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Your doctor says you need an expensive treatment, but your health insurer says they're not going to pay.

It's not clear how often consumers confront this dreaded scenario. When it happens, patient advocates say you shouldn't always accept the health plan's coverage denial as the final word.

They recommend asking insurers and health care providers two questions: Why is the service not being covered? And can the decision be reversed?

If this yields unsatisfactory answers, there are more options, including filing a formal appeal, calling regulators and asking employers to intervene if it's for job-based coverage.

"I think step one is to try and see, informally, if you can fix it," said Karen Pollitz, co-director of the Program on Patient and Consumer Protections at the Kaiser Family Foundation. "When a problem does arise, I usually pick up the phone — I wait on hold for however much hold music they can play for me — and I ask if they can reconsider."

In July, the California-based foundation published an annual report that's one of the more prominent — albeit limited — assessments of coverage denials in health insurance.

Using 2020 data from health plans sold on the federal government's marketplace, researchers calculated that insurers denied an average of about 18% of in-network claims that year. Denial rates varied substantially across insurers, from a low of 1% to a high of more than 80%.

The Kaiser report only looked at denials in coverage sold to individuals, which is estimated at less than 6% of the U.S. population. The federal marketplace data, meanwhile, covers enrollees in just 33 states — a group that doesn't include Minnesota.

"The denial rate that is reported for marketplace plans strikes me as substantial," Pollitz said. "We don't have any kind of baseline comparison, like [the] rate in employer-sponsored coverage, which is what most people have."

Why some claims are denied

The rates, however, don't reflect whether the claims ultimately end up getting paid, said Kristine Grow, a spokeswoman for America's Health Insurance Plans, a trade group for health insurers. Denials can happen because health care providers didn't provide sufficient information, the claim lacked prior authorization or a referral or a particular service is excluded from coverage, said Lucas Nesse, chief executive of the Minnesota Council of Health Plans, a trade group for the state's nonprofit insurers.

"Denials commonly result in delays in payments to providers and sometimes require doctors to resubmit claims," Nesse said in a statement.

Yet, there is a subset of denials in which patients are financially responsible for huge medical bills, said Jonathon Hess, chief executive of Athos Health. Neither health care providers nor insurers publicly report information on these denials, Hess said, which makes it impossible for outsiders to know exactly how many people are left confronting tens of thousands of dollars in uncovered costs.

That's why Cancer Legal Care, an Oakdale-based nonprofit that provides free legal services to Minnesotans with cancer, launched a program a few years ago to help oncology patients seek reversals when health plans deny coverage.

Since 2020, the program helped 31 patients win coverage for about $1.8 million worth of care.

"Their denials were for a wide variety of reasons and our clients and their providers were unsuccessful in getting the denials overturned," said Bill Foley, a health insurance advocate with Cancer Legal Care. The nonprofit group "made a commitment to this by hiring a couple uniquely qualified attorneys to help develop and manage the program."

Where to start if denied

Not every medical service is going to be covered, Foley said. But patients who review their health plan contract language and think coverage was erroneously denied have options for disputing it.

Even before an appeal, patients should talk to their health plan and health care providers to see if there might be a way to get the situation resolved, since denials can stem from billing errors that can be fixed.

Insurers have a process for internal and then external appeals. To make their case, consumers should obtain and review health plan materials that spell out the details of their coverage, Foley said. These are detailed documents that routinely exceed 100 pages in length, he noted, not the benefit summaries spanning just a few pages that enrollees usually see.

"If you keep running into dead ends, you need someone who can advocate for you," Foley said. "Your CFO placing a call to the insurer, or your benefits manager placing a phone call to the broker who signed your company up with the insurer — those aren't the first places to go, but they may be able to get your claim reviewed by a higher level executive at the health plan."

What if an internal appeal fails?

After trying an internal appeal with the insurer, people with fully insured health plans can seek external appeals by submitting a request to the Minnesota Department of Commerce or submitting it to the Minnesota Department of Health. Some employer plans are regulated by the federal government.

The state Commerce Department has staff to help consumers determine which agency regulates their health plan and therefore should field their concern, said Julia Dreier, deputy commissioner for the department's insurance division.

Federal data suggest that relatively few people try formal appeals in response to denied claims, said Amy Monahan, an expert in employee benefits law at the University of Minnesota. That's potentially a missed opportunity for people with fully insured health plans in Minnesota, Monahan said, because state court rules here for external appeals are more consumer-friendly than in other states.

Why coverage may differ

With fully insured plans, insurers take the financial risk for the cost of claims. While individuals as well as many small to midsize businesses buy fully insured coverage, many employers — particularly large multistate companies — run self-insured plans regulated by the federal government.

Increasingly, health insurers are adopting guidance documents that specify the circumstances in which they will provide coverage for emerging and expensive treatments, Monahan said. This "rulification of medical necessity," she said, is a growing problem for patients because they're forced to argue "about whether you satisfy the list, not about whether this is an appropriate medical treatment."

"You really want to make sure you see that document … because it's going to tell you the basis on which the insurer is evaluating your claim," Monahan said. She added: "There aren't any great comprehensive sources that I'm aware of that tell you on average the percentage of medical claims that are denied."

How Minnesota insurers stack up

The Kaiser Family Foundation report found Bloomington-based Bright Health had denial rates above 18% on individual market coverage in six of eight states where it operated during 2020. The insurer did not respond to questions on the findings.

Minnetonka-based Medica had above-average denials for its individual market business in Kansas, Missouri and Oklahoma, Kaiser reported.

Using the foundation's methodology, the Star Tribune looked at regulatory filings for Minnesota carriers in the individual market and found they were less likely to deny claims in 2020. The lowest rate was 6.4% at Bloomington-based HealthPartners, according to the Star Tribune review, while the high was 15.5% at Medica.

The insurers said they could not verify the Star Tribune's calculations.

In general, Medica said it wouldn't be surprising if the insurer's denial rate was lower in Minnesota than in other states because health care providers here have worked with the nonprofit health plan for many years. Through experience, doctors and hospitals learn Medica's rules for submitting a bill, the insurer says, and when an authorization or referral is required.

"In states where we are developing relationships with providers, we do see more denials for incorrect or incomplete billing, missing referrals or for out-of-network services," Medica said in a statement. "Not every denial is a clinical decision. Many, if not most, are administrative."

At HealthPartners, officials said they work proactively with members and health care providers to avoid unexpected denials, which in 2021 resulted in a claim denial rate of 3.5% for all individual market health plans. A chunk of HealthPartners subscribers receive care from hospitals and clinics that are owned by the nonprofit insurer.

"Contracted providers and health plans operate with contracts and administrative policies," the insurer said in a statement. "If a contracted provider's claim is denied for coding or submission problems, the provider can't seek full payment from their patient. Claims denied for other reasons can be billed to the patient."

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