A healthcare insider's surprise bill from a hospital-owned clinic shows how only 1 percent of health insurance denials get appealed despite a 34 percent reversal rate, and what consumers can do to protect their finances.
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Only 1% of health denials appealed despite 34% reversal rate
Only 1 percent of health insurance claim denials were appealed in 2024 despite a 34 percent reversal rate for ACA-plan appeals, according to a KFF analysis, leaving consumers exposed to avoidable out-of-pocket costs that can reach thousands of dollars.
"I did everything right — confirmed in-network coverage, no prior authorization required — and still ended up owing 40 percent of my physical therapy bills," said Carly Newhouse, a licensed clinical social worker and health-tech consultant who spent 13 years in healthcare before receiving a surprise bill in late 2024.
Newhouse's insurer covered hospital care at 60 percent until she hit her deductible because the outpatient clinic she visited was owned by a hospital and billed under a more expensive facility code. She completed 22 sessions over 11 weeks before the bills arrived. KFF data shows ACA plans denied 19 percent of in-network claims and 37 percent of out-of-network claims in 2024, with 36 percent of denials attributed to vague "other" reasons and 25 percent to "administrative reasons."
The financial stakes are substantial. Only 1 percent of ACA-plan denials were appealed in 2024, up from 0.2 percent in 2021, even though research shows 53 percent of commercial denials in New York were overturned in 2025 and 34 percent of ACA denials reversed in 2024. Newhouse ultimately had her denial reversed through Sheer Health, an insurance advocacy platform, and paid no more than her expected copays — but only after months of appeals that went nowhere.
The Facility Code Trap
The core problem Newhouse encountered is a site-of-care issue: outpatient clinics affiliated with hospitals often bill under hospital facility codes. A visit at a location that looks like a standard office can be billed with a place-of-service (POS) code of 22 (hospital outpatient) rather than 11 (office), turning a $25 copay into a $350 bill for the same service. Neither her insurer nor the clinic mentioned this when she verified coverage before starting treatment.
Physical and occupational therapy claims are among the most commonly denied, according to Sheer Health, which helped Newhouse reverse her denial. The company noted that timed treatment units and strict medical-necessity guidelines drive many of these rejections. The same facility-code issue can affect imaging, lab work, and specialist visits at hospital-owned outpatient centers across the country, a pattern that has drawn scrutiny from consumer advocates and state regulators since the No Surprises Act took effect in 2022.
Five Checks Before Your Next Visit
Newhouse and Sheer Health recommend several steps consumers can take before receiving care to avoid the same financial trap:
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Confirm the provider accepts your specific plan, not just your insurer. ACA marketplace plans are narrower network products sold under the same brand names as employer-sponsored plans such as UnitedHealthcare or Blue Cross Blue Shield. Ask: "Do you accept [plan name] through the [state] health exchange?" Never rely solely on the insurer's online directory, which may be outdated. Write down the date and name of the person who confirmed coverage.
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Get the facility name and billing codes before your visit. Ask for the CPT code (describing the medical service), the ICD-10 code (tracking symptoms and diagnosis), and the place-of-service code. Verify with your insurer that the POS code qualifies for in-network benefits.
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Ask whether prior authorization or a referral is required. Some plans require pre-approval for services like physical therapy or imaging before they will cover them.
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Verify every referral separately. If an in-network provider refers you to a specialist or a physical, occupational, or speech therapist, repeat the verification process for each newly referred provider.
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Watch for two common traps: hospital-owned clinics that bill under facility codes, and in-network providers who perform procedures at out-of-network locations. Confirm both the provider and the specific location are in-network with your plan.
The appeal process itself is worth pursuing despite its complexity. Newhouse's first two appeals went nowhere — her denial letters did not even cite reasons — but Sheer Health reversed the denial within weeks using much of the same information. Given that 34 percent of ACA appeals succeed and 53 percent of commercial denials in New York were overturned in 2025, the effort can save consumers thousands of dollars. These figures reflect the latest available data as of September 2026; readers should verify current rates against official insurer and regulatory announcements.
This article is for informational reference only and does not constitute professional advice.
