Deny This: Guess Who Has the Highest Medical Claim Rejection Rate?

[thundley4]

By Tom Blumer (Bio | Archive)
October 6, 2009 - 00:06 ET

Oh, the establishment press will just loooooove this -- not.

From BigGovernment.com (HT Mark Levin over the airwaves this evening):

Beverly Gossage, Research Fellow for Show-Me Institute and founder of HSA Benefits Consulting wondered which insurance companies rejected the most claims. She found her answer in the AMA’s own 2008 National Health Insurer Report Card (fairly large PDF).

I'm curious. Was it Aetna? Humana?

A chart showing the major carriers and how Medicare compared to them in the study follows:

Well, well.

The Medicare denial rate found in the study was, on a weighted average basis, roughly 1.7 times that of all of the private carriers combined (99,025 divided by 2,447,216 is 4.05%; 6.85% divided by 4.05% =1.69).

You would think Medicare's sheer size might enable it to have smoother procedures with its providers that would enable it to turn down a lower percentage of claims. But no, this is the government we're talking about.

So who's the most "heartless" now? And why should Americans accept the idea of gradually being forced into a government-run system when, based on documented government experience, they will be more likely to see their claims denied?

And I didn't even get to the idea of refusals to treat in the first place, something that is present to some degree in virtually every state-run system, but is currently against the law in hospital emergency rooms in the U.S.

NewsBusters

Then let's throw this on top. 

According to their own auditors, Medicare knowingly overpays for almost everything it buys. Examples include:

-- $7,215 to rent an oxygen concentrator, when the purchase price is $600.

-- $4,018 for a standard wheelchair, while the private sector pays $1,048.

-- $1,825 for a hospital bed, compared to an Internet price of $1,071.

-- $3,335 for a respiratory pump, versus an advertised price of $1,987.

-- $82 for a diabetic supply kit, instead of a $47 price on the Web.

FoxNews

Yep, it sure makes sense to have a non-profit government run insurance plan to me.   I guess the days of $500 hammers are gone, but only because medical equipment is more profitable. 

[Deuce]

I had read an article about a study of denial rates in California, which showed drastically higher denial rates there. An average of 21%, with the highest being PacifiCare at a staggering 39.6%.

I wonder if the discrepancy is something regional (perhaps some seriously lax health insurance laws in California?) or if there's a fundamental difference in how the two studies measured things. Different definition of denial? Cherry-picked stats?

"Allowed amount equal to the billed charge and the payment equals $0"

The payment I get, "allowed amount?" I don't understand this terminology.

It is pretty curious, I was under the impression that Medicare was rank with fraud because they didn't even bother reviewing most of the claims. This seems to indicate otherwise.

edit: I suppose reason for denial is also important. A portion of denials are for duplicated claims, and obviously those are claims that should be denied.

[IassaFTots]

I had read an article about a study of denial rates in California, which showed drastically higher denial rates there. An average of 21%, with the highest being PacifiCare at a staggering 39.6%.

I wonder if the discrepancy is something regional (perhaps some seriously lax health insurance laws in California?) or if there's a fundamental difference in how the two studies measured things. Different definition of denial? Cherry-picked stats?

"Allowed amount equal to the billed charge and the payment equals $0"

The payment I get, "allowed amount?" I don't understand this terminology.

It is pretty curious, I was under the impression that Medicare was rank with fraud because they didn't even bother reviewing most of the claims. This seems to indicate otherwise.
 

edit: I suppose reason for denial is also important. A portion of denials are for duplicated claims, and obviously those are claims that should be denied.

 Allowed amount" is the amount the provider has accepted as a negotiated/contracted rate for that procedure.  Say for example a doctor bills 100, but the allowed amount, being an in network provider is 50.  Either you (if you have a deductible) or the insurance company pays that 50, and the other 50 is a write off by the physician. 

Edit: Sorry about that, somehow I got my response in the quote box. 

[thundley4]

Pacificare probably wasn't included because it doesn't have a national coverage area like the others do.

[formerlurker]

I think private health insurance carriers should release their fraud units' savings -- private insurers are far more competent at stemming provider fraud than Medicare/Medicaid, where fraud is rampant.    How many of those paid claims by Medicare were fraudulent claims?  I am willing to bet a far higher % than denied claims.

[bkg]

[my sister] That's just Republican lies and propoganda [/my sister]

[Deuce]

That could be the case - local insurers not included in the study. I seem to remember Aetna having a much lower denial rate in that study. Still higher than these national numbers though.

I  wonder about the duplicate claims. I understand they make up a significant percentage of denials. The problem is such data is not really tracked. Since Medicare doesn't review cases very thoroughly, perhaps they receive more duplicate claims (the fraud problem they have) and therefore catch more for denial? What's the reason? A private company has an incentive to deny a claim - profit margins. The government paper pusher doesn't, unless there's funding issues? Maybe Medicare is underfunded so their employees are looking to skimp on care.

Another potential for explaining the discrepancy is that Medicare naturally has the sickest patients. They make more claims and more expensive claims, more expensive claims get reviewed more thoroughly perhaps?

[IassaFTots]

I have worked for an insurance company before, processing claims.  It is feasible that it could very well be a duplication issue.  Many Medicare Participants also have addtional coverage, to cover some if not all of the difference that Medicare does not pay.  If a claim is submitted by the provider, AND the participant, and even perhaps the Third Party payor, that would result in a duplicate claim and then a denial. 

Additionally, putting my processing hat back on, I remember the common mindset was to pay claims, without doing any reasearch on whether or not it should be paid.  The thinking behind that was if you paid a claim there would not be any call back from anyone complaining, therefore you wouldn't get in trouble.  Audits were usually 10 claims out of 100, so you could still pay some correctly, and not get caught for over paying.  Now, with that being said, most insurance companies have automated the process of paying claims, and more than likely the computers are paying only those they should.