Are health insurance companies generally being fair and honest when they reject claims from policy holders?
That would seem to be an important question in deciding how best to fix the U.S. health system. But it hasn't been a focus of the raging health-care debate -- possibly because the answer is not publicly available.
"This is one of the dark corners of the black box that is private health insurance," said Karen Pollitz, a professor at the Georgetown University Health Policy Institute.
Data on how often insurance claims are denied -- and for what reasons -- is collected and analyzed by the insurance companies themselves. But except in California, the companies aren't required to provide those records to any state or federal agency. "The number is knowable, but not known by regulators or policy makers or patients," Pollitz said.
The main health-care reform bill being considered in the House does seek to address the matter. It would require health insurance companies to report data on claims policies, practices and denials to a central commissioner.
The issue of claims surfaced recently in California. The state Nurses Association issued a press release saying that data it obtained from the Web site of the state's Department of Managed Health Care showed that in just the first half of 2009, California's six largest HMOs had rejected more than 31 million claims -- 21 percent of those they had received.
The way the nurses group tells it, state officials didn't even know they had the data.
Don DeMoro, a policy director for the nurses' association, said that he received a phone call from the managed care department after its press release came out.
"They said, 'You couldn't have gotten this data from us. We don't collect it ourselves,'" DeMoro said. "'The data is there,' I told them, 'but it's hard to find.' I walked them through the steps and waited while they clicked through their own Web site. Once they saw that the data was there, they politely said, 'Thank you' and hung up."
Lynne Randolph, spokesperson for the state agency, said she does not know what DeMoro might have been told, but said, "We've always known about this data."
(To check the California data, go to the managed care agency's searchable financial reports. On the pull down menu, select 'full service,' choose a company name and 'annual.' When the list comes up, click on the company name and you will download a spreadsheet. The claims data is contained on the tab labeled 'Schedule G.')
In any case, Randolph contends that the nurses' group misrepresented the meaning of what it found. She said the total number of "claims denied" include duplicate claims and claims that were eventually appealed and accepted, in addition to actual denials. "You can't just look at the numbers in schedule G," she said. "I guess it might look that way to a layman, but that data obviously does not reflect actual denials."
Tim Labas, assistant deputy director in the Office of Health Plan Oversight at the state agency, estimated that the actual denial rate across the board in California is probably somewhere between 10 and 20 percent. "That might still seem high," he said. "But there are legitimate reasons why claims are denied."
The state officials said they consider the claims data they collect to be a kind of early warning system. If they notice large jumps in claims denials for an insurance company, they have the authority to request more specific information, said Mark Wright, an official in the health plan oversight office. The office said it could not cite an example of when it made such a request.
"We could require the insurance companies to report all of the data to us, but I think it would just be too much information for us to handle," Wright said. "We'd be overwhelmed."
The National Association of Insurance Commissioners (NAIC), whose stated mission is to "assist state insurance regulators, individually and collectively, in serving the public interest" said the group did not know the state reporting requirements for insurance companies, nor does it collect data on the actual number of claims denials.
State regulators tend to focus on individual complaints from consumers. But only a fraction of consumer problems with health insurance result in formal complaints.
A national survey published by the Kaiser Family Foundation in June 2000 found that 51 percent of those surveyed had experienced some type of problem with their health insurance, but only two percent had made a formal complaint. Nearly 90 percent of those surveyed could not name the agency that regulates health insurance in their state.
In recent testimony before the House Subcommittee on Domestic Policy, Pollitz, the Georgetown professor, said that collecting claims data is important because "regulators must be able to monitor patterns of health insurance enrollment and disenrollment in order to know whether insurers are avoiding or shedding."
Robert Zirkelbach, spokesperson for the insurance industry's trade association, America's Health Insurance Plans (AHIP), said his organization had not taken a position on the proposed reporting requirement in the House bill.
AHIP represents, among others, UnitedHeathOne, Wellpoint, Inc., Aetna, Inc., Humana, Inc., CIGNA Healthcare, and the Health Care Service Corporation, all of whom sent executives to testify before the subcommittee on Thursday.
AHIP submitted testimony to the record as well, noting that the organization had completed an internal investigation of 700 million claims voluntarily submitted by 19 unnamed insurance companies in 2006 and found the denial rate to be only about 2.36 percent.
But Pollitz said that consumers and regulators, not insurers, need more "detailed, descriptive information about how coverage works." This data about health insurance is generally lacking at both the federal and state levels.
Last year the House Committee on Oversight and Government Reform requested information from 50 state health insurance regulators. They found that most states didn't know the answers to basic questions. Only four states -- Hawaii, Kansas, Texas, and Washington -- knew how many times insurers had dropped people's coverage. Only ten states knew how many individual health insurance policies were in effect in their jurisdictions. More than one-third of state commissioners did not know which health insurance companies even offered policies in their state. The federal agency responsible for maintaining health insurance standards and oversight, the Center for Medicare and Medicaid Services, does not gather compliance data, nor does it track state enforcement.
"It is time for the federal government to take a more active role in health insurance regulation," Pollitz said.