[zephen]

> the only way for them grow profits is to increase cost.

And, of course, things like spurious denials drive up costs for them and for the providers. More direct costs, more costs at the provider they have to cover...

From the insurance company perspective, it's a win-win!

[chongli]

> things like spurious denials drive up costs for them and for the providers

Spurious denials? Or improperly filed claims?

[zephen]

Spurious denials.

It's easy to find documentation of this. For example:

https://pmc.ncbi.nlm.nih.gov/articles/PMC10391242/

https://phrma.org/blog/70-denied-how-insurance-denials-are-d...

https://www.forbes.com/sites/joshuacohen/2026/05/04/independ...

Anecdote is not the singular of data, but when my late wife was dying of cancer, the oncologist was attempting to follow standard care procedures. Preauthorizations were denied even after physician consultation with the insurance company.

My research showed me that the insurance companies contract with other companies (who they may or may not own) to handle the dirty work. It was only after learning the magic incantations to directly contact the "third-party" company that I was able to get traction.

"We do not believe this treatment is warranted."

"Well, her doctor believes it, so she's going to get the treatment. The only question is whether you pay now, or after I file a small claims case."

It was miraculously authorized at that point. It's the same fucking thing with car insurance. The poor people who can't fight really get screwed.

[chongli]

None of your links provides data on spurious denials. The third link does provide this statistic:

"Over a six-year period between 2019 and 2025, almost half of a large set of denied health insurance claims in New York state were reversed when the cases reached independent review organizations, comprised of clinicians unaffiliated with insurers"

But that doesn't get into the reasons why the claims were denied in the first place. It doesn't tell us anything about bona fide spurious denials vs. improperly filed claims (mistakes in the paperwork), clerical errors, or clients placed under investigation for claiming too early (after applying) or too often (making a lot of spurious claims), or care providers who do the same.

Insurance companies are concerned with adverse selection and moral hazard. A client who files a lot of claims shortly after getting insurance raises the suspicion that they were not honest about their health prior to applying. Similarly, a client who claims every drug a pharmacy carries raises other suspicions.

Of course, most clients aren't like that, but a not-insignificant minority are, and a small number of clients can file a very large number of claims.

[zephen]

> But that doesn't get into the reasons why the claims were denied in the first place.

The first link in that article does. It starts off by noting that this the third level review, so there were ample chances for the insurance company itself to fix things, and also says that "The report also showed that 47.1% of denials on the basis of medical necessity, 44% of denials based on care determined to be experimental or investigational, and 42.9% of formulary denials were overturned."

It's a pipe dream to assume that, by the time the appeals got to that point, it could be chalked up to administrative error.

> Insurance companies are concerned with adverse selection and moral hazard. A client who files a lot of claims shortly after getting insurance raises the suspicion that they were not honest about their health prior to applying. Similarly, a client who claims every drug a pharmacy carries raises other suspicions.

Yes, every Canadian gets 5 abortions a year, even the men. But seriously, the moral hazard goes the other way. It is so fucking difficult to get doctor appointments that the insurance companies should be doing everything in their power to help keep people healthy, rather than worrying about the 0.1% of the population that suffers from Munchausen syndrome.

[ethbr1]

It's both.

Medical fraud is like retail stock shrinkage or fraudulent credit card charges -- no one on the customer side is aware of it, because it's handled on the other side and baked into pricing.

But there are substantial amounts of both straight fraud and too aggressively up-coding / over-billing.

The meta problem is that the because of the nature of the industry (legitimate volume dwarfs fraud), it's more financially impactful to pull levers that impact legitimate volume (read: prior auth requirements).

The anti-fraud systems are also pretty robust. As you'd imagine, insurers have been dealing with this for more than a few decades by now.

[akramachamarei]

How would spurious denials drive up the cost of medical service?

[clcaev]

By failing to provide adequate treatment early in a disease course, further exacerbations and comorbidities can appear, and these can become their own chronic conditions requiring further ongoing treatment.

[akramachamarei]

This is a great answer.

[zephen]

By adding tons of paperwork and time and effort. When a denial happens, often the doctor himself has to communicate with the insurance company via phone, instead of, you know, doctoring.

This often proceeds over multiple rounds. And then either the company eventually pays, or the consumer has to pay and try to get reimbursed later.

You asked this question 30 minutes after even a casual reading of my other comment, and a little thinking about it, would have fully answered it.

I would like to assume good faith, but your other comments indicate a high probability that you are an insurance company shill.

And in response to your other question about collusion, no there doesn't have to be collusion. Insurance companies putting onerous bogus requirements on providers will automatically drive up the costs.

[akramachamarei]

I am deeply offended by your allegation. Not everyone who disagrees with you is a shill. I would not make the same accusations about you, nor would I act as if I can estimate the probability that you are. HN's commentary guidelines address this.

You can consider my mistake to be in conceptualizing the cost of "medical services" too narrowly, as just the medicine, and not the providers' surrounding administration. To that end I take your point. In theory, at least. Do you know how much this has? In particular, you refer to the back-and forth negotiation of claims--on what do you base this claim?

[zephen]

> I am deeply offended by your allegation.

Be offended all you want. It's a free country, but, to be perfectly frank, you are still making it difficult to believe you are writing in good faith, as I will show.

> You can consider my mistake to be in conceptualizing the cost of "medical services" too narrowly, as just the medicine, and not the providers' surrounding administration.

Which is fine, except that my very first comment that you responded to explicitly explained "More direct costs, more costs at the provider they have to cover..."

So I already explained that which you said you missed, before your first comment questioning it.

> Do you know how much this has? In particular, you refer to the back-and forth negotiation of claims--on what do you base this claim?

When I wrote "You asked this question 30 minutes after even a casual reading of my other comment, and a little thinking about it, would have fully answered it." I was serious.

You still asking this question, instead of looking at that comment, indicates that at best you are completely unserious. For your edification, here is a link to that comment:

https://news.ycombinator.com/item?id=48480873

When you wrote your first comment in reply to mine, there were already two comments there -- that one and its very short parent.