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New Reporting on Insurance Claim Denials Highlights 'Scam' of For-Profit Healthcare
"Private insurance companies, including Medicare Advantage plans, are designed to generate profit. How do they do that? Take our money and then deny our care."
Jun 28, 2023
A pair of new stories examining the increasingly common but shadowy U.S. insurance industry practice of refusing to pay for certain treatments drew outrage Wednesday from patient advocates and Medicare for All proponents, who said the reporting further reveals the harms of for-profit healthcare.
The investigative outlet ProPublicafocused its attention on the "galling" secrecy around insurance companies' claim denials, which frequently leave patients with massive medical bills and little clarity as to why their claims were rejected.
"How often insurance companies say no is a closely held secret," ProPublica's Robin Fields reported. "There's nowhere that a consumer or an employer can go to look up all insurers' denial rates—let alone whether a particular company is likely to decline to pay for procedures or drugs that its plans appear to cover."
"In 2010, federal regulators were granted expansive authority through the Affordable Care Act to require that insurers provide information on their denials. This data could have meant a sea change in transparency for consumers," Fields added. "But more than a decade later, the federal government has collected only a fraction of what it’s entitled to. And what information it has released, experts say, is so crude, inconsistent, and confusing that it's essentially meaningless."
The data that is available indicates claim denials are on the rise. According to a February KFF study of Affordable Care Act plans, "nearly 17% of in-network claims were denied in 2021."
Elisabeth Rosenthal of KFF Health News wrote in a column last month that declining to pay for patients' treatments is "a handy way for insurers to keep revenue high."
"Millions of Americans in the past few years have run into this experience: filing a healthcare insurance claim that once might have been paid immediately but instead is just as quickly denied," Rosenthal wrote. "If the experience and the insurer's explanation often seem arbitrary and absurd, that might be because companies appear increasingly likely to employ computer algorithms or people with little relevant experience to issue rapid-fire denials of claims—sometimes bundles at a time—without reviewing the patient's medical chart. A job title at one company was 'denial nurse.'"
ProPublica noted Wednesday that "some advocates say insurers have a good reason to dodge transparency."
Citing Wendell Potter, a former Cigna executive who now supports Medicare for All, ProPublica reported that "refusing payment for medical care and drugs has become a staple of their business model, in part because they know customers appeal less than 1% of denials."
"That's money left on the table that the insurers keep," Potter told the outlet.
With their companies' profits booming, the CEOs of the top seven private health insurance giants in the U.S. took home a combined $335 million in compensation last year.
Medicare Advantage providers—private insurers paid by the federal government to cover patient care—have become notorious for denying claims for medically necessary treatments as enrollment in the program continues to surge.
As The Lever's Matthew Cunningham-Cook reported Wednesday, "Medicare Advantage insurers are threatening the foundational premise of the government's healthcare safety net for seniors and people with disabilities: that people in Medicare should get the care that is recommended by a doctor."
"A 2022 investigation by the inspector general of the Department of Health and Human Services found that in 2019, 13% of the total prior authorization requests denied by Medicare Advantage plans would have been covered under traditional Medicare, leading to an estimated 85,000 additional care denials," Cunningham-Cook wrote. "That year, Medicare Advantage plans also wrongly denied 18% of payment claims—covering an estimated 1.5 million claims—reducing the likelihood that doctors will recommend the costliest yet often most effective care, for fear of not being paid."
Social Security Works, a progressive advocacy group that backs Medicare for All, tweeted in response to the new reporting Wednesday that "private insurance companies, including Medicare Advantage plans, are designed to generate profit."
"How do they do that? Take our money and then deny our care," the group added.
Cunningham-Cook opened his piece with the story of Jenn Coffey, a former Republican state representative in New Hampshire "who, like many GOP faithfuls, believed private insurers could solve the healthcare crisis if they were allowed to do things like sell policies across state lines."
But Coffey's views were shaken when UnitedHealth, her ultra-profitable Medicare Advantage provider, "constantly rejected or second-guessed the care options her doctors suggested for her cancer recovery and for a rare and painful secondary disease that has no standard treatment plan," Cunningham-Cook reported.
“Now I've realized that you can't fix or repair the system,” Coffey told The Lever. "The insurance companies don't offer anything. They serve as a roadblock."
"The only way forward," she added, "is Medicare for All."
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UnitedHealth Touts Profit Surge After Lobbyists Weaken Medicare Advantage Crackdown
UnitedHealth CEO Andrew Witty told investors he "appreciates" the Biden administration's decision to slow the implementation of its Medicare Advantage reforms.
Apr 14, 2023
The chief executive of UnitedHealth Group told investors Friday that he "appreciates" the Biden administration's decision to more slowly implement its crackdown on overbilling in Medicare Advantage, a privately run, government-funded program that the Minnesota-based insurance behemoth touted as a key profit driver in its newly released first quarter earnings report.
UnitedHealth, one of the largest Medicare Advantage providers in the U.S., reported $91.9 billion in revenue for the first three months of 2023—15% growth year-over-year—and more than $8 billion in earnings from operations, exceeding analysts' expectations.
UnitedHealthcare, UnitedHealth Group's insurance business, "is pacing strongly to its outlook for another year of market-leading growth in serving more people through its Medicare Advantage offerings," the company said in its earnings release. The company said Friday that it added 655,000 new Medicare Advantage members in the first quarter of the year.
UnitedHealth's earnings report came after the company helped lead an aggressive lobbying campaign against new Biden administration rules aimed at limiting Medicare Advantage insurers' ability to overcharge the federal government by making patients appear sicker than they actually are.
According to The New York Times, UnitedHealth CEO Andrew Witty appeared on Capitol Hill in person to lobby against the proposed changes, which the lucrative Medicare Advantage industry falsely characterized as cuts to the program that now provides insurance to nearly half of the overall Medicare population.
Late last month, the Centers for Medicare and Medicaid Services (CMS) offered a number of concessions to the industry, agreeing to impose its policy changes over a period of three years instead of all at once and boosting Medicare Advantage payment rates by more than expected.
As STATreported last week, Wall Street investors were "overjoyed" by the Biden administration's move, which drew criticism from progressive lawmakers and healthcare analysts who warned the slow phase-in will allow Medicare Advantage plans to continue their abusive practices. UnitedHealth, like other Medicare Advantage insurers, has been accused of wrongfully denying or attempting to deny patients necessary care, in some cases utilizing artificial intelligence to determine when to end coverage.
When it comes to excess billing, CMS recently estimated that overpayments to Medicare Advantage totaled $11.4 billion in fiscal year 2022—a significant drain on the Medicare trust fund.
Citing one industry analyst, STAT noted that UnitedHealth could reap $900 million in additional profit next year alone thanks to the administration's decision to delay full implementation of the reforms.
\u201c$UNH CEO Andrew Witty says he "appreciates" @CMSGov's decision to phase in changes to Medicare Advantage risk adjustment. The delay could allow UnitedHealth to pull in at least $900 million of added profit, just next year. https://t.co/KnNbyCwqZO\u201d— Bob Herman (@Bob Herman) 1681477811
In an analysis published in February, former insurance executive Wendell Potter noted that UnitedHealth is one of just seven large for-profit insurance companies that now control 70% of the Medicare Advantage market, which is dependent on taxpayer money.
According to Potter, who now heads the Center for Health and Democracy, insurance giants UnitedHealth, Cigna, CVS/Aetna, Elevance, Humana, Centene, and Molina saw their combined revenues from taxpayer-supported programs grow 500% between 2012 and 2022.
"They've essentially been bailed out by taxpayers," Potter said of for-profit insurance giants like UnitedHealth in a recent interview with The American Prospect. "And members of Congress, and various administrations, have been just standing on the sidelines, not paying attention to what's been going on."
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Biden Urged to Crack Down on 'Terrifying' Use of AI by Medicare Advantage Insurers
"Robots should not be making life-or-death decisions," said healthcare campaigner Ady Barkan.
Mar 27, 2023
Sen. Elizabeth Warren joined healthcare campaigner Ady Barkan and others on Monday in sounding alarm over a recent investigation showing that Medicare Advantage insurers are using unregulated artificial intelligence systems to determine when to end payments for patients' treatments, a practice that has prematurely terminated coverage for vulnerable seniors.
STATreported earlier this month that while "health insurance companies have rejected medical claims for as long as they've been around," AI is "driving their denials to new heights in Medicare Advantage," a privately run program funded by the federal government.
"Behind the scenes, insurers are using unregulated predictive algorithms, under the guise of scientific rigor, to pinpoint the precise moment when they can plausibly cut off payment for an older patient's treatment," the outlet found. "The denials that follow are setting off heated disputes between doctors and insurers, often delaying treatment of seriously ill patients who are neither aware of the algorithms, nor able to question their calculations."
"Older people who spent their lives paying into Medicare, and are now facing amputation, fast-spreading cancers, and other devastating diagnoses, are left to either pay for their care themselves or get by without it," STAT continued. "If they disagree, they can file an appeal, and spend months trying to recover their costs, even if they don't recover from their illnesses."
Barkan, co-executive director of Be a Hero and an ALS patient who is acutely aware of the injustices at the heart of the United States' for-profit healthcare system, tweeted Monday that STAT's reporting is "outrageous and terrifying" and circulated a petition imploring the Biden administration to crack down on the Medicare Advantage industry's use of AI.
"This barbaric practice must end," the petition states. "We're calling on President Biden and the [Centers for Medicare and Medicaid Services] to stop this practice immediately."
Warren (D-Mass.), who blasted the huge profits of top Medicare Advantage insurers last week, echoed Barkan in a tweet of her own.
"Medicare Advantage insurers make patients look as sick as possible to overcharge taxpayers billions," Warren wrote, referring to a common industry practice known as upcoding.
"At the same time, they deny seniors and people with disabilities care—with the help of AI algorithms," the senator continued. "We must crack down on these abuses. No more #DeathByAI."
An analysis published last year in the Journal of Medical Internet Research found that "despite the plethora of claims for the benefits of AI in enhancing clinical outcomes, there is a paucity of robust evidence."
But that lack of evidence hasn't stopped hugely profitable private healthcare companies from increasingly using AI tools to "help make life-altering decisions with little independent oversight," STAT determined after reviewing secret corporate documents and hundreds of pages of federal records and court filings.
"Over the last decade, a new industry has formed around these plans to predict how many hours of therapy patients will need, which types of doctors they might see, and exactly when they will be able to leave a hospital or nursing home," STAT reported. "The predictions have become so integral to Medicare Advantage that insurers themselves have started acquiring the makers of the most widely used tools."
"Elevance, Cigna, and CVS Health, which owns insurance giant Aetna, have all purchased these capabilities in recent years," the outlet continued. "One of the biggest and most controversial companies behind these models, NaviHealth, is now owned by UnitedHealth Group."
"President Biden has the power to stop this. We're meeting with White House staff this week to discuss this outrage."
In 2020, a UnitedHealthcare algorithm determined that 89-year-old Dolores Millam—who broke her leg in a fall that year—would only need to stay in a nursing home for 15 days following surgery, STAT reported.
After the 15 days were up, Millam "received notice that payment for her care had been terminated." Millam's daughter, Holly Hennessy, told STAT that "she couldn't fathom UnitedHealthcare's conclusion that her mother unable to move or even go to the bathroom on her own—no longer met Medicare coverage requirements."
"Hennessy said she had no choice but to keep her mother in the nursing home, Evansville Manor, and hope the payment denial would get overturned," STAT reported. "By then, the bills were quickly piling up."
UnitedHealthcare rejected Millam and Hennessy's appeal, forcing them to pursue relief in federal court—an arduous process.
A federal judge finally ruled months later that UnitedHealthcare improperly denied Millam that she was entitled to full coverage.
The total bill for her nursing home stay was $40,000, according to STAT.
Barkan warned Monday that "insurance behemoths using AI to squeeze every cent out of us." Just seven healthcare companies control more than 70% of the Medicare Advantage market.
"President Biden has the power to stop this," Barkan wrote of Medicare Advantage plans' use of AI. "We're meeting with White House staff this week to discuss this outrage."
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