Mary Chris Jaklevic, AHCJ’s health beat leader for patient safety, contributed to this article.

In the past year, journalists and health researchers have uncovered troubling facts about how health insurers fail members by delaying or denying care through prior authorization. Also called prior approval, this process is a cost-cutting tool that health insurers use to require patients or doctors to get an okay before agreeing to pay for tests, procedures and prescription drugs, as Lauren Sausser reported for KFF Health News in August. 

Among many significant problems with prior approval, the biggest may be that both patients and doctors must wait while insurers review the requests, which can take days, weeks or months, according to the American Medical Association. It can result in denials, delays and requests for a different test, procedure or drug. Delaying care exacerbates illnesses and can even lead to death, the Association said in a March report.

Reporting about prior authorization is crucial because: 

• It shows how health insurers often put profit over patient care and how having health insurance does not guarantee coverage. 
• Precise numbers and the frequency of health insurers’ denied claims are closely held secrets, as ProPublica’s Robin Fields reported in June.
• Health insurers deny an estimated 10% to 20% of all claims received, Fields noted, adding that such percentages obscure how denial rates can vary from one plan to another or across different medical services. A good source of data comes from KFF, which published “Claims Denials and Appeals in ACA Marketplace Plans in 2021” on Febuary 9, 2023. 
• When health insurers deny claims, the appeals process is so onerous and complex that few patients do so, Cheryl Clark reported for ProPublica last month. KFF’s February report showed that consumers enrolled in plans under the Affordable Care Act appealed less than two-tenths of 1% of denied in-network claims in 2021, and insurers upheld most (59%) denials on appeal.

Insured consumers left uncovered

Since August 2022, two investigative news organizations, ProPublica and The Capitol Forum, have collaborated to report on insurers’ denial rates in a series titled “Uncovered: How the insurance industry denies coverage to patients.” On August 18, 2022, ProPublica’s David Armstrong and Maya Miller and The Capitol Forum’s Patrick Rucker explained in this article, “Do You Have Insights Into Health Insurance Denials? Help Us Report on the System,” that having health insurance does not guarantee coverage for care. Also, they noted, when patients push back, they face significant obstacles. “Challenging the insurance company can require filing an appeal with the insurer, requesting an independent medical review or even filing a lawsuit,” they wrote.

In one story, “UnitedHealthcare Tried to Deny Coverage to a Chronically Ill Patient. He Fought Back, Exposing the Insurer’s Inner Workings,” Armstrong, Miller and Rucker detailed how UnitedHealthcare, the nation’s largest health insurer, flagged expensive claims for increased scrutiny. The patient, Christopher McNaughton, had ulcerative colitis that caused severe arthritis, debilitating diarrhea, numbing fatigue and life-threatening blood clots, they reported. His medical bills were totaling almost $2 million annually and UnitedHealthcare decided it would not pay for what it determined were costly drugs. His fight to get coverage exposed the insurer’s hidden procedures for rejecting such costly claims. 

In another article, Armstrong, Miller and Rucker reported that over two months last year, the health insurer Cigna denied more than 300,000 requests for payment using a system called PXDX. With PXDX, Cigna’s physician reviewers spent an average of 1.2 seconds on each case, allowing them to reject claims instantly on medical grounds without opening each patient’s files and leaving Cigna members with unexpected bills, ProPublica reported. 

To avoid unfair denials, insurance laws and regulations in many states require health insurers’ medical directors to examine patient records and review coverage policies before denying claims, regulators told ProPublica. In response, Cigna said the reporting was biased and incomplete.

In her article, Sausser noted that a retired physician in Kentucky said health insurers collect premiums and then don’t pay claims, adding, “That’s how they make money.” Previously, the retired physician worked as a medical claims reviewer for Humana and later became a whistleblower who testified before a Congressional subcommittee in 2009. 

Sausser also quoted Brad D. Constant, M.D., a gastroenterologist and assistant professor at Colorado Children’s Hospital, whose research showed prior authorization can increase the chances that children with inflammatory bowel disease will need hospitalization. 

In a survey of its members, the American Medical Association confirmed that prior authorization denials exacerbate patients’ conditions. One third of the 1,001 physician respondents said prior authorization led to serious adverse events for patients; 25% said it led to a patient’s hospitalization; 19% said it led to a life-threatening event or required intervention to prevent permanent damage; and 9% said it led to a patient’s disability or permanent bodily damage, congenital anomaly or birth defect or death.

Scarce data on prior authorization denials 

To estimate the frequency of denials, ProPublica’s Fields reported that health insurers reject about 10% to 20% of all claims received, adding that such percentages shed no light on how denials vary from one plan to another or across different medical services.

“There’s nowhere that a consumer or an employer can go to look up all insurers’ denial rates — let alone whether a particular company is likely to decline to pay for procedures or drugs that its plans appear to cover,” she wrote. “The lack of transparency is especially galling because state and federal regulators have the power to fix it, but haven’t.”

Citing KFF’s February report, Fields noted that almost 17% of in-network claims were denied in 2021 but that insurers’ denial rates varied widely and ranged from 2% to 49%. Among in-network claims, KFF reported that about 14% were denied because the claim was for an excluded service, 8% were due to lack of preauthorization or referral, and about 2% were based on medical necessity. 

And consumers enrolled in these plans appealed less than two-tenths of 1% of denied in-network claims, and insurers upheld most (59%) denials on appeal, the KFF report showed. 

The complex and onerous appeals process

One of the most frustrating aspects of denials is the appeals process, as Cheryl Clark showed in her article, “I Set Out to Create a Simple Map for How to Appeal Your Insurance Denial. Instead, I Found a Mind-Boggling Labyrinth.” Both insurers and regulators have made filing an appeal so complicated that only a tiny percentage of patients ever do so, she noted. 

“The central problem: There are many kinds of insurance in the U.S., and they have different processes for appealing a denial,” she wrote. “And no lawmakers or regulators in state and federal governments have forced all insurers to follow one simple standard.”