Report on Denied Insurance Claims in Massachusetts
According to a recent report, “other administrative denials” were the predominant reason for denied claims, making up 11.7% of all claims, which amounts to about 5.4 million. This category represents claims that did not adhere to the insurance company’s protocols, such as being filed late, lacking proper documentation, or needing separate billing for certain services.
Additionally, 4.9% of claims, or approximately 2.2 million, were denied due to issues like incomplete submissions, coding mistakes, or duplicate claims.
In total, claims refused for administrative reasons constituted over 16% of all claims, roughly 7.6 million in 2024. Interestingly, denials based purely on clinical reasons were less than 1% across any insurer.
The report highlighted significant differences in denial rates among Massachusetts insurance companies, with UnitedHealthcare seeing a denial rate of 28%, compared to 11% for WellSense, a nonprofit health plan associated with the Boston Medical Center Health System.
It’s important to note that this report focused solely on the overall number of claims filed. A claim may have been submitted multiple times before receiving payment, leaving some uncertainty about how many denials led to insurers not covering a treatment.
Despite this, the report emphasized the challenging approval process imposed by the state’s insurance companies. David Seltz, the commission’s executive director, remarked that these administrative denials illustrate a system that burdens both clinicians and patients.
He further pointed out that each of the 7.6 million claims denied for administrative reasons represents significant time and resources wasted by healthcare providers and insurers alike.
In light of the findings, Lora Pellegrini, president of the Massachusetts Association of Health Plans, noted that the administrative process is critical for effectively managing one of the country’s most sophisticated healthcare systems. She mentioned that while claims are often denied, the majority of submissions are paid, as most denials are based on the insurers deeming certain accommodations as unnecessary.
Pellegrini expressed concerns about ensuring efficiency, suggesting that lax billing and payment oversight could lead to increased instances of fraud and waste, subsequently raising healthcare costs. She also argued against the report’s implications that administrative complexity significantly drives healthcare expenses, referencing various other systemic issues that contribute to higher insurance premiums.
The report was presented to the commission’s board by Nancy Ryan from the Office of Patient Protection. Although the 20% denial rate was alarming, some board members viewed it positively because the denials were largely due to administrative issues rather than the insurance companies deeming treatments unnecessary.
Deborah Devoe, board chair and former executive at Beth Israel Lahey Health, emphasized that addressing these administrative issues could significantly reduce the volume of denied claims. Similarly, Keith Marzili Erickson from Boston University’s Questrom School of Management noted that improving administrative processes in insurance claims would likely be manageable.
The report suggested that one effective approach could be for insurers to provide clearer guidelines for healthcare providers on how to submit claims accurately. The state is also contemplating regulations that could incentivize insurers to minimize inappropriate or duplicate claims. Streamlining claims procedures across competing insurers may help resolve this issue.
This report represents the latest critique of ongoing administrative inefficiencies in the Massachusetts healthcare system. Seltz pointed out recently that administrative complexities result in massive waste and present a major opportunity for savings, especially in primary care, where two hours of administrative work are needed for every hour of clinical work.
He believes this is an area where improvements can be made nationwide, questioning why each health plan manages administrative tasks differently. Seltz called it an “insane” way to construct a system and stressed that a real opportunity for reform exists.
This direction aligns with Governor Maura Healey’s newly formed task force focusing on healthcare affordability. State Insurance Commissioner Michael Caljou expressed a desire to tackle administrative waste within the industry and develop a centralized platform for processes like credentialing.
Caljou asserted that with the right strategy, meaningful changes can indeed be accomplished.
