Outrage tends to bubble up when denials become human drama, triggering media interest. There's the 17-year-old girl who died before her liver transplant was approved. Or the people in California whose insurers canceled their policies retroactively after they got sick. What's often missed is that these cases are the tip of an opaque iceberg. An estimated 10 to 15 percent of claims are denied for various reasons, some of them technical, such as not meeting filing deadlines or failing to get pretreatment authorizations. Denials that produce the most disputes are those where insurers judge the care to be unnecessary or unproven, pitting a proverbial sick David against a multibillion-dollar Goliath. What few Davids know is that insurance contracts by law grant companies the legal right to manage a patient's care, including denying it, sight unseen, and give them the final say, if challenged. Unless the state steps in.

Many denials are iffy calls and can appear distinctly arbitrary, with one insurer saying no to a particular therapy or procedure while others reimburse for it. An FDA-approved drug might be denied because it's used off-label, even if it is shown to work in peer-reviewed reports. In cancer care, the generally expensive intravenous chemotherapy drugs given in a doctor's office are typically covered, while an equivalent, if not better, therapy taken at home orally is not. When insurance authorization is required for each new service or each hospital stay for the same serious illness, who's best to say what's medically necessary? Doctors and their staff will spend hours trying to get the approvals, but patients should be warned that if the company ultimately denies payment, for whatever reason, it's the patients who are responsible—with bill collectors ready at their door.

The problem is bound to grow as insurers make use of sophisticated data tools dubbed "denial engines," which are touted to reduce reimbursements by 3 to 10 percent. Bearing brand names like Ingenix Detection Software and Bloodhound Technologies' ClaimsGuard, they search patient records for any signs that claims have strayed outside company parameters. Weeding out fraud or speeding up processing is one thing; serving up excuses to deny legitimate coverage is another.

... In America now it's a computer that'll be saying no to your health needs... Might as well call them dEaTh dRiVeS