Members rarely challenge coverage denials, surprise billing

Despite efforts to reduce surprise billing, many Americans still receive unexpected bills or coverage denials and need better health literacy to challenge them, according to an issue brief from Commonwealth Fund.

Commonwealth Fund researchers assessed over 5,600 insured adults between the ages of 19 and 65 who responded to a survey fielded from April 18 through July 31, 2023. SSRS executed the survey.

The survey found that 45% of the participants said they or someone in their family had received a bill or copayment that they did not anticipate, expecting the service to be free or insured. Those on Individual and Marketplace plans were more likely to report this (50%). Medicaid beneficiaries were least likely to report this problem (30%).

Among those who had received an unexpected bill, only 45 percent challenged the bill. Medicare beneficiaries (53%), Medicaid plan members (50%), Hispanic individuals (49%), and those with incomes that exceeded 400% of the federal poverty level were most likely to challenge a bill.

Most Medicare beneficiaries who challenged their bill had the bill reduced or dismissed (61%), compared to 46% of Medicaid beneficiaries and 36% of employer-sponsored health plan members. Standardization may play a role in making this process simpler for individuals in public payer programs.

Those who did not challenge their unexpected bills tended to be young—between 19 and 34 years of age (60%). Many were also low-income (58%) and Hispanic (59%).

The data showed that 54% of the individuals who did not challenge their unexpected bills or copays simply did not know they had the right to do so. Three out of ten said that the cost of the bill was too small to be worth the trouble (29%). Others said they did not have time or did not know who to contact about challenging their bill.

In addition to receiving bills they did not anticipate, participants reported receiving coverage denials they did not expect. Across all insurance types, payers denied coverage for care that a doctor recommended.

Overall, 17% of participants were denied coverage for recommended procedures or services. In this population, 43% of adults said they or their doctors challenged the denial, with 44% of members challenging their payers’ decisions in private health plans and 40% in public health plans.

As a result of these coverage denials, 59% of respondents said they experienced a delay in care. Eight out of ten respondents experienced anxiety due to the denial, 47% saw their health issues worsen, and 16% said that their health issue developed into a more serious condition later. Only 7% of respondents said that the denial had no effect.

As with unexpected bills, many who did not challenge the surprise coverage denials did not challenge because they did not know about their appeal rights (45%). Another 40% were not sure who to contact and 23% did not have the time to challenge the denial.

Fifty percent of those who challenged their denials reported that the appeal ended in approval for their care, with 30% saying they received full approval, 11% receiving partial approval, and 9% getting approved for a comparable care process.

The Commonwealth Fund researchers recommended that HHS could track claims denials. Additionally, policymakers could establish consequences for inappropriate denial or billing practices. The researchers also highlighted a couple of consumer-oriented solutions, such as spreading awareness about appeal rights and procedures and providing support through the process.