How Health Insurance Companies Secretly Profit From Denying Your Claims

What if health insurers are denying your care to protect corporate profit, not your health?

How Health Insurance Companies Secretly Profit From Denying Your Claims What if health insurers are denying your care to protect corporate profit, not your health?

In 2024, Medicare Advantage insurers denied admission to skilled nursing facilities for patients recovering after hospital stays. When patients and doctors appealed, the insurers overturned 95% of those denials.

A denial reversed 95 times out of 100 is not a reliable medical safeguard. It is an obstacle that fails only after someone has the strength, knowledge, and time to force a second look. The patient has already been ill, injured, or recovering from surgery. The insurer’s first answer was still no.

Insurance is sold as protection from uncertainty. You pay premiums so illness, injury, surgery, medication, and hospital care do not destroy your finances. Yet, when protection is needed, a corporate gatekeeper appears with rules that were invisible when the policy was sold. Your doctor recommends care. The insurer decides whether you receive it.

The financial conflict is brutally simple. Insurers collect premiums and profit by controlling medical spending. Every denial, delay, exclusion, restricted network, rejected referral, reduced payment, or prior-authorization refusal reduces what the company pays for care. The language changes from company to company. It may be called utilization management, claims review, medical necessity, or policy compliance. The patient still encounters a barrier between a doctor’s decision and the treatment they need.

The system does not depend on one outrageous rule. It uses many smaller gates. Prior authorization, network restrictions, coding requirements, referral rules, benefit limits, formularies, exclusions, paperwork deadlines, and internal definitions of medical necessity all produce the same result. Each rule looks technical in isolation. Together, they form an obstacle course controlled by the company that benefits when the patient does not reach the end.

Software has made that gatekeeping faster, larger, and harder to see. ProPublica reported that EviCore, an outsourced review company used by large insurers, employed an algorithm known internally as “the Dial.” It adjusted the likelihood that company doctors would review a prior-authorization request, increasing the possibility of denial. The insurer does not need to tell a doctor to deny more care. It needs only to set a system that gives fewer requests meaningful scrutiny.

The insured person and their doctor are often kept out of the loop until the last mile. By then, a decision has already been shaped by rules, software, and reviewers they cannot see. The patient is expected to produce records, obtain specialist letters, meet deadlines, repeat tests, find new referrals, and appeal a decision while dealing with pain, fear, and declining health. The company has a department, a process, legal teams, data, and time. The patient has a letter saying no.

That imbalance matters because most people do not appeal. In 2023, HealthCare.gov insurers denied 20% of in-network claims, while consumers appealed fewer than 1% of the denied claims. A denial that is never challenged becomes a saving without anyone having to admit that the original decision was wrong.

Federal investigators found the same problem in an earlier review of Medicare Advantage plans. Thirteen percent of sampled prior-authorization denials met Medicare coverage rules, while 18% of sampled payment denials met the applicable coverage and billing rules. These were decisions that should not have been denied.

The harm is not abstract. In the American Medical Association’s 2025 survey, 26% of physicians reported that prior authorization had led to a serious adverse event for a patient in their care. Ninety-five percent said it delayed necessary care. Seventy-nine percent said patients abandon treatment because of the barriers. This is not an inefficient system. It is a system that changes what happens to people when they are most vulnerable.

The same control reaches prescription drugs. Insurers and pharmacy-benefit managers decide which medicines are preferred, which require prior authorization, which demand step therapy, and which pharmacy a patient must use. A specialist can prescribe the treatment that fits a patient’s condition, only to have an insurer demand that the patient first fail on a cheaper drug selected by the company.

The Prescription Price Game showed how far that distortion can go. A 90-day supply of Droxidopa was priced at $180 in cash but became a $9,700 transaction through an Express Scripts-affiliated pharmacy channel. The medicine did not become more valuable. The corporate route became more profitable. The same intermediaries that obscure drug prices also control whether the patient receives the drug at all.

This power does not sit inside one insurance office. It expands through mergers and vertical control. Insurers, pharmacy-benefit managers, provider networks, clinics, home-care businesses, data platforms, and claims-processing systems increasingly sit inside connected corporate structures. Each acquisition gives the same parent company more influence over what care is offered, where it is delivered, what medicine is approved, and how much is paid. Patients see separate brands and separate departments. The money often travels through the same corporate pipeline.

Politics allowed that pipeline to grow. Regulators review individual transactions while the public lives with the combined power created over years of approvals. Large corporations fund legal teams, economists, lobbyists, policy specialists, industry associations, and consultation responses that patients and independent doctors cannot match. Complex regulation is presented as protection, yet complexity also protects the companies large enough to absorb it and use it.

Advertising money adds another layer of protection. It does not require a corporate executive to call a newsroom and demand silence. It shapes what receives investigative budgets, legal support, specialist reporting, data analysis, and sustained attention. A story about a new health product attracts advertising. A story exposing the machinery behind denied care threatens relationships, access, and revenue. The result is not total silence. It is too little scrutiny of a system that controls too much.

The denial letter is only the final mile. Long before it reaches the patient, financial incentives, software rules, corporate ownership, political influence, and hidden decision-making have already shaped the outcome.

Try This

• Start before the refusal. Ask the doctor’s office which approvals are required, who will submit them, what evidence supports the request, and what the appeal plan will be if the insurer says no.
• Request the written denial reason, the exact policy language, the clinical criteria used, and the appeal deadline.
• Act immediately. For urgent care, request an expedited appeal and keep every letter, record, date, name, and reference number.
• Bring your doctor into the fight. Ask the treating physician to request a peer-to-peer review with the insurer’s medical reviewer and submit a written explanation of why the treatment is necessary.
• Escalate outside the insurer. Use external review and file a complaint with the State Insurance Department. For a self-funded employer plan, also contact the US Department of Labor.
• Get help when the process overwhelms you. Patient advocacy organizations and medical case managers can help organize records, challenge denials, and pursue appeals.

Do not let a corporate form letter become the final word on your care.

Quick Summary

Health insurers profit by controlling what they pay for care. Prior authorization, opaque rules, software-driven review, step therapy, and exhausting appeals place corporate decisions between patients and their doctors.

A denial is not always a final medical judgment. It is often the first move in a system that expects sick people to give up.

Why This Matters

When someone is told they need care, the question should be how quickly that care can begin. Instead, families are pushed into a fight they never expected. They must read denial letters, collect records, call departments, chase approvals, and argue with strangers while living with pain, fear, disability, or the possibility that time is running out.

The doctor who knows the patient becomes another person asking permission. Treatment is delayed while paperwork moves through a corporate system built to protect spending targets. Every day lost can mean worsening symptoms, avoidable suffering, a rushed emergency visit, or a condition that becomes harder and more expensive to treat.

This is not simply bad administration. It is a transfer of power from the patient and doctor to a company whose financial interest improves when it pays less. No family facing illness should have to become an expert in insurance law just to receive the care they already pay to have.

What Not To Do

• Do not confuse insurance coverage with guaranteed access to care.
• Do not treat an insurer’s definition of medical necessity as an independent medical judgment or allow it to replace the doctor treating you.
• Do not assume an official-looking denial letter makes the decision final or correct.
• Do not mistake a complex process for a fair process.

Bottom Line

A health-insurance policy should protect you when you are ill, not place a profit-driven corporation between you and your doctor. Until that conflict is exposed and challenged, every denial deserves a closer look.

The book Business of Healing examines the wider system behind healthcare decisions, including the corporate incentives, political influence, and institutions that shape access to care. Available worldwide on Amazon.com.

For the prescription side of this system, read The Prescription Price Game.

Educational Disclaimer

Educational content only. This article is general commentary, not medical, legal, or insurance advice. Coverage, appeal rights, and complaint routes vary by plan and location. Full disclaimer at EmbracingMyVitality.com.

The 95 Percent Question

The 95% overturn rate involved appealed denials of admission to skilled nursing facilities after a hospital stay. These facilities provide short-term skilled nursing and rehabilitation for people recovering from illness, injury, or surgery. The result exposed a disturbing weakness in the original decision-making process. When appeals overturn nearly every challenged denial, the first decision cannot be treated as a dependable judgment of patient need.

The greater concern is the cases that never reached appeal. A patient who is too sick, isolated, confused, overwhelmed, or financially pressured to fight receives no second look. The system records only the final outcome. It does not record the care that was abandoned because the fight itself became too difficult.

The Cost of Friction

A denial does not need to be permanent to cause damage. Each request for more paperwork, another clinical note, a different code, or a new referral consumes time. Doctors and their staff spend hours dealing with insurer demands instead of patients. Families repeat the same details to departments that do not communicate with one another. The burden becomes part of the insurer’s control system.

The appeal process also hides its own failure. A company can point to a formal right of appeal and claim the system is fair. That right means little when the patient has no idea how to use it, misses the deadline, cannot obtain the required evidence, or is too exhausted to continue. A right that is difficult to use is not the same as meaningful protection.

The Algorithm Does Not Need to Say No

The modern denial system does not always require a machine to issue the final rejection. It is enough for software to decide which cases are reviewed, how quickly they move, which documents are considered missing, and which requests receive added scrutiny. A change to those rules changes real access to care.

Outsourcing makes the process even less visible. The patient sees the insurer’s logo on the denial letter but may never know that a separate company handled the review. Responsibility is dispersed across the insurer, the review contractor, the software system, and the internal medical team. The patient must still fight the result.

Step Therapy Turns Treatment Into a Test

Step therapy forces patients to try the insurer’s preferred medicine before receiving the medicine selected by the treating clinician. The company calls this a cost-control measure. For the patient, it means being required to fail before being allowed to receive the treatment their doctor already chose.

This approach is especially dangerous when a condition is progressing, when earlier treatments have already failed, or when the patient has experienced side effects. A drug that is cheaper for the insurer is not automatically the right drug for the person who must take it.

Rules Are Beginning to Change

Federal regulators have begun forcing more transparency into prior authorization. CMS now requires impacted payers to provide specific reasons for denied prior-authorization decisions and to meet faster decision deadlines. Standard requests must receive a decision within seven calendar days, while expedited requests require a decision within 72 hours.

These changes matter, but they do not remove the underlying conflict. A faster refusal is still a refusal. Clearer wording on a denial letter does not return decision-making power to the doctor and patient.

Support Exists Outside the Insurance Company

Patients should not assume that the insurer’s customer-service department is their only source of help. External review, state insurance departments, employer-benefits offices, and patient advocacy organizations can create pressure beyond the original decision-maker.

The Patient Advocate Foundation provides support for people navigating coverage barriers and financial pressure connected to medical care. Its case-management and assistance programs are designed for people who need help dealing with the system while also dealing with illness.

Sources

1. HHS Office of Inspector GeneralMedicare Advantage Organizations Overturned Nearly All Appealed Prior Authorization Denials for Skilled Nursing Facility Admissionhttps://oig.hhs.gov/reports/all/2026/medicare-advantage-organizations-overturned-nearly-all-appealed-prior-authorization-denials-for-skilled-nursing-facility-admission-raising-concerns-about-initial-denials/
2. HHS Office of Inspector GeneralSome Medicare Advantage Organization Denials of Prior Authorization Requests Raise Concerns About Beneficiary Access to Medically Necessary Carehttps://oig.hhs.gov/reports/all/2022/some-medicare-advantage-organization-denials-of-prior-authorization-requests-raise-concerns-about-beneficiary-access-to-medically-necessary-care/
3. ProPublicaEviCore, the Company Helping U.S. Health Insurers Deny Coverage for Carehttps://www.propublica.org/article/evicore-health-insurance-denials-cigna-unitedhealthcare-aetna-prior-authorizations
4. KFFClaims Denials and Appeals in ACA Marketplace Plans in 2023https://www.kff.org/private-insurance/claims-denials-and-appeals-in-aca-marketplace-plans-in-2023/
5. American Medical Association2025 Prior Authorization Physician Surveyhttps://www.ama-assn.org/system/files/prior-authorization-survey.pdf
6. Centers for Medicare and Medicaid ServicesCMS Interoperability and Prior Authorization Final Rulehttps://www.cms.gov/newsroom/fact-sheets/cms-interoperability-and-prior-authorization-final-rule-cms-0057-f
7. Patient Advocate Foundationhttps://www.patientadvocate.org/
8. Embracing My VitalityThe Prescription Price Gamehttps://embracingmyvitality.com/read/?id=1033&lang=en