Healthcare.gov marketplace insurers denied nearly one out of every five claims (18%) submitted for in-network services in 2020, though why the denial rates are so high and the ultimate consequences for consumers are difficult to access from the publicly available data, a new KFF analysis finds.
The Affordable Care Act requires insurers to report data about claims denials and appeals to encourage transparency about how insurance coverage works for enrollees. The analysis examines data released by the Centers for Medicare and Medicaid Services on more than 230 million claims submitted to 144 insurers selling marketplace coverage in 2020, the most recent year available.
The analysis finds a huge variation across insurers, which have average denial rates as low as 1% and as high as 80%. Denial rates also vary by state, though insurers within the same state often show wide variations as well. In Florida, for example, the average denial rate was 15%, but the three insurers with the largest market share of enrollees reported denial rates of 10.5% (Florida BCBS), 11.1% (Health Options), and 27.9% (Celtic Insurance).
The CMS data include some information about why in-network claims are denied, though the vast majority (72%) fall into a broad category of “all other reasons,” likely including administrative or paperwork errors and other issues.
Relatively few claims cite a specific reason such as lack of prior authorization or referral (10%), an excluded service (16%) or lack of medical necessity (2%). Among the claims denied for reasons of medical necessity, about 1 in 5 involved behavioral health services.
Consumers appealed few of the denied in-network claims in 2020, with fewer than 61,000 appeals in 2020, reflecting just over one-tenth of 1% of those denials. Following those appeals, insurers usually upheld their initial denials (63%), and consumers rarely took the next step to file an external appeal.
The analysis, as well as data files with the insurer- and state-specific information, is available online.