Protego Health

The use of AI to fight denials was the first article in Modern Healthcare's first newsletter of 2025. To me, the main takeaways were: 1) Covered is in the right place at the right time to take advantage of nascent but exponentially improving technologies (AI/LLM's) to help providers even the playing field. 2) While health systems like NYU are working on creating their own software, the customers we serve (Independent specialty provider groups, including those backed by PE firms) hava limited resources. 3) The AMA said that 80% of its members don't always appeal refusals because many don’t think they’ll be successful, have limited time, or need to provide urgent care. American Medical Association - we can help :) According to Dr. Ferra of Deloitte as it relates to the use of AI to fight denials, "the use of automation could be the new normal." There are over $700 billion in annually denied medical claims. While there are many players in the space, there is a lot of work to be done - Tal Shulman, the Covered team, and I are proud to be part of the efforts to even the playing field for providers and patients.

What is the dollar amount of INCORRECTLY denied medical claims in the United States ??? Below are my calculations. For years health plans have used technology to process and deny claims. Tal Shulman and I started Covered to help providers automate the process of appealing denied medical claims to even the playing field. By intervening before a bill hits patient responsibility, we can help both providers and patients like my brother, who was hit with $1 million in bills after multiple surgeries?for Colitis.? In one of the most comprehensive studies on denials to-date, in 2017, Change Healthcare found that there were $263 billion in initially denied claims within hospitals and health systems (https://bit.ly/3Bap82U). Applying an inflation calculator to that number (https://bit.ly/4fdRW8D), we find that $263 billion becomes $334 billion in 2024 dollars. Change Healthcare also noted a 23% increase in denials between 2016 and 2020 (https://bit.ly/3ZtlEAE). If we conservatively assume another 15% between 2020 and 2024, that $334 billion becomes $461 billion. In 2022, according to CMS, Physician and clinical services ($884 bn) were 65.5% of hospital services ($1.35 bn) (https://bit.ly/41uW1SE). Using that same logic, if we multiply $461 bn by 1.65, we get? $737.8 billion. Some denials are correct - providers bill incorrectly, or bill for services that are not medically necessary. But going back to that initial report, Change noted that 63% of denials were recoverable. 63% of $737.8 bn is $465.8 bn. If correct, that means that a dollar amount approximately equal to the GDP of Israel is incorrectly denied by America's health insurance plans each year.

We were devastated to learn this morning of what looks to have been the targeted assassination of UHC's CEO Brian Thompson. While we spend our days fighting against the practices of insurance companies like UnitedHealth Group, U.S. Healthcare must be fixed through legislation and innovation, not through violence. Our thoughts are with Brian's family.

The problem of incorrectly denied medical claims has many repercussions throughout the industry. The obvious one is that when providers can't get paid, patients often get stuck holding the bag. The secondary issue is that when independent providers cannot get paid for services rendered, they look to join larger groups/health systems with greater resources and negotiating power with which to fight back against insurance companies. Problematically, consolidation almost always (still looking for a counter-example - please share in the comments if you've found one) leads to higher prices for consumers and lower quality care. The larger the provider, the more negotiating power it has with insurance companies, the higher the rates it can command, and since patient co-insurance is a percentage of the overall cost of services, costs to the patient go up. A Modern Healthcare article (https://bit.ly/45nBRtE) reported that merging hospitals?raised prices by an average of 1.6% in the two years after a transaction, based on data from 322 hospital mergers between 2010 and 2015. According to a 2020 article (Beaulieu, Nancy, Ph.D, Et. Al. “Changes in Quality of Care after Hospital Mergers and Acquisitions”. NEJM. 2020; 382: 51-59)?in the New England Journal of Medicine, the quality of care at hospitals that have been acquired during recent consolidation of health care systems has stayed the same or gotten worse, and that hospital prices almost always increase as a result of market consolidation. The study examines outcomes from nearly 250 hospital mergers that took place from 2009 to 2013.?Using data collected by CMS, they analyzed variables such as 30-day readmission and mortality rates among patients discharged from a hospital, as well as clinical measures such as timely antibiotic treatment of patients with bacterial pneumonia. Another article (Frakt, Austin. “Hospital Mergers Improve Health? Evidence Shows the Opposite”.?The New York Times. February 11, 2019.) also reiterates that multiple studies show that as the market for hospitals has become more consolidated in recent years, health outcomes have become worse. According to many academic experts, there is three decades of evidence that suggest hospital mergers do not improve quality. More than 200, or 20%, of completed mergers from 2002 to 2020 were anticompetitive based on the Herfindahl–Hirschman Index, a commonly used measure of market concentration.?Yet the FTC, which is meant to protect consumers from monopolies, took enforcement action against only 13 of 1,164, or 1% of hospital mergers from 2002 to 2020. In summary, help is not coming from the FTC/the government. It is up to the private sector to fix these problems. At Covered, one of our objectives is to restore the balance of power between payors and providers, and allow independent providers to remain independent.