How High is Too High? The Crippling Cost of Denial Rates

Recent data shows that insurers deny nearly one in five in-network claims, but this troubling statistic only captures the formal denials that occur after care is received. The real denial rate is much higher when you consider all the invisible barriers that payers implement to prevent care from happening in the first place — network restrictions that limit provider choice, prior authorizations that delay critical treatments, step therapy requirements that force patients to fail on cheaper medications first, and other administrative hurdles that effectively deny or delay care before a claim is ever submitted.

We’ve all experienced the frustration of unnecessary healthcare barriers. When insurers deny claims or require prior authorization, they’re not just moving numbers around on a spreadsheet to pump up their bottom line — they’re delaying or preventing necessary care.

The impact is staggering. According to recent KFF research, 58% of insured adults report experiencing problems with their health insurance, including denied claims. For 39% of those struggling to pay their medical bills, claim denials directly contributed to their financial challenges. These numbers represent millions of Americans who aren’t getting the care they need when they need it.

The legacy insurance industry’s response? A shrug and an admission that “no one would have designed the system this way.” That’s not good enough for my family or my employees. We need fundamental change, not incremental adjustments to a broken system.

The solution starts with transparency. Patients should know exactly what’s covered and what it costs before receiving care. Doctors should be empowered to make medical decisions without interference from insurance companies. And the entire process should be designed to facilitate care, not obstruct it.

There’s compelling evidence that a transparent, barrier-free approach to health insurance can work. When insurers eliminate networks, remove prior authorization requirements, and provide upfront pricing information, denial rates drop dramatically. With a modern consumer-driven approach, some insurance plans have been able to reduce denials to well under 1% — and those denials are things like cosmetic procedures, not cancer care.

The potential impact is significant. When people have easier access to routine and preventive care, they’re less likely to end up in the emergency room. Being able to see doctors quickly and afford medications means health issues can be addressed before they become emergencies. This proactive approach, combined with eliminating administrative hurdles, can significantly reduce overall healthcare costs. More importantly, it puts healthcare decisions back where they belong — between patients and their doctors.

It’s time for the industry to acknowledge that high denial rates aren’t an inevitable feature of health insurance, they’re a symptom of a system that prioritizes control over care. By embracing transparency and eliminating unnecessary barriers, we can create a healthcare system that works better for everyone.

The technology and capabilities to enable this transformation already exist. The only question is whether we have the will to implement them. Market data shows that when incentives are properly aligned and consumers are empowered with information, better outcomes naturally follow. This isn’t theoretical — it’s been demonstrated in markets where these principles have been put into practice.

The path forward requires getting back to fundamentals: payers should pay for care, doctors should provide care, and patients should be empowered to make informed decisions about their care. By returning to these core principles and embracing transparency, we can build a healthcare system that truly serves its purpose — helping people get the care they need when they need it.

Source: tumsasedgars, Getty Images

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