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Tuesday, October 6, 2009

Medicare Denials Higher than Commercial Insurers?

Here's the version of the email recently sent to me:

According to the 2008 Health Insurance Report Card (PDF) released by the American Medical Association, the “carrier” with the highest percentage of denials is . . . Medicare.

Metric 12—Percentages of claim lines (i.e., records) denied

Description: What percentage of records submitted are denied by the payer for reasons other than a claim edit? A denial is defined as: allowed amount equal to the billed charge and the payment equals $0.

Source: NHXS


Count of records

Denied records

Percent of

claim lines


Date range





03/01/2007 – 3/10/2008





03/01/2007 – 3/10/2008





03/01/2007 – 3/10/2008





03/01/2007 – 3/10/2008

Health Net




03/01/2007 – 3/10/2008





03/01/2007 – 3/10/2008





03/01/2007 – 3/10/2008





03/01/2007 – 3/10/2008

My first reaction was to spend a few minutes simply looking at the table provided and thinking about what it meant. It was:

"So you're going to split hairs between Medicare and Aetna over 0.05% while Medicare processes 10 times as many claims and almost 7 times as many claims as the next largest processor, UHC?

That's something I call "reframing", (redacted friend's name), but I do appreciate the attempt.

Besides, statistically wouldn't it be fair to assume that the processing of the largest number of claims would yield the greatest likelihood of more denials?"

What's more telling on closer examination of the report card is that the commercial insurers are less efficient, less forthcoming with information, and more responsible for wasteful overhead than Medicare ever could be.

For example....

...CIGNA and Humana don't even reveal the date they receive a claim (Metric 1)

...while Medicare's median response time of 14 days (Metric 2) is among the longest, it's no longer than CIGNA and only one day longer than Aetna and Humana

NOTE: The "median" means the middle value, or the value at which there are an equal number of values above and below the median value. Think highway median dividing two sides of the highway equally. The "mean" is the arithmetic average. Further review of the details of Metric 2 show the following mean values:

Aetna: 13.81 days

Medicare: 13.83 days

CIGNA: 19.57 days

Humana: 21.85 days

...the coup de grace seems to me to be "Metric 5 - Contracted payment rate adherence" defined as, "On what percentage of records does the payer’s allowed amount equal the contracted payment rate?"

Medicare is 98.12%. The next closest is Coventry at 86.74%. Humana is 84.20%, Aetna is 70.78% and CIGNA is 66.23%.

Now I'm no expert, but it looks to me like commercial insurers don't seem to score very well at even paying what they contracted to pay. Some of them are getting what we called in school "failing grades."

And some of us think the big, bad government can't do things right? Please.

So if someone sends you something similar and wants to split hairs between Medicare and Aetna over 0.05% while Medicare processes 10 times as many claims as Aetna and almost 7 times as many claims as the next largest processor, UHC, then feel free to remind them that that is called "reframing the discussion." It's what people do when they want to cherry pick data, present it out of context, and without proper comparison to related data that forms the broader and more accurate picture.

Finally, the definition of "denial" seemed a bit unclear to me. I'm still not claiming to fully understand all of this but here is what it looks like to me.

Medicare's top reason for denying a claim (27.8%) is, "Claim/service lacks information which is needed for adjudication." Looks to me like something we call in the business world "cockpit error." Someone in the health care provider's office seems to have failed to fill out the form completely and/or correctly.

The carrier with the next highest percentage of denials, Aetna, has as it's top reason for denying claims (65.7%), "Payment adjusted because the benefit for this service is included in the payment/allowance for another service/procedure that has already been adjudicated."

Again, I'm no expert but I've raised 2 kids, have power of attorney for my aging mother, and have reviewed my fair share of claims. I think what this means - 2/3 of all their denials - is that they have made their plans and the processing of claims so complex as to result in 2/3 of denials being essentially a duplicative claim. No need for reform there, right?

CIGNA's top reason for denying claims (37.6%) is simply, "Deductible Amount." Again, I wonder how it is that just over 1/3 of all the denials end up being this. Could it be that CIGNA's plan definitions, processes, and claims processing are so confused and confusing that 1/3 of all denials are because the patient and health care provider claims administrator can't tell that the claim is part of a deductible? I don't know; just speculating.

So before anyone starts reframing the discussion and dissecting and distributing misleading or self-serving information, ask questions, do some homework, and challenge the assumptions and conclusions.

I'm on the record as supporting single payer. If this report card is any indication of how that might work under a government-run program, I'll gladly pay higher taxes instead of insurance premiums to companies that have never proven and still can't prove that they can do a better job.

"Everyone is entitled to his own opinion, but not his own facts."
Daniel Patrick Moynihan

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