Behind the health insurance denials and pre-authorizations drawing anger — and what to do about them

The aftermath of the Dec. 4 killing of UnitedHealthcare CEO Brian Thompson — a moment captured on video in which a gunman shot the father of two in the back on a Manhattan street — provoked an outpouring of anger at how insurance companies deny claims and require pre-approvals.

The CEO of UnitedHealthcare's parent company wrote an op-ed recognizing the frustration many have with insurance companies, and acknowledging that the health care system needs improvement. But he condemned the hostility expressed toward UnitedHealthcare employees since Thompson's death. Elected officials and others said they were horrified by the glee some took in his killing.

What's behind the outrage?

The words "deny," "delay" and "depose" were written on ammunition found at the scene, and writings attributed to the suspected assassin, Luigi Mangione, condemned insurance companies, leading to speculation that the killer's motivation was in part hatred of the industry and its practices. Mangione Thursday was ordered held without bail on federal charges that include murder through the use of a firearm. He pleaded not guilty. He also faces 10 state felony charges, including first-degree murder.

Newsday talked with health insurance experts, government agencies and insurance companies to examine the insurance denial and pre-authorization processes that exasperate many Long Island patients and health care providers, and explain how to appeal when an insurance company refuses to pay for care.

Why so much anger at insurance companies?

Nearly 96% of Long Islanders — more than 2.76 million people — have some type of health insurance coverage, whether private or public, according to 2023 Census Bureau estimates.

Many people have told stories of how they or loved ones could not obtain care or medications because of insurance company denials. Some have said family members died because of denials. A denial is when a company refuses to pay a claim for a medical service — such as a visit to a doctor or a procedure — or medication. 

Insurance companies also sometimes require pre-authorizations and they can deny those.

What are pre-authorizations and why are they important?

Prior authorizations are when the insurance company must approve a service or medication in advance. Pre-authorizations could be for anything, with each insurance plan handling them differently, said Diane Spicer, supervising attorney for Community Health Advocates, a division of the nonprofit Manhattan-based Community Service Society of New York that helps consumers navigate health insurance. Among the most common pre-approval requests are for expensive medications, MRIs, surgery and hospital admissions, she said.

The American Medical Association, which represents physicians, has long been critical of how pre-authorizations are used. A December 2023 AMA survey found that 94% of doctors said prior authorizations led to delays in access to necessary care for their patients, and 19% said they led to patient hospitalizations, with 7% saying they led to death, disability, permanent bodily damage or birth defects.

Dr. Barbara McAneny, a former AMA president and CEO of the nearly-7,000-patient New Mexico Cancer Center in Albuquerque, said center patients have died awaiting insurance approval for cancer drugs.

"It makes everybody scared to death," she said of pre-authorizations, especially with cancer care, for which time is of the essence.

Her practice spends $380,000 a year to pay employees whose only job is to request pre-authorizations, fight denials and monitor prescriptions.

"Almost everything has to go through prior authorization" in oncology, she said.

McAneny said she’s frustrated and angry that the medical judgment of oncologists with years of training and experience in treating cancer patients can be rejected by insurance company representatives without that knowledge.

"Part of the problem is they know a lot of practices are just going to give up [fighting]," McAneny said. "Doctors get burnt out."

How often do insurance companies deny claims?

Nearly 17% of more than 48 million in-network federal insurance marketplace claims were denied in 2021, according to an analysis by the health policy, research and news nonprofit KFF. But rates varied greatly by company, from 2% to 49%. UnitedHealthcare's denial rate for the two states in which it had plans old enough to supply data was nearly 29%.

A separate KFF analysis looked at prior authorizations for Medicare Advantage plans, which are offered by private insurance companies. That report found that the number of pre-approvals requested per enrollee, 1.7 per year, was the same in 2022 as in 2019, but that the denial rate for pre-authorizations had risen during that period from 5.7% to 7.4%. UnitedHealthcare requested prior authorizations less often than most other firms but issued denials more often.

Further data is limited. The 2010 Affordable Care Act requires insurance companies to report claim denial rates, but the federal government has never collected that data, except for certain health plans sold through the marketplace.

Why do insurance companies deny claims?

Insurance companies reported to the federal government that about 14% of in-network marketplace claims were denied because the service was excluded from coverage, 8% because of lack of pre-authorization or approval, 2% because the claim was for something not deemed "medically necessary" — and 77% for "all other reasons," which were not specified, according to the KFF analysis.

The health insurance industry group AHIP said in an email that denials due to coverage exclusions are because employers opted to not include that coverage, or it is not mandated by law, "not because the health plan made an arbitrary decision." Many claims submitted by doctors are "inaccurate, incomplete or ineligible," the statement said. UnitedHealth Group said in a statement that about half its denied claims are due to administrative errors, such as missing documentation, "which can be corrected."

Can I appeal a denial?

Yes. But very few people do. The KFF study of federal marketplace denials found that fewer than 0.2% of denied claims were appealed.

"A big part of that is that most people don’t know they have the right to appeal," said Michelle Long, a senior policy analyst for KFF’s program on patient and consumer protections.

There are two levels of appeals: Internal appeals directly to the insurance company and, usually after internal appeals are exhausted, external ones, typically through a federal or state government agency. External appeals must deal with "medical judgment" issues, such as when a physician believes a procedure or medication is medically necessary and an insurance company disagrees, Spicer said.

How do I appeal?

How and to whom you appeal varies greatly depending on what kind of plan you have, and "it’s very challenging to know the rules of all the different kinds of insurance," Spicer said.

You often start with your insurance company, or with Medicare or Medicaid. But many companies hire third-party vendors that handle claims for prescription drugs, MRIs and other imaging, and other categories, and in those instances, usually you appeal through the vendor, but sometimes through the insurance company, Spicer said.

Different companies and plans are regulated by different entities. For "self-funded plans," which according to KFF cover most employees in employer-sponsored insurance, the U.S. Department of Labor’s Employee Benefits Security Administration handles external appeals. For many other plans, the state Department of Financial Services does. Employees often don’t know what type of plan they have and don’t know where to turn for help, Spicer said.

With Medicare, Medicare Advantage, traditional Medicare and prescription drug plans each have distinct internal and external appeals processes. Most Medicaid recipients in New York have plans through private companies, so the appeals process is similar to private insurance, Spicer said.

This all sounds confusing.

It is, said Spicer, who believes it is partly by design, to discourage appeals, and partly because the nation's entire health care system is so complicated. The difficulty of the process is a big reason few people appeal denials, she said.

"This is super hard for consumers, and absolutely time consuming," and many people don’t have the time, she said.

Should I file an appeal myself?

You can. Instructions on filing appeals should be on "explanation of benefits" forms, but many people don’t understand basic insurance terminology, and few know there are programs available to help them through the appeals process, Long said.

For external appeals, this is the form for the Department of Labor and this is the form for the Department of Financial Services. Here is a guide for Medicare appeals.

But McAneny said "it's not fair to ask sick people who don't know health care to take on the insurance industry. It's just not a fair fight."

She said patients should ask their health care providers to intervene with insurance companies on their behalf. "We drown them in medical literature," she said of her center's approach. Insurance companies routinely claim they never receive the material, which McAneny believes is a delay tactic, so the center sends it again. Yet especially smaller medical practices may not have the resources to provide sufficient help to patients, she said.

Spicer recommends asking organizations like hers for assistance. They, and providers, know how to most effectively argue and appeal, which documents to provide, and what legal rights consumers have, she said. They also can tell patients if they even have grounds for an appeal.

How do I prevent getting a denial?

Read your insurance plan carefully, although Spicer said they're not always easy to comprehend.

And it’s hard to predict what you’ll need insurance for, said Christine Eibner director of the payment, cost and coverage program of the health care division of RAND, a research and analysis nonprofit.

"There are all these scenarios that are hard to anticipate," she said.

Spicer advising talking with your provider to ensure a service is covered.

How successful are appeals?

Data is limited. The KFF study found that for the marketplace plans, insurers upheld 59% of their claim denials.

Are denials increasing?

There are indications they are, Eibner said. An U.S. Senate subcommittee report found denials of prior authorization for Medicare post-acute care rose between 2019 and 2022 for the three largest Medicare Advantage insurers. Nearly three out of four health care provider staff surveyed by Experian Health said claim denials were increasing, and 73% of doctors said in an AMA survey that prior authorizations were becoming more common.

Eibner said the increases could be because of laws like the Affordable Care Act, which included a ban on companies refusing to insure people because of preexisting conditions, and a prohibition of annual and lifetime limits of the dollar amount of coverage of "essential health benefits," such as hospital care and prescription drugs. Those regulations affect insurance company revenue, she said.

"Denials are one of the few levers insurers may have, and that might be why we’re seeing more emphasis on them," she said.

Can we expect reform to the denial and appeal process?

Long said discussion in the past few weeks of the health insurance system "struck a nerve for a lot of people" and reflects widespread frustration. But don’t expect major change soon, she said.

"Our health care system moves at almost a glacial pace," she said. "Any change is going to be incremental."

By David Olson

david.olson@newsday.com@DavidOlson11

David Olson covers health care. He has worked at Newsday since 2015 and previously covered immigration, multicultural issues and religion at The Press-Enterprise in Southern California.