justice 2060093 640

U.S. Department of Labor Files Lawsuit Against UnitedHealthcare for Automated Denials

09 Aug, 2023 F.J. Thomas

justice 2060093 640

Sarasota, FL (WorkersCompensation.com) – With the enormous amount of data driving healthcare, the evaluation and processing of claims across claims platforms is an automated process. In fact, the large majority of claims are processed without human review or interference. 

Lists or tables are one tool that allows software platforms to automatically process claims according to certain rules or edits. Information to include or exclude is included in the tables or lists that help the software route the claim through the system. 

Adjustment and reason codes are also utilized in the claims adjudication process to identify how the claim was processed. While the claims adjudication process may be automated, the findings in an OIG audit earlier this year clearly indicate that the use of adjustment or reason codes by payers is not always consistent nor accurate. 

On July 31st, the U.S. Department of Labor filed a lawsuit alleging that UMR, a third-party administrator and UnitedHealthcare subsidiary, automatically denied thousands of emergency department and drug screen claims while using vague remark codes to explain why those claims were denied. With a denial period of 2015 to 2018, the lawsuit states that handling of the denied claims violate the Employee Retirement Income Security Act (ERISA), and does not the “Prudent layperson standard” under the Affordable Care Act (ACA) in their explanation of benefits. 

According to the complaint, the denials by UMR occurred because of an algorithm driven by two diagnosis code lists, True ER and Sudden and Severe lists. If a claim was filed with a diagnosis that was not included on those lists, the system automatically denied the claim. 

When the claims denied, there was extremely little information provided on why the claim denied, and how to file an appeal. Initially, there were only two vague denial codes that were issued in the automated denials. One was code 200, which simply stated the charge was denied due to the plan excluding benefits for the treatment. Code 947 stated the charges were denied due to being an excluded benefit, and to refer to the general exclusions in the benefit booklet. The explanation of benefits never referenced the benefit restrictions or rules for which the denials were based. Additionally, there was no indication that the diagnosis was the reason for the denials. 

For a limited a time starting in August 2018, UMR did allow for drug screen claims to process and pay. Then in 2019, UMR switched the denial from 914, which is a lack of medical necessity to 515, which is medical records needed from provider. 

According to the lawsuit, UMR did not change their policy until they determined that practically 98 percent of appealed claims for emergency services were overturned. According to a report from Healthcare Dive, UnitedHealthcare spokesperson Maria Shydlo states that they have been in discussions with the DOL, and that the case is referencing “administrative processes that are no longer in place.” 

United Healthcare has been the target of several lawsuits potentially stemming from their automated process and lack of information. Last fall, Optum, an administrator division of United Healthcare settled for $15 million for alleged drug overcharges to the Ohio Bureau of Workers’ Compensation. Earlier last year, Optum agreed to pay out $5.8 million for drug overcharges to the Massachusetts workers’ compensation insurance system. 


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    About The Author

    • F.J. Thomas

      F.J. Thomas has worked in healthcare business for more than fifteen years in Tennessee. Her experience as a contract appeals analyst has given her an intimate grasp of the inner workings of both the provider and insurance world. Knowing first hand that the industry is constantly changing, she strives to find resources and information you can use.

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