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    Denial-of-benefits appeals need consistency

    Two factors make it tricky to get a clear, current picture about denial-of-benefits (DoB) appeals. For one, it’s difficult to pin down even such basic numbers as percentages of claims (or policy applications) denied, denials appealed internally, denials finding their way to external review and denials overturned on review. 

    The second factor is that no one can be certain what final regulations will require because changes brought to this area by the Affordable Care Act (ACA) are still subject to an Interim Final Regulation. With those two caveats in mind, consider this our best effort at clarifying the current state of denials, appeals and reviews.

    The numbers 

    Though comparative data are hard to come by, looking at different sources brings this picture into some focus. 

    A March 2011 report by the U.S. Government Accountability Office (GAO) found that “rates of coverage denials, including denials for preauthorizations and claims, varied significantly” from 11% in Ohio in 2009 to 24% in California in the same year, based on data from four states. However, the report noted that methodological variations likely accounted for much of the difference. 

    “There’s no useful data … at all,” on the gross number of denials that are formally appealed, says Peter Kongstvedt, M.D., FACP, of the Department of Health Administration and Policy at George Mason University. “We don’t know how many upheld appeals go to external review, but of those that do, roughly half are overturned [internally],” he says. 

    According to an analysis by the California Department of Insurance, reviews of DoB appeals between 2001 and 2013 resulted in a health plan’s decision being overturned 43% of the time. From prior experience at a regional health insurer, Roberta Herman, M.D., current director of healthcare strategy for Navigant, says that fewer than 15% of level 1 appeals were denied and fewer than 15% were overturned on external review. 

    In various contexts, America’s Health Insurance Plans (AHIP) has cited about 3% of benefits claims that are ultimately denied—that is, after both internal (insurer) appeal and external (independent) review. 

    Members of the National Association of Independent Review Organizations  (NAIRO) are reporting “a steady upward trend in federal external appeals as a result of the ACA regulations,” says president Andrew G. Rowe, who is also CEO of AllMed Healthcare Management Inc. in Portland, Oregon. However, such appeals “still represent a very small percentage of overall case review requests from health plans,” he adds. 

    Further, full or partial approval of care (that is, overturning health plans’ denials) has been running at approximately 25% to 35% of all internal appeals cases, compared with just above 20% for final federal external appeals, Rowe says. 

    It appears likley that the internal appeals process is sound enough that only a minority of its findings are reversed on external review. 


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