Payor-denied claims continue to top the list of threats to a healthcare provider’s financial wellbeing.  Combined with uncompensated provider services, potentially lost annual revenue as a result of these denials easily exceed billions of dollars.  

The reasons for these denials vary but include such well-known justifications as lack of medical necessity for the services rendered, experimental treatment, lack of pre-certification or authorization and uncovered charges. Denied reimbursement for commercial health insurers continue to hover between 5 percent and 10 percent nationally, with certain parts of the country topping 10 percent.

And while much has been written on how to reduce these denial rates and recover payments for  medically-necessary services (including several SAC-authored and other professional journal articles), some providers may still be overlooking the impact of pre-certification and pre-authorization denials on their bottom line. Since these denials may represent an “opportunity cost” rather than a “hard cost,” it´s understandable that they may give priority to getting paid for services already provided rather than securing approvals for future services even if such services may be medically-necessary.

But given that healthcare spend in the United States is well over $3.2 trillion, even a fraction of a percent change in pre-certification or pre-authorization rates may make a significant contribution to both the financial well being of a healthcare provider and to the health of the community it serves.

To help give this some perspective, some studies suggest that as many as 53 million insured Americans may be in jeopardy from payors that simply refuse to cover treatments for chronic or persistent illnesses.  In the case of these patients, treatment is denied in almost one-in-four cases and almost 70 percent of the denied treatment was for a serious illness or condition. The result is delayed or foregone treatments, both of which create serious population health situations while at the same time  increasing the financial risk for providers.

Majority of Pre-certification and Pre-authorization Denials are Reversed

The good news is that, according to the Government Accountability Office (GAO), while only a small percentage of denied claims are challenged by patients or their advocates, about half of these denials end up being reversed.  Clearly, neither patients nor their healthcare providers should accept any pre-certification denial as being final. These denials only become final if the patient or provider gives up.

Supporting this is another study done in California which showed that up to 80 percent of denials were reversed when they were reviewed by that state’s Department of Managed Health Care. Some detail from that study revealed:  

• 60 percent of cases insurers denied as “not medically necessary” were either overturned by the State’s independent medical review or ultimately reversed by the insurer
• 80 percent of cases insurers denied as “experimental” or “investigational” were overturned or reversed by the insurer
• 52 percent of cases where insurers refused to authorize payment for emergency or urgent care provided to a patient were overturned or reversed by the insurer

The reality is that despite internal review policies, controls and procedures, insurance companies can and do make errors the first time a pre-certification or pre-authorization (or any claim for that matter) is submitted.  

Making it Personal

Patients who have been denied pre-certification for medically-necessary treatments are increasingly partnering with their health-care providers to appeal the denials in the hopes of having them reversed.  The idea is that putting a personal face to what is otherwise a very impersonal bureaucratic process will either pressure providers, or at least encourage them, to revisit a denial. Some of these patients have even gone public with their stories in the hope that the added visibility will make a difference or, at the very least, help educate others on how to appeal.

While it is too early to tell how successful this approach may ultimately be over the longer term, several high-profile cases have been successful in demonstrating the challenges – from both the payor and provider perspectives – in having a denial reversed.  Some of these include:

• A 38-year-old mother who was initially denied a liver transplant due to the payor not having correct medical information about previous health issues and treatment outcomes
• A woman whose emergency room care was denied multiple times since the insurer would not classify the eventual diagnosis as a medical emergency but who eventually relented when the case received local media attention
• A father whose daughter needs medication to treat a variety of autoimmune diseases who says he “routinely prevails” in his ongoing appeals
• A sleep apnea sufferer refused lab tests since it there were deemed “medically unnecessary” even though the condition had become life threatening and who had the denial reversed on appeal to his state’s Department of Insurance

How Providers Can Support Patients

Should patients decide to pursue appeals of denied pre-certifications, a provider should consider offering them the aggressive support and assistance of their patient advocate area since both provider and patient benefit from a reversed denial.  

Patient advocates should do the following to be effective:

• Understand what the healthcare policy does and does not cover before making an appeal
• Be as thorough and diligent as possible both in putting together information and in filling out required paperwork
• When possible, communicate via written correspondence in addition to  a telephone call and also keep copies of all bills and letters
• Stick to the facts and avoid emotion wherever possible
• Should the payor rescind or reimburse any premiums, do not cash the check
• Above all else, be patient and persistent

While the process for getting denials reversed can be time-consuming, burdensome and frustrating, the end result more times than not benefits both providers and their patient communities.  In this case, patience and organization usually pays off.