For many patients, a denial by their health insurance provider is more than a financial burden; it’s a matter of life and death.
A new study by the KFF, an independent source for health policy research, polling and news, found that 58% of insured adults have experienced a problem using their health insurance, including being denied claims. The study also found that Alabama had the highest initial denial rate for in-network claims by HealthCare.gov insurers in 2023. That average in-network denial rate was 34%.
According to the study, the state’s largest insurer, Blue Cross Blue Shield (BCBS) of Alabama, had the highest initial denial rate in the country, with a 35% denial rate of in-network claims, or 4,533,017 initial denials.
BCBS of Alabama director of corporate communications and community relations Sophie Martin told 1819 News the numbers were misleading because they included claims that were eventually corrected and processed. Martin said the total claims denial rate is much lower, around 6%.
The KFF study showed UnitedHealth Group had a 33% rate of initial denials across 20 states, or 4,670,649 denials for Affordable Care Act patients.
The study listed reasons for denials, which included lack of prior authorization or referral, exclusion of a service, denials based on medical necessity, experimental or cosmetic procedures, administrative reasons, the enrollee’s benefit reached and unspecified reasons.
The state’s largest health system, UAB, has since announced it plans to drop UnitedHealthcare from its network.
UAB Health System CEO Dawn Bulgarella said the insurance giant’s inability to reach a reasonable compromise has made it impossible for the system to deliver the highest quality care to patients.
UnitedHealthcare reported $14.4 billion in earnings last year, with a $6 billion profit. UAB said that profit came at the expense of policyholders and healthcare providers. The system cited below-market reimbursement rates, excessive claim denials and delayed payments as reasons it is not confident in the insurer.
“United’s approach to contract negotiations has already led to breakdowns with numerous providers — and more may follow,” Bulgarella said.
UnitedHealthcare told 1819 News the allegations from UAB are false. UnitedHealthcare’s Alabama CEO, Bryan Palmer, stated that the claims by UAB are an attempt to divert attention from the health system’s higher costs.
“UAB is nearly 40% higher today than the average cost of other peer academic health systems throughout the Southeast,” Palmer stated. “Despite this, UAB is demanding an approximate 20% price hike for our commercial plans. UAB is also seeking a significant rate increase for our Medicare Advantage plans that would make them among the highest cost in our Medicare Advantage network nationally. Our goal is to reach an agreement that is affordable for consumers and employers. However, we need UAB to come to the negotiating table with a proposal consumers and employers can afford.”
UnitedHealthcare claims the costs of outpatient surgeries and colonoscopies at UAB Hospital are more than double the costs at the other 25 academic health systems in the Southeast.
A spokesperson for UnitedHealthcare told 1819 News that UAB’s recent acquisition of St. Vincent’s is another way the health system is driving up costs.
The spokesperson said that agreeing to UAB’s current proposal would result in increased premiums and out-of-pocket costs for consumers. The insurer proposed to extend its contract with UAB through September 30 to allow time for additional discussions, but UAB refused.
UnitedHealthcare’s contract with UAB is set to expire on July 31.
UnitedHealthcare and BCBS of Alabama are among over 50 health plans that signed on to simplify and reduce prior authorization requirements.
Kate Berry, the senior VP of strategic partnerships and clinical affairs at AHIP, told 1819 News that prior authorization is an important part of patient care, and streamlining that process could reduce denial rates.
“There certainly is a recognition that the process needs to work better for both patients and providers,” said Berry. “It needs to be as transparent and simple as possible to try to get the providers and their patients’ responses to prior authorization requests as quickly as possible, even in real time if the process is fully electronic.”
Martin said BCBS of Alabama has already implemented several policies to improve prior authorizations, including affirming that prior authorizations will be reviewed by a licensed, qualified clinician, improving communications to members about prior authorizations and reducing the use of prior authorizations for certain medical services.
BCBS is still working on streamlining the process for members who switch health insurance companies by honoring the prior authorizations from their previous company. The goal is to have that process in place by 2026. The insurer has also agreed to standardize provider submissions for electronic prior authorizations and fast-track responses by 2027.
“Improving the prior authorization process will help us create an efficient, affordable, and sustainable health care system for Alabama,” said Martin. “Working together – with our provider partners and across health insurers – will ensure patients receive the most effective care at a more affordable cost.”
Berry said that while the shooting death of the UnitedHealthcare CEO brought more attention to high rates of denial of claims, there is a real problem with denial of claims, and that is nothing new.
“Obviously, that was a tragic situation that happened last December, and I think that brought maybe further attention to prior authorization,” Berry said. “However, I mean, this is quite honestly not a new issue. This has created some friction between plans and providers and patients for quite some time.”
With healthcare costs rising and health plans being highly regulated, Berry said it is important for the industry to come together to do what is right for patients and to promote affordability. AHIP plans to monitor health plans to ensure they are taking the committed steps.
To connect with the author of this story or to comment, email [email protected].
Don’t miss out! Subscribe to our newsletter and get our top stories every weekday morning or become a member to gain access to exclusive content and 1819 News merch.
link