Some Say “Yes” More Often Than Others

Some Carriers Say “Yes” More Often Than Others 

By ARTHUR D. POSTAL

Published 3/17/2011 

WASHINGTON BUREAU -- Officials at the U.S. Government Accountability Office (GAO) have found wide variations in health insurance application denial rates.

The average application denial rate was 19%, but the denial rate varied significantly from carrier to carrier, GAO officials say in a new report.

About one quarter of the insurers studied had application denial rates from 0% to 15%, and another quarter had application denial rates of 40% or more.

The GAO officials came up with the application denial statistics using 2010 data collected from 459 individual market insurers by the U.S. Department of Health and Human Services (HHS).

GAO also analyzed data from 6 states that have their own programs for collecting application denial data.

In Maryland, for example, application denial rates ranged from a low of about 6% to a high over 30% in each of 3 years of data studied.

Claim denial rates also varied widely, both from carrier to carrier and from state to state, officials say. Officials found that aggregate claim denial rates range from 11% to 24% in the 3 states that collect claim denial data.

The researchers analyzed independent claim review data from 6 states and found that the reviewers in those states often reverse denials when consumers file appeals.

Figures from 4 of the 6 states indicated that 39% to 59% of the appeals resulted in reversals, officials say.

Researchers who conducted a similar study for an insurance company trade association found that, in states with an independent external review system, the reviewers reversed claim denials about 40% of the time.

A provision in the Patient Protection and Affordable Care Act (PPACA) required the GAO to do the denial study.

GAO officials warn that they found little information about the reasons for variations in application denial rates.

“There are also several issues to consider when interpreting application denial rates,” officials say. An individual who faced an application denial may have succeeded at getting coverage from the carrier by agreeing to pay a non-standard rate, and some individuals who were rejected may have secured coverage from other carriers, officials say.

HHS officials say they agree with the GAO’s findings and would like to improve the quality and scope of denial data.