Claims Denials and Appeals in ACA Marketplace Plans in 2023

The Kaiser Family Foundation's analysis of ACA marketplace claims data for 2023 reveals two statistics that, taken together, describe a system profoundly misaligned with patient and provider interests: marketplace insurers denied 20 percent of all in-network claims, yet less than 0.2 percent of those denials were appealed internally. One in five claims denied. Fewer than one in 500 contested. For physician practices operating in the marketplace landscape, this gap between denial volume and appeal volume represents both a systemic failure and an operational opportunity.

The 20 Percent Denial Rate

A 20 percent denial rate for in-network claims is extraordinary. These are not out-of-network claims where coverage disputes might be expected. These are claims for services provided by physicians within the insurer's own network, billed according to the contractual terms the insurer established. When one in five of those claims is denied, the denial is not functioning as a guardrail against inappropriate utilization — it is functioning as a systematic friction point that delays or prevents payment for contracted services.

The KFF data shows this is not an anomaly. The 20 percent rate in 2023 represents the highest marketplace denial rate since the exchanges launched in 2014, continuing an upward trend that has persisted for several years. This trajectory suggests that marketplace payers are becoming more aggressive in their denial practices, not less — despite increased regulatory attention and growing public criticism of denial rates.

The 0.2 Percent Appeal Rate

The near-absence of appeals is the more troubling finding. If 20 percent of claims are denied and only 0.2 percent are appealed, approximately 99 percent of marketplace denials go uncontested. This statistic has multiple explanations, none of them reassuring:

• Patients may not understand their appeal rights or may find the appeal process too complex to navigate
• Physician practices may lack the staff capacity or workflow infrastructure to appeal marketplace denials systematically
• The dollar value of individual marketplace claims may fall below the threshold where practices consider appeals cost-effective
• The appeal process itself may be sufficiently burdensome that it functions as a deterrent, which is arguably its design

Whatever the mix of causes, the result is clear: marketplace payers face virtually no accountability for their denial decisions. When 99 percent of denials stand unchallenged, the incentive structure rewards aggressive denial behavior. There is no meaningful downside to denying a claim that is unlikely to be appealed.

The Provider Perspective

For physician practices, marketplace plans present a specific challenge. The patient population tends to be more cost-sensitive, the reimbursement rates are often lower than commercial or Medicare rates, and the administrative burden per claim can be disproportionate. Adding a 20 percent denial rate to these existing challenges creates a payer segment where the administrative cost of collecting revenue can approach or exceed the revenue itself for certain service categories.

The KFF data does not break down denial reasons in granular detail, but industry experience suggests that marketplace denials cluster around prior authorization requirements, medical necessity determinations, and eligibility verification — the same categories that drive denials across other payer types, but at higher rates. Practices with significant marketplace patient populations need denial management approaches that are efficient enough to be economically viable at marketplace reimbursement levels.

What Practices Should Take from This Data

The KFF findings present a clear strategic question: is your practice among the 99.8 percent that does not appeal marketplace denials, or are you building the capability to contest denials that should not stand? The 20 percent denial rate is a problem that no individual practice can solve. But the 0.2 percent appeal rate is a problem that every practice can address within its own operations. Even modest improvements in appeal rates — from near-zero to systematic review of high-value denials — can recover meaningful revenue. The data shows that the denials are happening at scale. The question is what your practice does about the ones that land on your desk.