Medical Billing Denials and Appeals of Marketplace Plans: A Summary of Recent Data

Medical billing denials have been more challenging ever since the launch of the Affordable Care Act (ACA). Because of this, providers can benefit from understanding the Centers for Medicare and Medicaid Services (CMS) perspective on claims denials and appeals. This can provide them with guidelines on appeals processes, denial management, and the revenue cycle KPIs that will be helpful in keeping their revenue cycle healthy. 

Information from the Kaiser Family Foundation (KFF) can be helpful in this goal. To help you understand how their reporting might support your own efforts, we’ve provided a summary of their results curated for your needs here [1].

KFF has analyzed transparency data from CMS. This data includes claims denials and appeals from non-group qualified health plans (QHPs) that are offered on HealthCare.gov. The agency requires that insurers report the reasons for claims denials down to the plan level. The ACA requires reporting of transparency data from all employer-sponsored health plans that were not grandfathered in and by non-group plans that are sold on and outside of the marketplace.

The data is intended to be a source of information for both consumers and regulators about how these plans work on a practical level. One example KFF gives is how this data could be used in monitoring compliance with the Mental Health Parity and Addiction Equity Act (MHPAEA), offering insight into behavioral health claim denial rates in comparison to other services. The information could also be useful in creating transparency for trends around surprise medical bills which are addressed by the No Surprises Act. 

Data is reported on the following topics: 

• The number of claims denied
• Enrollment and disenrollment
• Claims payment policies and practices
• Rating practices
• Enrollee and participant rights
• Cost-sharing and payments in relation to out-of-network coverage

This reporting on medical billing denials began in the 2015 plan year.

The report covers information on denials in medical billing for the 2021 calendar year that was submitted by qualified health plans on HealthCare.gov. It does not include insurers with incomplete data, insurers with fewer than 1,000 claims submitted, or stand-alone dental plans. The topics covered include:

• Claims submitted and denied
• Plan-level claims denial data
• Reasons plans have for medical billing denials
• Appeals

Claims Submitted and Denied

There were 230 major medical insurers who reported for the 2021 plan year. Of them 162 reported having received at least 1,000 in-network claims. The total was 291.6 million claims received, out of which 48.3 million were denied. This amounts to an average denial rate of in-network claims of 16.6%. 

But the denial rates had a wide range, falling anywhere between 2% and 49%. Distribution of the 162 issuers by number of denials fell out as follows: 

• Less than 10%: 41 reporting issuers 
• 10-19%: 65 reporting issuers 
• 20-29%: 39 reporting issuers 
• 30% or more of in-network claims: 17 reporting issuers 

Frequent deniers, with at least one-third of their in-network claims included:

• Meridian Health Plan (MI)
• Absolute Total Care (SC)
• Celtic Insurance (FL, IL, IN, MO, NH, TN, TX)
• Ambetter Insurance (GA, MS, NC)
• Optimum Choice (VA)
• Buckeye Community Health Plan (OH) 
• Health Net (AZ) 
• UnitedHealthcare (AZ)

There was also significant variation in denial rates by state. States with some of the highest rates include Mississippi, Alabama, Georgia, Indiana, Texas, Arizona, and New Hampshire. 

It is important to keep in mind though, that average denial rates could obscure rates that vary within that state. 

Plan-Level Claims Denial Data

Providers might also find data collected at the plan level. CMS collected limited data at the plan level, with 158 of the 162 issuers reporting plan level data on their in-network claims along with reasons for denials. This data revealed variation based on metal levels in 2021. 

• Bronze plans: 15.9% of in-network claims denied 
• Silver plans: 17.3% of in-network claims denied
• Gold Plans: 17.1% of in-network claims denied
• Platinum Plans: 11.4% of in-network claims denied
• Catastrophic plans: 19.7% of in-network claims denied

Reasons Plans Have for Medical Billing Denials

Perhaps most useful for providers will be the reasons marketplace plans have for denials in medical billing. Data was reported on multiple categories of reasons for in-network claim denials. 

• Prior authorization or referral
• Out-of-network providers
• Exclusion of service
• Medical necessity
• Other reasons

Insurers reported 44.7 million reasons for denying in-network claims, which included around 3 million denials for claims that were later paid. Here is what was found:

• The most common reason for denial wasn’t a single reason at all, and fell under the “all other reasons” category at 76.5%
• The highest identified reason was excluded service, at 13.5%
• Prior authorization or referral denials made up 8%
• Medical necessity fell at the bottom of the reasons

It is important though, to keep in mind that these totals, like the geographic data, can obscure variation at the plan level. To illustrate, 2% of all in-network claim denials were for medical necessity, but several plans with higher denial volumes (over 75,000) saw higher proportions of medical necessity denials, reaching as high as 37%. 

Appeals of Medical Billing Denials

The report also found that consumers, who sometimes have the right to independent appeal, largely weren’t taking advantage of the opportunity. Of the 48 million in-network claims that were denied, only 90,599 were appealed, amounting to a rate of less than two-tenths of a percent.

Providers who are reviewing this data should use it to inform their approach to denials, especially if they have a high level of marketplace plans in their mix. If you are looking for ways to refresh your denial management strategy, we can help.