No Prescription for You: How and Why Rx Claim Denials Are Increasing

By: David Ostrowsky

The world of rejected insurance claims is shrouded in mystery. It is an ecosystem of numbers and records often lacking full transparency to those searching for answers. Though some government-funded health plans are mandated to disclose their denial rates, most for-profit insurance companies keep a lid on that data. Thus, any rare opportunity to dive into the cold hard facts becomes newsworthy.

Last month, there was such an opportunity when the prominent health analytics company Komodo Health generated a report grounded in the analysis of over four billion claims. The Komodo Health report, published in The New York Times on July 18, illustrated that prescription drug denials by private US insurers skyrocketed 25 percent from 2016 to 2023 (18.3 percent to 22.9 percent), while America’s most prominent insurers, including UnitedHealthcare, Cigna, Aetna, Anthem, and Humana, all saw their rejection rates rise, with the exception of Humana’s rate decreasing over the last two years of the analysis. Meanwhile, in 2023, the last year data was collected, Cigna recorded the steepest denial rate (25%). In fairness, it is often the case that after a denial, replacement claims for the very same drug are eventually okayed, however, sometimes patients grow disillusioned and out of frustration, forgo their medication before a final approval can come to fruition.

Over the past year, public outrage has intensified over the systemic inequities streaming through America’s private health insurance system. Specifically, a perceived exorbitantly high rate of denials—including claims for both medical services and prescription drugs—has drawn the ire of Americans paying escalating costs to cover themselves and their families. Eight months after UnitedHealthcare CEO Brian Thompson was murdered in Midtown Manhattan—a tragic moment that nonetheless epitomized many Americans’ collective disgust with their nation’s health insurance system—such resentment hasn’t dimmed. However, objectively speaking, the Komodo report does provide some fascinating insight into a situation that continues to adversely affect millions.

For one, while UnitedHealthcare has long been singled out as the most egregious example of an insurer coldheartedly denying claims, evidently it is not the only massive private insurer that has been inclined to consistently reject a high volume of claims—at least in regard to prescription drugs. But as for why those claims keep getting denied at a steady rate, the report offers some explanations that warrant consideration. Certainly, heightened AI-fueled automation of the claims review process still factors into the equation (it should be noted that major American health insurers recently pledged to reform prior authorization tactics, including those incorporating AI), however the analysis found that the Rx claims were most typically rejected because the given refill had been requested prior to the patient being eligible for receiving more medication. Meanwhile, other logistical/timing issues persist when providers and/or pharmacies file duplicative, inaccurate or incomplete claims that can trigger an initial denial.

On a more macro level, as the Times article pointed out, it is not always health insurance companies responsible for deciding to turn down claims. In fact, those judgments are often made by Pharmacy Benefit Managers, more colloquially known as PBMs, which are companies that manage prescription drug benefits for health insurers, employers, and other payers. In acting as the middleman, the PBM is charged with negotiating drug prices, processing claims, and—in many cases—determining which drugs are covered by insurance plans.

Within the purview of cost containment, the recent exploding popularity of high-priced weight loss medications has been another consideration for payers of all sorts. These GLP-1 drugs are in many cases not particularly cost-effective for plans given that many participants don’t stay on them long enough to realize their full benefits. As such, some insurers, while concurrently trying to confirm medical necessity of the onrush of other drugs being churned out at a breakneck pace, may deny claims for brand-name GLP-1 drugs with the hope of ultimately steering participants towards lower-cost, alternative generic versions.

So yes, this Komodo Health report only adds credence to the belief shared among many patients and doctors—often articulated in a very forthright manner via social media—that insurers are unjustly refusing to pay for medically necessary care and prescriptions. But from a different lens, the study also presents findings that suggest maybe the situation is a bit more complex and multifaceted than some might originally think.