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In-Network Coverage Denials by ACA Marketplace Plans Raises Concerns About Parity Enforcement
Affordable Care Act (ACA) marketplace insurers denied about 18% of in-network claims in 2020, and while just 2% of such claims were denied based on medical necessity, approximately 1 in 5 medical necessity-based denials were for behavioral health services, according to new research from the Kaiser Family Foundation (KFF).
Overall, the study found that marketplace plans denied around 765,000 claims in 2020 on the grounds that they were not medically necessary. Of those denials, 150,000 were for behavioral health services. KFF noted that by comparison, a previous report on private insurers by FAIR Health showed that 2.7% of all medical claim lines in 2017 involved behavioral health diagnoses.
While marketplace insurers as a whole were found to deny 18% of in-network claims, 1 in 5 insurers reported denying more than 30% of such claims, a significantly higher figure than what has been previously reported for commercial insurers.
While the Centers for Medicare and Medicaid Services (CMS) require marketplace plans to report medical necessity denials separately for behavioral health services, CMS does not require plans to break out reporting of other data for behavioral health claims, which could provide better context regarding denials of behavioral health claims vs. other services. The findings in the KFF report raise concerns about enforcement of the Mental Health Parity and Addiction Equity Act.
“Twelve years after enactment of the ACA, limited transparency in coverage data collected by the federal government is notable for what it doesn’t show, perhaps even more than for what it does reveal,” the KFF researchers wrote. “These data reporting requirements were enacted to show regulators and consumers key features of health plans that are not otherwise transparently obvious—whether they reliably pay claims for services the plan contracted to cover, how often out-of-network care is sought (a possible indicator of network adequacy), how often claims are subject to preauthorization or medical necessity review, and how claims payment and utilization review practices operate differently for different types of services or diagnoses.”
But because agencies have not fully implemented the provision, data that could be used to conduct oversight and enforce parity laws are limited, the researchers wrote.
“More robust transparency data reporting, while potentially more burdensome to insurers, could provide data useful to both regulators and consumers,” KFF concluded.
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