Report Highlights Unforeseen Health Care Bills and Coverage Denials by Commercial Insurers

The AHA reported on a study documenting how commercial insurer coverage denials create unforeseen healthcare bills for patients — bills that simultaneously harm patients financially and complicate the provider-patient relationship that physician practices depend on. For practices managing the fallout from payer denials, this report articulates a dimension of the denial problem that is often overlooked: the patient-facing impact that ultimately circles back to practice operations.

When a commercial insurer denies coverage for a service that a physician ordered and a patient received, someone has to pay. If the denial stands, that someone is often the patient. And when the patient receives an unexpected bill for a service they believed was covered, the trust they place in their physician's practice is damaged — regardless of whether the practice had any role in the denial decision.

The Patient Impact

The AHA report documents several patterns in how coverage denials produce unforeseen patient bills:

• Post-service denials. Services that were not flagged as requiring prior authorization, or that were authorized and subsequently denied on other grounds, leave patients responsible for charges they had no reason to anticipate.
• Medical necessity denials for in-network services. When an in-network provider delivers a service that the payer subsequently deems not medically necessary, the patient may face the full charge — a financial exposure that was invisible at the time of service.
• Retroactive coverage determinations. Payer audits that result in post-payment recoupment can produce delayed bills to patients for services received months or years earlier.
• Coordination of benefits disputes. Patients with multiple coverage sources may receive surprise bills when payers dispute which plan is primary, leaving the patient responsible during the resolution period.

How This Affects Physician Practices

The patient financial impact of coverage denials creates several problems for physician practices that extend beyond the direct revenue loss:

Patient satisfaction and retention suffer when patients receive unexpected bills. Patients often hold their physician practice responsible for billing surprises, even when the practice accurately submitted the claim and the denial was the payer's decision. The resulting frustration can lead to negative reviews, patient attrition, and damaged community reputation — costs that do not appear on a financial statement but are real nonetheless.

Collection rates decline when patients are billed for denied services. Patients who receive unexpected bills are less likely to pay them promptly or in full, particularly for large amounts. The practice faces a choice between aggressive collection efforts that further damage the patient relationship and writing off the balance — neither of which is a good outcome.

Staff time increases as patient billing inquiries rise. When patients receive unexpected bills, they call the practice. Those calls consume front-desk and billing staff time, adding to the administrative burden that the denial already created. Staff must explain the denial, describe the appeal process, and often manage the patient's frustration — a task that contributes to front-office burnout.

The Appeal Connection

The patient impact of coverage denials strengthens the case for systematic appeal processes. When a practice appeals a denial and the appeal succeeds, the patient bill goes away. The service is paid by the insurer as it should have been. The patient-provider relationship is preserved. The practice collects its contracted rate. Everyone wins except the payer that issued the inappropriate denial.

This means that appeal activity has value beyond the direct revenue recovery. Every successful appeal also eliminates a potential patient billing problem, a potential negative patient experience, and a potential collection challenge. When practices calculate the ROI of their denial management efforts, the patient-facing benefits should be part of the equation.

Proactive Communication Matters

Practices can mitigate the patient impact of coverage denials through proactive communication:

When a claim is denied, informing the patient promptly — before the explanation of benefits arrives — gives the practice an opportunity to frame the situation. Explaining that the claim was denied, that the practice disagrees with the denial, and that an appeal is being filed positions the practice as the patient's advocate rather than the source of the billing problem.

When a denial is upheld after appeal, helping the patient understand their options — including the right to an external review, financial assistance programs, and payment plans — preserves the relationship even when the financial outcome is unfavorable.

The AHA report documents a problem that physician practices experience daily. The solution is not just better appeals — it is a comprehensive approach to denial management that recognizes the full spectrum of costs that denials impose, including the patient costs that ultimately become practice costs.