ACA plans denied one-fifth of in-network claims in 2023, KFF finds

Insurers that sell Affordable Care Act plans on the federal exchange denied nearly one out of every five claims for services that should have been covered in 2023, according to new research from health policy firm KFF.

Out-of-network services were denied at an even higher rate, with more than one-third of claims refused that year.

Insurers offering plans on HealthCare.gov had huge variation in their denial rates. But nationwide, the insurers with the highest volume of in-network denials were Blue Cross Blue Shield of Alabama with 35% of claims denied; UnitedHealth with 33%; Health Care Service Corporation with 29%; Molina with 26% and Elevance with 23%. 

Insurers said the figures were misleading, given that KFF counted as ‘denied’ claims that insurers initially denied for issues like a incorrect service code before they were resubmitted or filed as a new claim and ultimately approved. The research was also based on a small sample of total claims, payers said.

Blue Cross Blue Shield of Alabama’s denial rate for correctly submitted claims for eligible members is less than 10%, while UnitedHealth’s is closer to 2%, according to spokespeople for both companies. A representative of Health Care Service Corporation said “most claims are approved” but didn’t provide an exact figure.

According to the KFF’s methodology, researchers didn’t count claims paid after an initial denial as ultimately denied. However, “claims that are denied do not necessarily indicate that services are not ultimately paid by the insurer, such as when a new claim is filed instead of resubmitted,” the methodology reads.

Animus against insurers has bubbled for a while, but seemed to reach a fever pitch late last year after the December killing of a major insurance executive set off a darkly jubilant celebration online. People on social media shared stories of times medical care was delayed or denied and called for reform to insurers’ business practices.

Yet data is sparse on insurers’ denial rates, as the companies don’t need to publicly disclose how often medical claims for coverage are refused for most of their plans. The federal marketplace set up by the ACA more than one decade ago is different, as regulators require companies to report information on claims denials and appeals (though the data as of now doesn’t include plans sold on state-based marketplaces or employer health plans).

Researchers with the KFF mined that data to find 19% of claims for in-network services that had already been provided were denied in 2023, the most recent year data is available. For out-of-network services, that share rose to 37%.

There was significant variation in in-network denials across insurers peddling plans on HealthCare.gov, ranging from 1% to 54% in some states, researchers found. Most insurers denied between 10% and 19% of claims, while fewer than 29 payers denied more than 30%.

Insurance groups said some denials are necessary to curb improper or unnecessary medical services.

“While we recognize it can be frustrating, there are reasons for the small percentage of claims that may be subject to denials or further review,” a spokesperson for AHIP, the national health insurance lobby, said in a statement.

Those reasons include incorrect information on claims submissions from providers, claims for unsafe treatments or claims for services that aren’t covered by a person’s health benefit, the spokesperson said.

The KFF study found in 2023 only a small percentage — 6% — of in-network claims were denied for a lack of medical necessity.

The most common reason for denials was a general “other” rationale, which was cited in 34% of in-network refusals. That was followed by administrative issues, in 18% of cases; excluded services, in 16%; exceeding benefit limits, in 12%; and a lack of prior authorization or physician referral, in 9%.

Consumers appealed only 1% of denied in-network claims to their insurer, the KFF found. Following an appeal, less than half (44%) of denials were overturned.

Insurance executives have acknowledged widespread discontent with the healthcare industry following the killing of UnitedHealthcare CEO Brian Thompson.

During a conference call this month to discuss UnitedHealth’s financial results for the fourth quarter, CEO Andrew Witty said the company will try to improve processes that cause member dissatisfaction, like claims processing and procedure approvals. Elevance and Cigna have also pledged to address pain points with their plans.

Despite concerns that denials could be increasing due to insurers adopting technology to automate claims reviews, denial rates for in-network claims stayed relatively steady since 2015, the KFF found. That runs opposite to physician’s reported experience: Nearly three in four providers surveyed by Experian Health said the number of claims denied by payers shot up between 2022 and 2024, according to a survey published last fall.