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Data shows insurance claim denials up as healthcare costs

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Patients say coverage decisions have negatively affected

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health

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Advocate says resolving claims has become more difficult

(Adds graphic in related content, updates headline)

By Stephanie Kelly and Julie Steenhuysen

NEW YORK, Dec 9 (Reuters) - Jen Watson, a 41-year-old

mother in Federal Way, Washington, has worked for years with her

doctor to find the right medications to deal with her multiple

chronic illnesses, which include epilepsy and fibromyalgia.

Her doctor had found some medications that could reduce

Watson's nerve pain, but Watson says her UnitedHealthcare

Medicaid plan refused to cover the drugs. And because of her

pain, it has been hard for Watson to find work.

"I've been struggling to find work in part because I can't

stand for more than 15 minutes and end up in serious pain very

quickly because my symptoms aren't well managed," Watson told

Reuters.

The killing last week of a powerful health insurance

executive has ignited an outpouring of anger from Americans

struggling to receive and pay for medical care.

Police are still hunting for the man suspected of killing

Brian Thompson, chief executive of UnitedHealthcare, and have

not determined a motive. But the attack called fresh attention

to deepening frustrations over health coverage.

Recent data show that patients are now even more likely to

have their claims denied, pay more for premiums and medical

visits, and face unexpected costs for care they thought was

covered by their health plan. Rising costs are attributed in

part to consolidation of doctors' practices, hospitals and

insurers.

UnitedHealthcare, part of UnitedHealth Group ( UNH ), is the

largest manager of health benefits, followed by Cigna ( CI ) and

CVS Health ( CVS ).

"It's a very shocking event. But it's also an opportunity

for people to vent about issues that have been of great concern

to many people," said Tahneer Oksman, a professor at Marymount

Manhattan College's communications department in New York.

Americans pay more for health care than any other country

and over the past five years, spending on insurance premiums,

out-of-pocket co-payments, pharmaceuticals and hospital services

has increased, government data shows.

Shares of UnitedHealth ( UNH ) have nearly doubled over the last

five years. During the week of the shooting, UnitedHealth ( UNH ) shares

fell by more than 10% through Friday.

UnitedHealth ( UNH ), CVS and Cigna ( CI ) did not provide a comment for

this story.

Insurance industry trade group AHIP said in an emailed

statement that health plans, providers and drugmakers share

responsibility to make care as affordable as possible and easier

to navigate.

"Health plans are working to protect patients from the

full impact of rising costs while connecting them to care that

is safe, evidence-based and coordinated," the group said.

Insurers who manage health benefits and drug benefits say

that they negotiate down prices of doctor visits, hospital stays

and costly medications. Most plans are sponsored by employer or

government clients who foot part of the bill and have a say in

what gets covered.

Kevin Gade, COO at investment firm Bahl & Gaynor, which owns

about 2.6% of UnitedHealth ( UNH ) shares, said companies like

UnitedHealth ( UNH ) play an important role in providing critical and

needed care for all patients within an inefficient U.S.

healthcare system that needs to evolve.

"Unfortunately, when you're dealing with people's lives,

there is a reality that there will be hiccups along the way," he

said.

Justine, 51, a UnitedHealthcare customer who works at a

nonprofit in New York City, was diagnosed with breast cancer in

2017 and underwent a double mastectomy in 2018. She asked that

her last name be withheld for privacy reasons.

A year after surgery, she developed lymphedema, in which

fluid builds up in her arm that can lead to infections and is

treated by being fitted with custom-made compression sleeves.

Her employer-based insurance from UnitedHealthcare approved

the sleeves, which cost $4,000 for a night sleeve, and several

hundred dollars for a daytime sleeve replaced every three or

four months.

But the company that made them said UnitedHealthcare failed

to pay, citing various paperwork issues. "That continued for a

long time," said Justine. "I kept feeling like, is this a run

out the clock situation?"

The Patient Advocate Foundation, a charity that provides

patient claims aid and financial assistance, has found that

cases have gotten much more difficult to resolve.

In 2018, a case manager would need to initiate on average 16

phone calls or emails to resolve a claim; now, it's 27, said

Caitlin Donovan, the group's spokesperson.

"The American health insurance industry is becoming more

complicated to navigate, negotiate and try to appeal," Donovan

said.

CLAIMS DENIALS RISE

The 2010 Affordable Care Act, commonly known as Obamacare,

set new baselines for who and what insurance plans must cover.

As costs have risen, insurers increasingly turned to the prior

authorization process, vetting requests for medical services

before agreeing to pay.

Prior authorizations were deployed 46 million times in 2022,

up from 37 million in 2019, a KFF analysis of privately managed

Medicare Advantage plans for people aged 65 and older or who are

disabled found. CVS denied 13% of such requests while Elevance's

Anthem Blue Cross Blue Shield denied 4.2%.

UnitedHealthcare denied 8.7%.

Only about 10% of patients appeal these denials, and of

those challenges, about one-third fail, KFF said.

In an American Medical Association 2023 survey, 94% of

physicians said prior authorization delayed care, and 78% said

it sometimes led to patients abandoning treatment. Nearly 1 in 4

reported it had resulted in a serious adverse event for patients

and 95% reported it raised physician burnout.

Denials of health claims also increased, rising 31% in 2024

from 2022, according to a 2024 survey by credit firm Experian of

210 healthcare staff responsible for billing and reimbursement.

Patients who are denied claims appeals have few avenues of

legal redress after the insurer's own process. Federal law for

employer-sponsored plans limits damages to the amount of a

denied claim, which means few law firms are inclined to take

such cases, said Sara Haviva Mark, a lawyer who specializes in

representing people whose claims are denied.

In the KFF survey, 18% said their health plans did not pay

for care they thought was covered in the prior 12 months.

Rachel Benzoni, a 37-year-old doctoral student in Omaha,

Nebraska, said she has watched loved ones and friends struggle

to navigate the healthcare system, and has had issues receiving

coverage under UnitedHealthcare for routine procedures including

dental care.

"I recently paid nearly $1,000 to get periodontal work done,

as United denied my entire claim," she said, adding that they

did not give a reason for the denial beyond that the procedure

was not covered.