Claims Denials and Appeals in ACA Marketplace Plans

Issue Brief
  1. The ACA transparency in coverage data reporting requirements for marketplace plans are at Section 1311(e)(3); Section 2715A applies the same requirements to group health plans and issuers outside of the marketplace.

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  2. Instead, for certain data categories, issuers are required to provide a URL link to general information about the insurer and its policies and procedures.

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  3. The transparency files also include data on QHP enrollment and disenrollment at the issuer level. Enrollment and disenrollment data are not reported by plans, but reflect information collected by the healthcare.gov Multidimensional Insurance Data Analytics System (MIDAS). The MIDAS enrollment and disenrollment data are posted in other public use files, as well, with data displayed at the plan level.

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  4. The Maryland Insurance Administration (MIA) requires semi-annual reporting of data for health care benefits provided under insurance policies, plans, contracts and certificates issued or delivered in the state, including claims under medical plans, TPAs, dental plans, prescription drug plans, Medicare Supplement plans, and others. Payers must submit data on the number of “clean claims” submitted and denied, including the most prevalent reason for the denial of claims. “Clean claims” is a term defined under Maryland statute, though filers can report data based on their own less-stringent definition of Clean Claims. From time to time, MIA compiles data into a summary report, the most recent report posted is for calendar year 2015. In that year, Maryland plans report receiving 60.4 million claims, of which 52.7 million (87%) were clean claims, and 15.6% of all claims (including 5.1% of clean claims) were denied. The average amount per processed clean claim was approximately $192 in 2015. The report does not provide information on the average amount per denied claim. HMOs as a group denied more claims (21.1%) compared to insurers (10.5%). The top five reason categories for claims denials in that year were (1) non-covered expense, not reimbursable due to deductible of copay (36.8%); duplicate claim (19.8%); miscellaneous, other reasons (11.2%); additional miscellaneous information needed from patient or provider to process claims (9.1%); and UCR allowable fee amount exceeded, coding problem including bundling or incidental procedures (5%).

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  5. This total does not include claims submitted to Oxford HMO or Oxford Insurance. The report card shows the number of denials, but not the total number of claims for these two insurers.

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  6. The Connecticut report card also provides information on appeals of utilization review denials. Of 293,000 utilization reviews requested by plans, nearly 54,000 were denied, or about 18%. Consumers appealed just over 5700 UR denials, or about 11%, and insurers reversed the denial at appeal 38% of the time, on average.

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  7. ACA transparency data reporting instructions for claims submitted in a calendar year read as follows: “Enter the number of claims received by an issuer asking for a payment or reimbursement by or on behalf of an in-network health care provider (such as a hospital, physician, or pharmacy) that is contracted to be part of the network for an issuer (such as an HMO or PPO). Claims should be counted by date of service (DOS).”

    Instructions for claims denied in a calendar year read as follows: “Enter the number of claims received by an issuer asking for a payment or reimbursement by or on behalf of an in-network health care provider (such as a hospital or doctor) that is contracted to be part of the network for an issuer (such as an HMO or PPO) that the issuer subsequently denied. A claim means any individual line of service within a bill for services (medical and pharmacy, including pharmacy point of sale). Include claims for all QHPs in FFMs and SBM-FPs that fall under the reporting HIOS ID. If the issuer has more than one HIOS ID, it should submit a separate spreadsheet for each HIOS ID. Do not include claims that were pended for additional information and subsequently paid. Do not include out-of-network claims. Include all denials in the total number of claims denied in calendar year 2016. This includes, but is not limited to: Pediatric vision and dental denials; Partial denials; Denials due to ineligibility; Denials due to incorrect submission; Denials for incorrect billing; and Duplicate claims.”

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  8. For example, in addition to reporting on patient cost liability for all out-of-network claims, issuers could report on the number of claims from out-of-network physicians submitted during an inpatient stay or outpatient procedure at an in-network hospital or facility.

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  9. Under current federal regulations, published in June 2011, issuers in most states are subject to state appeals laws that meet NAIC-established minimum standards, including a requirement that the external reviewer must be independent and not selected by either the health plan or the consumer. However, in six states (Alabama, Florida, Georgia, Pennsylvania, Texas, and Wisconsin) a federally defined external review process applies. In these states, issuers can decide on a case-by-case basis whether to follow an external review process established by the U.S. Department of Labor (DOL), or one established by the U.S. Department of Health and Human Services (HHS). Under the DOL process, the issuer must select and contract with at least 3 external review organizations, then randomly assign external reviews among them. Under the HHS process, the issuer submits the external appeal to a review entity contracted by the federal government.  In addition, under the federally defined external review process, the type of denials eligible for external review is limited to denials based on medical necessity or that otherwise involve use of medical judgment by the plan. This narrow scope of eligibility was described as temporary. The original ACA appeals regulation, published in July 2010, made all types of denials eligible for external review, but a year later, the regulation was amended to suspend this scope of eligibility and temporarily replace it with the narrower scope. This suspension was adopted to give the marketplace time to adjust to providing external review. The 2011 regulation also “welcome[d] any data on external review claims actually performed” and stated “the Departments expect that the suspension will be lifted by January 1, 2014, when other consumer protections under the Affordable “Care Act take effect…”

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  10. U.S. Department of Health and Human Services, Office of Inspector General, “Medicare Advantage Appeal Outcomes and Audit Findings Raise Concerns about Service and Payment Denials,” September 2018.

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