There are a great number of studies that point out the disadvantages of medical treatment delays due to insurance claim denials in various fields of medicine. The denials can lead to advancement of severe disease to treatment not even being administered due to financial strain. In addition, payers are constantly adjusting their denial strategy.¹
There are many challenges of dealing with a denial including but not limited to¹:
1. The justification of the denial may not be clear
2. Different medical necessity guidelines may be used depending on the insurer's preference
3. Interpretation of the guidelines vary
4. Insurers may not follow their own guidelines
5. Hospitals may need to depend on doctors who lack the same level of financial incentive to reduce denials
Insurance companies also try to switch "site of care" - from hospital to home (or elsewhere). The risks this poses²:
-Possibility of anaphylactic reactions
-Possibility of undertrained provider
-Possibility of critical labs not getting drawn
-Lack of communication with responsible physicians
-Increase loss of response to meds
-Increase in ED visits
-No cost savings to insurance companies
Denial rate depends on³:
1. External factors - regulatory environment, degree of hospital consolidation in a given market, and the number of hospitals in close proximity to each other
2. Internal factors - payer mix, hospital's investment in case management, and up-front authorization work
Denials have direct impact on earnings - a service has already been provided and the cost has been incurred.³
Medical necessity and notification denials increase significantly each year: the cost of healthcare increases and in turn, employers will demand more cost savings from commercial carriers. The effect of this is carriers will increase denials to find those savings - some have denial rates as high as 20% of inpatient days.¹
Prior authorization criticisms by doctors ⁵:
1. Time-consuming
2. Potentially harmful for patient access to care
3. Ultimately more costly because of administrative burden (Example: In oncology - the payer strains is listed as the primary pressure in their daily practice)
In 2017, the American Medical Association conducted a survey and found that 84% of physicians reported prior authorizations as a high or extremely high burden; 86% of physicians reported an increase in burden in the last 5 years. ⁵
The sad reality is insurance denials can lead to procedures never being performed. ⁵
In Dermatology:
A study conducted on patients suffering from alopecia areata and denial of oral tofacitinib (not FDA approved, but is effective in treatment of alopecia areata) found that 34% of patients experienced decreased quality of life and mood (including suicidal ideation) due to disease burden.⁴ Eventually 46% secured insurance approval.⁴ Other studies have found that an overturn rate of 40-50% is possible.³
In Pediatric Oncology:
Another study found that young adults under oncologic care are less likely to be approved for proton therapy compared to the pediatric population - independent of tumor type or location.⁶ The study reported that >50% of young adults were denied vs. <1% of peds for proton therapy.⁶
Despite advances in cancer treatment and improvements in survival, some adolescents/young adult cancers remained stagnant. ⁶
-This group is more prone to inadequate insurance coverage
-There is an increase in financial burdens
-There is a decrease in access to specialized cancer care
In Behavioral Health:
Young people with mental illness struggle to receive essential behavioral health care. Denial of coverage by insurance is one obstacle.⁷ Behavioral health IMRs are overturned at a higher rate than non-behavioral claims (55% with depression and 36% with substance use disorder were overturned).⁷
After standardized implementation of illness severity tools in IMRs, odds of a medically necessary claim being overturned was 2.5 times higher than before the standards.⁷ With a high percentage of claims being overturned after IMR, findings suggest that health plans inappropriately deny medically necessary medical treatment.⁷
Overturn rates decrease and more level-2 and level-3 appeals are taking place.¹ This is why one should fight the denial aggressively to get what is deserved.³
Collecting medical necessity info and generating an appeals letter: depends on timeliness and medical management knowledge.³ Denials are based on the efficiency of care delivery and the site of delivery, not on medical care provided.³
Persistence often pays off and the patients typically receive the medically necessary medication.²
-The physician should carefully document any delays and specific steps that physician is taking to help their patient (e.g., peer-to-peer discussions, letters of medical necessity, appeals, and conversations with the patient). Such documentation will be important if a patient experiences an adverse outcome, and may help reduce the risk of litigation
Analyze denials data & use the consequent data to reduce denials. Review denial type, payer, diagnosis, and physician.³ In turn, this data should be used to identify key drivers of denials and develop processes to mitigate these drivers; this can lead to a decrease in denials.³
¹ Olaniyan, O. (Feb 2015). Reducing lost revenue from inpatient medical-necessity denials. Healthcare Financial Management, 74-79.
² Kahn, S. and Bousvaros, A. (Oct 2022). Denials, dilly-dallying and despair: Navigating the insurance Labyrinth to obtain medically necessary medications for pediatric inflammatory bowel disease patient. Journal of Pediatric Gastroenterology and Nutrition, 75(4), 418-422.
³ Olaniyan O, Brown, IL, Williams, K. (Aug 2009) Managing medical necessity and notification denials. Healthcare Financial Management, 63(8), 62-67. PMID: 19658326
⁴ Desai, S., Lo, K., Nambudiri, V.E. et al. (Jan2022) Challenges of securing insurance approval for oral tofacitinib for the treatment of alopecia areata: a multi-institution retrospective review. Arch Dermatol Res, 314, 487–489. https://doi.org/10.1007/s00403-020-02158-y
⁵ Lee, V., Berland, T., Jacobwitz, G. Barfield, M., Cayne, N., Maldonado T. (May 2020). Prior authorization as a utilization management tool for elective superficial venous procedures results in high administrative cost and low efficacy in reducing utilization. Journal of Vascular Surgery, 8(3), 383-389. https://www.jvsvenous.org/article/S2213-333X(19)30593-1/fulltext
⁶ Bishop, A., Livingston, J.A., Ning, M., Valdez, I., Wages, C., McAleer, M., Paulino, A., Grosshans, D., Woodhouse, K., Tao, R., Roth, M., Gunn, G.B., McGovern, S. (Mar 2021). Young Adult Populations Face yet another Barrier to Care with Insurers: Limited Access to Proton Therapy. International Journal of Radiatiation Oncolology Biolology Physics, 110(5), 1496-1504. https://www.redjournal.org/article/S0360-3016(21)00234-0/abstract
⁷ Bayne, M., Chirico, I., Wei, L. et al. (2024). Impact of illness severity tools on adolescent psychiatric managed care in california. Adm Policy Mental Health 51, 162–171. https://doi.org/10.1007/s10488-023-01323-5
Mederi Creed LLC
Copyright © 2023 Mederi Creed LLC - All Rights Reserved.
We use cookies to analyze website traffic and optimize your website experience. By accepting our use of cookies, your data will be aggregated with all other user data.