Report: Health insurers denied one in five claims in 2024

BOSTON --Commercial insurers denied roughly one out of every five claims submitted in 2024, with administrative issues driving a large chunk of those blocked coverage requests, according to a new analysis from state health policy officials.

Out of 45.9 million total claims in 2024, 20.4% were denied by health insurers in Massachusetts, the Health Policy Commission said in a report released Thursday. Denials due to "strictly clinical reasons" like medical necessity represented "at most" 1% of denied requests.

The most common type of denial reason — across 11.7% of claims — was "other administrative denials," such as claims not complying with insurer rules and procedures like timely filing and correct documentation. Another 4.9% of claims were denied over an incomplete claim, coding error, or duplicate claim or coverage, the report found.

"These data show there are opportunities to improve how care is accessed and paid for," HPC Executive Director David Seltz said in a statement. "Simplifying and streamlining billing and claims submissions is a clear step we must take to address inefficiencies in the health care system, and a step forward to more affordable, equitable, and accessible health care for all Massachusetts residents."

The head of an insurers' association cautioned against pursuing administrative fixes that she said could end up further raising health care costs.

Massachusetts Association of Health Plans CEO Lora Pellegrini said insurers have made "significant investments to reduce administrative friction by centralizing key functions through shared infrastructure." She pointed to a central platform that handles claims submissions and "voluntary automation" of prior authorization processes.

"MAHP supports targeted, data-driven efforts to reduce avoidable billing errors and improve efficiency, but administrative simplification alone will not solve the Commonwealth's affordability challenges," Pellegrini said in a statement. "In fact, weakening billing and payment controls risks increasing fraud, waste, and abuse, ultimately driving health care costs even higher. As stewards of employer's and consumer's health care premiums, health plans must ensure that billing is appropriate before payments are authorized."

The data set the HPC analyzed did not include prior authorization requests. The Division of Insurance is in the process of streamlining prior authorization requirements, in a separate bid to eliminate barriers to care and administrative complexity. A public hearing on proposed regulatory changes is slated for Feb. 19.

Denied claims varied widely across insurers, the report notes. United Healthcare denied 28% of claims, while Wellsense denied 11% of claims, according to the report.

"As a percentage of denied claims, around 90% of United Healthcare's and MGBHP's claims were denied for reasons categorized as other administrative denials," the report said, referencing Mass General Brigham Health Plan. "Almost 80% of Fallon's denied claims were denied for incomplete claims or coding errors."

Across all insurers, the report said 80% of denied professional medical/surgical claims and 67% of denied professional mental health claims were attributed to administrative reasons.

Pellegrini noted billing issues typically occur in "high-volume settings" — such as hospital, outpatient and professional services — "where providers' revenue cycle operations routinely review, correct, and resubmit claims as part of standard billing practices."

The report calls for standardizing and streamlining processes for submitting claims, with the aim of mitigating inefficiencies across the health care system.

"Any effort to reduce inefficiencies in claims processing should be a concerted effort involving both insurers and providers," the report said. "It is consumers and employers who should ultimately benefit from any administrative costs saved through lower premiums and cost-sharing."

Pellegrini refuted that premium increases are driven by claims processing, though she said insurers can work with providers to improve billing accuracy.

"Over 30 state reports have identified hospital and health system prices, provider consolidation, and prescription drug costs as the key drivers of health care spending," she said. "Meaningful premium relief for employers and consumers will only come from addressing these well documented cost drivers."

The HPC report could generate more discussion next week, as Gov. Maura Healey's new Health Care Affordability Working Group meets for the first time. The panel is tasked with recommending ways to tackle administrative waste, pricing practices and system inefficiency, according to the Healey administration.