Default Deny

The Healthcode System  ...  Chapter 5

The last chapter described the cost of the claims the system means to pay. This one is about the claims it means to refuse, and refusal turns out to have an architecture of its own.

In the systems that run the apparatus there is a security posture called default deny. The phrase describes a gate built to refuse everything by default and to admit only what clears an explicit exception. It is a sensible setting for a firewall. Applied to a sick person's claim, it becomes the quiet governing logic of American coverage: the default answer is no, and yes is the thing that has to be won.

The refusals are not holding steady; they are climbing. Between 2022 and 2023, one industry analysis found denials rising by roughly a fifth on commercial claims and by more than half on Medicare Advantage.[1] Whatever else is true of the gate, it is closing faster.

The gate has also moved. It used to sit behind the care, deciding after the fact whether to pay. Now, through prior authorization, it sits in front of the care, deciding whether the treatment may happen at all. Ask the physicians who spend their days at that gate what it does. In the American Medical Association's annual survey, more than nine in ten report that prior authorization delays necessary care, and roughly four in five say patients, worn down by the process, abandon treatment that was clinically indicated.[2] The figure that should stop a reader cold: about one in four physicians report that prior authorization has led to a serious adverse event for a patient in their care  ...  hospitalization, permanent harm, or death.[3] This is not overhead at the edge of the system. This is the apparatus reaching past the bill and onto the gurney. The doctors pay their share too, in the thirty-nine authorization requests and thirteen hours the average physician now loses to the process every week.[4]

Here is the detail that turns an inefficiency into an indictment. When denials are challenged, they collapse. The same analysis found a health system reporting that more than half of its denied Medicare Advantage claims were overturned on appeal.[1] Sit with the arithmetic. A denial reversed on appeal was, by the payer's own eventual admission, a claim that should have been paid the first time. A handful of such reversals is error. A majority reversed is not error... it is method. A system that refuses valid claims and pays them only when pressed is not malfunctioning. It is working exactly as designed, with the burden of proof inverted and handed to the patient.

In recent years the denial machine has stopped being a metaphor. Investigative reporting and a wave of lawsuits describe claim refusal carried out at the speed and scale of software. ProPublica reported that one large insurer used an automated system to deny more than three hundred thousand claims in two months, with physicians spending an average of 1.2 seconds of review on each, signing off on batches without opening individual files.[5] The insurer responded that the tool is a simple code-matching process, that most claims run through it are paid, and that it operates only after care has been delivered.[5] A separate class action alleges that another insurer leaned on an algorithm to cut off post-acute care for elderly patients, pressuring staff to keep nursing stays within one percent of the model's prediction, and that roughly nine in ten of the resulting denials were reversed when appealed; the company maintains the tool only guides clinicians and does not itself decide coverage.[6] Courts have allowed the central claims to proceed and ordered the algorithm disclosed.[6] The facts remain contested. What is not contested is the architecture they reveal: adjudication at machine scale, with human review compressed toward zero.

Default deny works for one reason above all others, and it is the coldest fact in this chapter. Contesting a refusal is costly, confusing, and rare. By the allegations in that same case, only about two patients in a thousand ever appeal.[6] Run that figure against a ninety percent reversal rate and the business logic resolves into something stark: the system can be wrong nearly every time it is questioned and still come out ahead, because it is questioned almost never. The denial does not need to be correct. It only needs to go uncontested. The house edge is not accuracy. It is exhaustion.

Chapter two established that under this system care must prove its necessity in code before the money will move. This chapter is what proving it has become: a gate whose default is refusal, widened by software, and kept profitable by the near-certainty that the patient lacks the time, the health, or the stamina to fight back. The cruelty is not in any single no. It is in a design that earns its margin from the friction it manufactures.

The worst of it is still not the care wrongly refused. It is the care that was never assigned a code worth offering  ...  the prevention the system cannot see, and will not pay for, no matter how cleanly the claim is filed. That is the hinge of this entire argument, and the subject of the next chapter.

Notes

1. Between 2022 and 2023, care denials rose an average of 20.2% on commercial claims and 55.7% on Medicare Advantage claims; one health system reported MA denial rates of 10.5%–15.5%, with as much as 56% of denied claims overturned on appeal. American Hospital Association, "Skyrocketing Hospital Administrative Costs, Burdensome Commercial Insurer Policies Are Impacting Patient Care" (September 2024), citing Strata Decision Technology and system-reported data.

2. In the AMA's 2024 prior-authorization survey, roughly 94% of physicians reported that prior authorization delays necessary care and about four in five reported that patients abandon clinically indicated treatment because of it. American Medical Association, "2024 Prior Authorization Physician Survey."

3. Roughly one in four physicians (24%–29% across recent survey years) reported that prior authorization had led to a serious adverse event for a patient in their care, including hospitalization, permanent impairment, or death. AMA, "2024 Prior Authorization Physician Survey"; AMA press release, "AMA survey indicates prior authorization wreaks havoc on patient care" (June 2024).

4. Physicians complete an average of 39 prior authorizations per week, spending about 13 hours on the process. AMA, "2024 Prior Authorization Physician Survey."

5. ProPublica reported that Cigna's PxDx system was used to deny more than 300,000 claims over two months in 2022, with physician reviewers spending an average of 1.2 seconds per claim and signing batches without opening individual files; Cigna characterized PxDx as a code-matching/sorting process that mostly results in payment and operates after care is delivered. ProPublica (March 2023); Healthcare Dive; company statements.

6. A class action concerning UnitedHealth/Optum's use of the nH Predict algorithm (developed by naviHealth) alleges it was used to deny post-acute care for Medicare Advantage members, that staff were pressured to keep skilled-nursing stays within 1% of the model's projection, that roughly 90% of resulting denials were reversed on appeal, and that only about 0.2% of patients appeal; UnitedHealth states the tool guides clinicians and does not make coverage decisions. Federal courts allowed breach-of-contract and good-faith claims to proceed (2025) and later compelled disclosure of the algorithm. STAT investigation; class-action filings; Healthcare Finance News; Bloomberg Law.