family Foundation.

The analysis, which examines 230.9 million in-network claims across 144 major insurers for that year, finds that the average in-network claim denial rate was 18.3% (42.3 million). Denial rates ranged from 1% to 80% depending on the payer.

Additionally, researchers of the study found that individuals rarely appealed denied claims, at a rate of just one-tenth of 1%, and when they did insurers upheld their original decision 63% of the time.

Under the Affordable Care Act, marketplace plans are required to report transparency data, which includes claim denials, claims payment policies and practices, and more. The researchers, however, point to the data not being audited or used to develop other tools to help individuals compare plans, while also omitting information that could better protect consumers.

"Twelve years after enactment of the ACA, limited transparency in coverage data collected by the federal government is notable for what it doesn’t show, perhaps even more than for what it does reveal," the authors write.

The analysis found that of the 144 studied insurers, 28 had a denial rate of less than 10%, 52 died between 10% and 19%, 36 denied 20-30%, and 28 denied more than 30%.

Insurers that denied over one-third of claims included Celtic in five states (Arizona, Indiana, Missouri, Tennessee, and Texas), Molina in six states (Missouri, Mississippi, Ohio, South Carolina, Utah, and Wisconsin), and QualChoice in Arkansas and Ambetter in North Carolina, Oscar in seven states (Arizona, Florida, Mississippi, Missouri, Tennessee, Texas, and Virginia), and Meridian in Michigan.

Reasons for denying claims varied, with about 16% denied because the claim was for an excluded service, 10% due to lack of preauthorization or referral, and about 2% based on medical necessity. Among 2% of claims identified as medical necessity denials, while one in five were for behavioral health services. The majority of denials (72%) were for 'all other reasons.'

With the insurer marketplace running on competition between plans, the authors state, it's important individuals can access all of an insurer's features, including how reliable plays pay claims.

"More robust transparency data reporting, while potentially more burdensome to insurers, could provide data useful to both regulators and consumers," the researchers write.