A lot of
people suspect insurance companies systematically and fraudulently deny perfectly
valid claims for some nefarious, greed-driven reason, and then blame someone
else for it – e.g., missing information from physician; or your claim was never received; or hospital miscoding. Our breathless media and too-often unprincipled
politicians stoke this suspicion weekly if not more often. So people who trust that our media and
politicians are truth-tellers naturally come to believe these suspicions
are all true.
But as we
so often see with media and politicians’ stories – they’re not all true.
My opinion? Most claims submitted are valid claims. And systematic denial of valid claims is an urban legend.
Questioning
the facts of a claim happens all the time. This is done to ensure the facts are known so that the
correct reimbursement is made. Questioning
the facts of a claim does not imply that hospitals or physicians are always
trying to pass bogus claims. They
aren’t. Nor does it mean the insurance
companies are always deliberately engaged in wrongful denials. They aren’t. If otherwise, there would be clear evidence. If that elephant were really inside the refrigerator,
we'd see her tracks in the jello. Those tracks aren’t there.
This is not
to say there is no insurance fraud; of course there is. Insurance fraud is committed by insured
persons; by providers of medical services; and by employees of claims
administrators. Insurance fraud exists in Medicare and Medicaid; in the
so-called national, single-payer plans around the world; and in private
insurance schemes. Fraud blooms wherever there is lax vigilance. But it
is simply wrong to cry “fraud” any time your claim is denied or your
reimbursement is less than you want it to be. When those things happen, the most likely reason is (1)
your policy doesn’t cover the expense submitted or (2) the reimbursement is
correctly calculated and you are disappointed, or (3) someone made an error
that can be corrected.
At one time
I was chief of benefits for a very large organization (more than 40,000 members). I saw claims denied or
"pended" when the physician's office submitted incomplete or
incorrect info – a correctable error.
I ALSO saw correctable processing errors made by our
administrators. I saw these claims
when the members contacted my office for help. In most cases, the cause was
human error, which for insurance reimbursement is correctable. And for that reason, it was never helpful in
resolving such matters when either party insisted on accusing the other of
intent to defraud.
I can bore
you with examples but here are two: (1) OP surgery performed in the
surgeon's Manhattan office, but billed from the suburban Connecticut office - a
different UCR area. That caused the claim to be underpaid. My office found the problem, and got it
fixed. (2) female employee prescribed
sildenafil acetate (Viagra), but reimbursement was denied. The denial was
reversed after my office got involved. Reason? The physician had
prescribed the medication for pulmonary hypertension - the very heart condition
sildenafil acetate was originally developed to treat - but the administrator overlooked
that fact likely because the drug had only recently completed its clinical
trials for the heart condition. These examples were "typical" for
my office in that they illustrate (1) how important it is to get all the relevant
facts when resolving claims and (2) despite the best of intentions, people make mistakes.
There are
reliable industry-wide statistics that support what I observed in my
office.
According
to Athenahealth the median "first pass" rate (reimbursement based on
the info submitted with the original claim) is running nearly 96% of all claims
for the top 10 commercial insurers in 2015. Their median denial rate for the
same period is running about 4% of all claims. About the same results emerged
for all of 2014. That is a LOT of data. These data certainly do not
suggest that hospitals and physicians' offices are submitting mostly incomplete
or incorrect claims; nor do they suggest insurers are systematically denying a
suspicious number of claims. In fact, as my two examples show, some
fraction of claims initially denied are eventually approved and paid on the
basis of additional - or corrected - information.
The
Athenahealth data is here (Athenahealth's customers are hospitals and physician
offices; it is not affiliated with insurers)
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Healthcare
reimbursement challenges and payer responsiveness analyzed in athenahealth’s
2015 PayerView annual report.
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Preview by Yahoo
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So I
don't believe that insurers systematically deny valid claims; and I
don't believe medical service providers systematically submit
incomplete, incorrectly-coded, or even fraudulent claims. There is a relatively small number of such claims but that does not mean the cause is systematic or deliberate. I think it's urban legend that says otherwise. The urban legend may be popular, even deliciously conspiratorial; but it's wrong. The truth is actually quite mundane.
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