July Research Roundup: What We’re Reading

New health policy research topped CHIR’s list of beach reads this July. For the latest monthly research roundup, we reviewed studies on marketplace enrollees’ denied claims, how marketplace coverage has benefitted small business and self-employed workers, and out-of-pocket spending on insulin.

Karen Pollitz, Matthew Rae, and Salem Mengistu, Claims Denials and Appeals in ACA Marketplace Plans in 2020, KFF, July 5, 2022. KFF researchers reviewed data on health insurance claim submissions, denials, and appeals reported by issuers of qualified health plans (QHPs) sold on HealthCare.gov in 2020. The Affordable Care Act (ACA) requires issuers to make a wide range of coverage data publicly available, including data pertaining to out-of-network claims. However, because CMS has not yet fully enforced the ACA’s data transparency requirements, QHP issuers have so far only reported data for in-network claims.

What it Finds

Among the 213 issuers offering QHPs on HealthCare.gov that reported in-network claims data for plan year 2020, only 144 members of this group provided complete data.
Issuers reported receiving 230.9 million in-network claims, and denied 42.3 million of them—an average denial rate of 18.3 percent. Claims denial rates varied among the 144 issuers who provided complete data: 80 issuers denied between 0-19 percent of claims, while the remaining 64 denied over 20 percent of claims.

Issuers that denied over 30 percent of claims included Celtic, Molina, QualChoice, Ambetter, Oscar, and Meridian. Notably, Celtic, QualChoice, and Ambetter health plans are all subsidiaries of Centene Corporation, a company that heavily markets its plans to lower-income individuals.
States with the highest average claims denial rates (over 20 percent) included Indiana, Mississippi, Texas, Georgia, Arkansas, Missouri, Arizona, Michigan, Ohio, Alabama, Alaska and Hawaii.
Silver-level marketplace plans saw the highest claims denial rates at 18.9 percent, while platinum plans had the lowest rates at 11.8 percent.

Issuers cited a number of reasons for denying in-network claims. Excluding claims denied for being out-of-network, roughly 16 percent of claims were denied for being an excluded service; 10 percent for lacking prior authorization or a referral; 2 percent for not meeting medical necessity criteria; and 72 percent for “other reasons.”

Certain plans were outliers—multiple plans with over 75,000 claims denials rejected as many as 56 percent of these claims for medical necessity reasons.
Twenty percent of medical necessity denials were for behavioral health services, even though behavioral health claims likely accounted for a much smaller share of overall claims.

QHP enrollees very rarely appealed claims denials: out of the approximately 42 million denials in 2020, consumers appealed only 60,754 (less than 0.1 percent) through an issuer’s internal appeals process. Issuers upheld 63 percent of the limited number of claims denials that enrollees appealed.

Why it Matters
Issuers’ utilization management practices, such as prior authorization and medical necessity determinations, are designed to constrain health care costs. However, these practices create barriers to health care access for enrollees. KFF’s analysis pulls back the curtain on how often and why issuers are denying claims. However, the lack of comprehensive claims data reported by issuers signals a need for greater transparency, which state and federal regulators could pursue through more robust enforcement of the ACA’s data reporting provisions. Additionally, the low appeals rate suggests that consumers are missing opportunities to challenge a claims denial. Stakeholders should continue investing in education and assistance to empower consumers to advocate for the coverage promised under their insurance contract.

Office of the Assistant Secretary for Planning and Evaluation (ASPE), Marketplace Coverage and Economic Benefits: Key Issues and Evidence, U.S. Department of Health and Human Services, July 20, 2022. Using tax and survey data, ASPE researchers evaluated how the ACA’s marketplaces and associated financial assistance have impacted health coverage rates among small business owners and self-employed non-elderly adults (ages 21-64).

What it Finds

In 2021, 2.6 million, or 25 percent of marketplace enrollees aged 21-64 were self-employed or small business owners.
The uninsurance rate among self-employed adults has decreased since ACA implementation, falling from 30.2 percent in 2013 to 20.5 percent in 2019.

An estimated 1.3 million self-employed people gained health coverage as a result of the ACA.
While self-employed adults have a higher uninsurance rate than the adult population as a whole, researchers find that this gap has narrowed from a roughly 9 percentage point difference pre-ACA to roughly 7 percentage points as of 2019.

The enhanced premium tax credits established by the American Rescue Plan (ARP) increased availability of affordable marketplace coverage for low- and middle-income consumers, particularly in rural areas where residents are more dependent on marketplace plans.

Overall, ASPE finds that the ARP subsidies extended coverage to 3 million people who would otherwise be uninsured.

Why it Matters
Pre-ACA, affordable health coverage options for self-employed people or small business owners were extremely limited. ASPE’s analysis confirms that the ACA marketplaces provide a critical health insurance safety net for these workers. In addition, the ARP’s subsidy expansion further reduced health care costs that can put significant financial strain on small businesses. On August 7, lawmakers in the Senate voted in favor of a three-year extension of the ARP subsidies as part of the Inflation Reduction Act. This extension is crucial to preserving coverage access for self-employed workers and small business owners, as well as others who rely on the marketplaces for affordable, comprehensive health insurance.

Baylee F. Bakkila, Sanjay Basu, and Kasia J. Lipska, Catastrophic Spending on Insulin in the United States, 2017-18, Health Affairs, July 2022. Researchers used data from the 2017 and 2018 Medical Expenditure Panel Surveys to evaluate the prevalence of “catastrophic health spending” (spending more than 40 percent of income left over after food and housing expenditures on health care) among people who filled at least one prescription for insulin.

What it Finds

Survey responses show that almost 8 million individuals in the U.S. filled at least one insulin prescription in 2017 and 2018.

Most respondents had their insulin prescription covered by health insurance—including Medicare (41.1 percent), private insurance (35.7 percent), Medicaid (11.1 percent), or other insurance (9.9 percent)—but 2.2 percent of respondents paid without any health insurance (“self-pay”).

The median annual out-of-pocket spending on insulin was $97.72, but this varied by coverage status and program. Median spending for respondents with Medicaid coverage was $0, while the median spending amount under Medicare and private insurance coverage was $122.67 and $175, respectively, and median spending for self-pay consumers exceeded $205.

Increases in age and number of daily insulin units used were both associated with increases in out-of-pocket spending.

Roughly one in seven Americans who use insulin experienced catastrophic health spending during the study period.

Catastrophic spending was heavily concentrated among the lowest-income respondents: while almost 56 percent of those with household incomes below $22,000 experienced catastrophic spending, no respondent making above $44,000 annually did.

The majority of those experiencing catastrophic spending had Medicare coverage. Researchers estimate that 700,000 Americans on Medicare experience catastrophic spending on insulin each year.

Researchers identified low household income as the biggest risk factor for catastrophic spending on insulin. Although Medicare beneficiaries spent less out-of-pocket on insulin than privately insured and self-pay groups, they had much lower average incomes, making catastrophic spending much more prevalent among the Medicare group.

Why it Matters
Insulin, a widely used, lifesaving drug, places a significant financial burden on millions of households. Last week, federal lawmakers took an historic step to ease this financial burden through the Inflation Reduction Act, which (if passed by the House) will cap out-of-pocket insulin costs at $35 per month for Medicare beneficiaries. Unfortunately, Congress cut a provision extending this protection to privately insured patients from the final bill. Even so, the long-awaited reconciliation package makes significant progress on tackling out-of-pocket prescription drug costs for Americans with diabetes.