Kurt Brouwer October 7th, 2009
Most of us have experienced a medical insurance claim denial. On the form from the insurance company, we see a big zero in the amount the insurer will pay.
In all the furor over the many and varied health insurance reform proposals, we have heard over and over again about how heartless private insurance companies are when it comes to denying insurance claims. We are left with the impression that a government insurance program would be much less likely to deny insurance claims.
However, statistics on claims denial among various insurance providers may tell a different story. A 2008 report from the American Medical Association was on The Drudge Report and it has been picked up in many other places:
2008 National Health Insurer Report Card (American Medical Association)
The purpose of the AMA’s National Health Insurer Report Card (NHIRC) is to provide physicians and the general public a reliable and defensible source of critical metrics concerning the timeliness, transparency and accuracy of claims processing by the health insurance companies that are responsible for paying these claims…
The chart below is based on statistics from this AMA report. Specifically, it covers the percentage of insurance claims that are denied completely. That is, where the insurance payment is zero. Here is how the AMA report describes claims denial:
…Percentages of claim lines (i.e., records) denied
Description: What percentage of records submitted are denied by the payer for reasons other than a claim edit? A denial is defined as: allowed amount equal to the billed charge and the payment equals $0…
Chart: Carpe Diem
Medicare claims denial — Is it 6.85% or 4.0%?
I suspect many readers will be surprised by this data because they might have thought that overall claims denial was much higher, across all insurers. And, many would also be surprised that Medicare was the highest insurer for claims denied. The next highest was very close — Aetna at 6.8%. However, the average for all private insurers on this chart was 3.89%, including Aetna. That’s just a bit more than half of the Medicare rate for claims denial.
2009 AMA National Health Insurer Report Card
To see if the denial rates had changed. I also looked at the AMA’s 2009 National Health Insurer Report Card. In general, the story is the same, although most insurers had lower rates.
For the 2009 report, Anthem BCBS (i.e. Blue Cross/Blue Shield) was the highest at 4.34% and Medicare was next at 4%. Aetna was the lowest at 1.81%. The private company denial average was 2.79% versus Medicare at 4%. So, Medicare was above average versus private insurers, but Medicare definitely closed the gap quite a bit.
As the Healthcare Economist wrote about this data in a post from last year [emphasis added]:
…the fact that Medicare denies more claims than commercial insurers should dispel the myth that the government is simply a benevolent entity, while commercial insurers are ruthless, profit-hungry wolves…
I don’t want to make too much of this particular report because there are many other issues involved in the healthcare or the health insurance debate. Nonetheless, this information from the AMA certainly flies in the face of conventional wisdom found in Washington DC and in the media.
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