Insurers Regularly Delay, Deny, and Defend Their Treatment Malfeasance

By: Marcus J. Hopkins, Health Policy Lead Consultant, ADAP Advocacy

New research conducted by Johns Hopkins Bloomberg School of Public Health and published in the Journal of the American Medical Association Health Forum found that health insurance denials for brand-name medications increased by 67% between 2018 and 2024, from 24.3% in 2018 to 40.7% in 2024 (Wang et al., 2026). It is yet the latest news showcasing how insurance companies are putting the squeeze on patients.

Photo Source: Johns Hopkins

Wang et al. utilized 2024 IQVIA pharmacy claims data to identify branded drug dispensations that faced initial prior authorization (PA) rejections and completed the PA process, calculating the frequency of same-day PA reviews and final approval rates.

They found that nearly one-third of initial prescription fill attempts (32%) were rejected because of formulary exclusions, including the medication not being covered by the patients’ insurance plan or because of utilization management rules (PA requirements). Of those rejections, nearly half (48.4%) were not followed by a prescription fill of either the prescribed drug or a drug in the same therapeutic class within 90 days. Those patients who were able to successfully appeal their rejections waited an average of 12 days before receiving their prescriptions (Bloomberg School of Public Health, 2026).

These findings highlight a common strategy employed by health insurance companies in the United States: “Delay, Deny, Defend.” This strategy—also the title of a 2010 book about the insurance industry written by Jay Feinman—is implemented by insurers in order to increase profits. Here’s how it works:

Insurers “delay” the processing of claims—particularly PA claims—in order to frustrate policyholders into abandoning their claims. This is accomplished by introducing bureaucratic obstacles, such as requiring numerous forms or claiming that forms were incorrectly filled out or filed, in the hopes that, by increasing the number and length of delays, insured patients will abandon their treatments.

Insurers also “deny” insurance claims, even if services are listed as being covered by a patient’s explanation of benefits. They utilize this tactic knowing that a vanishingly small percentage of patients will appeal those denials. Data published by KFF in March 2026 found that, among marketplace insurance plan holders, fewer than 1% of denied claims were appealed by policyholders. When policyholders do appeal, two-thirds of those appeals are rejected (Long et al., 2026).

If neither the “delay” nor “deny” tactics are successful, insurers may choose to “defend” their decisions in court. These legal battles can be extensive, last for years, and be both financially and emotionally taxing, which insurers rely upon to dissuade patients from fighting back against them (DeShaw, 2024).

Photo Source: Wikipedia

Wang et al.’s research found significant disparities between payors. Marketplace exchange plans and Medicaid managed care plans had the highest rates of denials—the plans most likely to be utilized by patients who have lower incomes or chronic ailments—with nearly half of all initial prescription attempts denied. Meanwhile, Medicare plans had lower rejection rates. Rejection rates may be lower because the vast majority of prescription drug prices are not negotiable under Medicare plans, while price negotiations are legal for commercial and Medicaid plans, meaning higher profits and payouts under Medicare plans.

As with last week’s blog ("Co-Pay Accumulators Are a Craven Attempt to Accumulate Profit Off the Backs of Patients"), this fundamental truth must be recognized and accepted to understand why these tactics are used:

The purpose of commercial health insurance companies is not to provide access to healthcare services; it is to make profits.

So long as the profit motive exists, insurers will work to ensure that they make those profits, even if it means that patients delay or abandon treatment; even if it means that patients die.

These strategies underpin another looming threat:

State programs, including those in Colorado and Connecticut, have recently been moving HIV antiretroviral medications out of protected drug classes that are generally covered under Medicaid medical benefits, and onto prescription drug formularies, creating lists of approved HIV therapies.

Photo Source: WalletInvestor.com

This poses a significant threat to people living with HIV/AIDS, as virtually every medication used to treat HIV is a brand-name drug. By removing HIV treatments as a medical benefit and placing them into a prescription benefit, patients whose HIV can only be managed by specific drug classes due to drug resistance may face the real risks that their prescriptions may be denied not because those drugs are not effective, but because payors wish to reduce prescription drug expenditures and make profits.

ADAP Advocacy vehemently opposes efforts by states and commercial insurers to profit off of patients. We need legislation that ends these practices. Whether politicians have the political will to enact such policies has yet to be seen.

Disclaimer: All funders of the ADAP Advocacy Association are publicly listed on our website. 

Disclaimer: Guest blogs do not necessarily reflect the views of the ADAP Advocacy Association; rather, they provide a neutral platform for the author to promote open, honest discussion of public health-related issues and updates.

References:

[1] Bloomberg School of Public Health. (2026, July 10). Insurance Denials for Brand-Name Prescription Drugs Rose Sharply From 2018 to 2024. Baltimore, MD: Johns Hopkins University: Bloomberg School of Public Health. https://publichealth.jhu.edu/2026/insurance-denials-for-brand-name-prescription-drugs-rose-sharply-from-2018-to-2024

[2] DeShaw, A. (2024, December 11). What Does “Delay, Deny, Defend” Mean? Portland, OR: DeShaw Law: Blog. https://www.deshawlaw.com/blog/what-does-delay-deny-defend-mean

[3] Long, M., Lo, J., & Pestaina, K. (2026, March 24). Claims Denials and Appeals in ACA Marketplace Plans in 2024. San Francisco, CA: KFF: Topics: Patient and Consumer Protections. https://www.kff.org/patient-consumer-protections/claims-denials-and-appeals-in-aca-marketplace-plans-in-2024/

[4] Wang, Y., Levy, J. F., Mattingly, T. J., II, & Anderson, G. (2026, April 17). JAMA Health Forum, 7(4), e260760. https://doi.org/10.1001/jamahealthforum.2026.0760

Are Nonprofit Hospitals' Community Benefit Tax Breaks Truly Serving Communities in Need?

By: Ranier Simons, ADAP Blog Guest Contributor

Nonprofit hospitals are supposed to be primarily focused on the communities they serve. They exist, in theory, to provide quality, equitable access to care for all, regardless of the ability to pay. The mission should be community service and improving the healthcare outcomes and well-being of their communities. Unlike for-profit hospitals, which concentrate on generating profits for private shareholders or owners, nonprofit hospitals are mandated to use their profits to invest in the community. Unfortunately, data shows that many nonprofit hospitals are not fiscally operating to properly benefit their communities despite the significant tax exemptions they are afforded, referred to as community benefits. In fact, some nonprofit hospital systems are exploiting their tax incentives and adding to patient and community medical debt. As such, many stakeholders and policymakers are increasingly scrutinizing nonprofit hospitals' tax-exempt status.

Photo Source: Third Way

Over half of the hospitals in the United State are designated by the Internal Revenue Service (IRS) as nonprofit.[1] According to the American Hospital Association (AHA), there are approximately 6,120 hospitals in the United States, with 2,987 of them categorized as nongovernment not-for-profit community hospitals.[2] The nonprofit designation means the entities are tax-exempt from most federal, state, and local taxes. A recent study conducted by researchers at Johns Hopkins Bloomberg School of Public Health, Johns Hopkins Carey Business School, and Texas Christian University found that in 2021, nonprofit hospitals received $37.1 billion in tax benefits.[3] Over the next decade, estimates indicate that the federal revenue lost from nonprofit tax breaks will be approximately $260 billion.[1] The significant tax deductions should spawn considerable community benefits. Nevertheless, the reality paints a different picture.

In turn, for the designation as a charitable non-hospital, these entities are required to use the funding generated from the tax breaks to provide for the needs of the patients served. This help is referred to as community benefit obligations. These obligations can be fulfilled with endeavors such as health education programs, community health improvement initiatives, charity care, and financial assistance programs.[1] Unfortunately, data shows that many nonprofit hospitals are not adequately fulfilling their community benefit requirements and, in some cases, operate like for-profit institutions. In some cases, they even fall short of the level of community benefit given by for-profit institutions. 

One of the most quantifiable and identifiable metrics of community benefit is charity care. Charity care is defined as providing free or significantly discounted medical care for patients who cannot afford it. Many patients who face medical affordability challenges are significantly impacted by emergency room or inpatient hospitalization expenses.[4] Both uninsured/underinsured and insured patients present a need for charity care. 

There is a growing chorus amongst stakeholders invested in improving public health calling for reforms to the lucrative 340B Drug Pricing Program, which was initially designed to "stretch scarce federal resources as far as possible, reaching more eligible patients and providing more comprehensive services." According to a recent report by IQVIA, the 340B Program ballooned to $124B in 2023, yet another report found 85% of disproportionate share hospitals (DSH) earn more in 340B profit than they spend on charity care. The special interests fighting 340B reform claim clear guidelines already exist for community benefit requirements. 

The IRS first issued guidance for hospitals designated as 501(c)(3) nonprofit entities regarding the specific charity care requirement in 1956.[1] This was before Medicare and Medicaid when there was a dire need for a means to help those in need. It directly specified that nonprofit hospitals could not deny care to those who couldn’t pay if they wanted to maintain their nonprofit status. After the advent of Medicare and Medicaid, the IRS pivoted to the community benefits standard concept of required activity in 1969.[5] This broader definition is part of the present dilemma with qualifying the community help nonprofit hospitals provide.

Whether specifically charity care or community benefit, data shows that most nonprofit hospitals are not adequately utilizing their savings from tax-exempt status to reinvest in the community. According to a March 2024 policy brief issued by the nonpartisan Lown Institute, in 2021, “about 80% of [nonprofit] hospitals spent less on meaningful community investment compared to the value of their tax breaks.”[6] For charity care specifically, in 2018, Johns Hopkins University research data showed that overall, nonprofit hospitals provided charity care valued at only 2.3% of their total operating expenses compared to the valuation of their tax exemption, which was 4.3% of total operating expenses.[7] A 2023 United States Senate HELP Committee report indicated similarly trending 2021 data. The report examined 16 major nonprofit hospital chains, all of which had more than $3 billion in annual revenue. Twelve of the 16 allotted less than two percent of their total revenue to charity care, with six of those twelve allotting less than one percent.[8]

In contrast to most nonprofit hospitals with poor levels of tax break investment, the Lown Institute identified a few positive anomalies for the 2021 fiscal year. Data was taken from information on IRS Form 990. Ten hospitals and ten hospital systems were identified as having community investments that exceeded their tax breaks.[9] The analysis was based on metrics deemed to have a “direct and meaningful impact on community health.”[9] These metrics included financial assistance, community health improvement services, cash and in-kind contributions, community-building activities, and subsidized health services.[9] 

Lakeland (Fla.) Regional Medical Center and Summit Healthcare Regional Medical Center (Show Low, Ariz.) topped the hospital list with high community investment spending at $194 million and $159 million, respectively.[9] Hackensack Meridian Health (Edison, N.J.) and Nebraska Medicine (Omaha) topped the health system list at $358 million and $119 million, respectively.[9] It is unusual for nonprofit entities to have community investments that exceed their tax exemptions. Usually, for-profit entities would have more of an incentive to have high levels of charity expenditures as for-profit entities can write them off to lower their tax burden, unlike nonprofits.

Photo Source: Health Affairs

The actions of nonprofit hospitals that do not adequately satisfy their charity care and community benefit are damaging in multiple ways. Some of the bad actors have low levels of revenue spent on charity care yet aggressively pursue bills of patients who cannot afford their needed care. Nonprofit hospitals have sold patient debts to for-profit collection agencies, garnished wages, put liens on property, and even denied non-emergent care to low-income individuals with insurmountable medical debt.[10] This is in bad faith and not in the community's best interests when there is ample revenue from the tax-exemption profit that can and should be used for charity care. Data shows that many low-income patients who are victims of aggressive debt collection practices are eligible for free and discounted care. Despite the protections put in place by the Affordable Care Act (ACA), many nonprofit hospitals make it difficult for patients to find out they are eligible for charity care, in addition to making the process challenging to navigate.[8]

Some nonprofit hospitals operate more like for-profit entities, especially regarding acquisition. Nonprofit hospitals have merged, acquired for-profit hospitals and insurers, and even opened for-profit businesses in other countries.[11] Several nonprofit hospitals with low percentages of revenue spent on charity care also have high CEO compensation. For example, in 2021, Allina Health System in Minneapolis, Minnesota, paid its CEO a salary equal to 21% of the total charity care provided by the entire hospital system.[8] New York Presbyterian Hospital paid its CEO $10.9 million while only allotting $68.5 million in charity care when the total 2021 hospital system revenue was almost $10 billion.[8]

Reform is needed to ensure nonprofit hospitals operate in the manner for which they were intended. Reforms suggested by the Committee for a Responsible Federal Budget include transparency and refining reporting, clearly delineating what community benefit means, and setting minimum community benefit spending levels.[8] The form entities use to report their community benefit activities is IRS Form 990 Schedule H. That form needs to be revised to require nonprofit hospitals to give significantly more details of categories and amounts of community benefit spending.[8] Moreover, rules should be updated to require reporting at the facility level, not the health system parent organization level.[8]

Community benefit should be more explicitly defined. Currently, it is too nebulous and includes metrics that are hard to measure and do not necessarily provide direct community or patient benefit.[8] Things like physician education and Medicaid shortfall should no longer be considered. Most importantly, things like Medicaid shortfall expenditures are already offset by funding, such as disproportionate share hospital payments.[8]

Federally, Congress should consider setting minimum levels of community benefit spending. Some states have already instituted this. Texas, for example, has stringent state laws around nonprofit hospitals. If an entity is not designated as a Medicaid Disproportionate Share Hospital (DSH), it can fulfill the required charity care levels by: providing charity care and community benefit equaling at least five percent of the entity or system’s net patient revenue with four percent of that being charity care and government-sponsored indigent care, provide charity care that exceeds the amount of funding generated by tax-exempt status, or prove that charity care is being given at proportionate levels corresponding to the community needs and entity’s ability.[12]

Photo Source: NPR

As a part of the continuing examination of the burden of medical debt, this week, ADAP Advocacy launched an online survey to collect data on patient perspectives and experiences with medical debt. It is available nationwide for anyone in the United States to participate. It is also anonymous with the option of providing personal information if you wish to be contacted for additional follow-up.

The ADAP Advocacy-sponsored Ryan White Grantee 340B Patient Advisory Committee commissioned the study to support patient-centered reform. Many hospitals, as recipients of drug rebates under the 340B Drug Pricing Program, are notoriously bad actors. Data from the survey will add color to patients’ lived experiences with medical debt’s whole-person effect on their lives.

Medical debt continues to adversely affect patients' healthcare outcomes and cause stresses on other aspects of daily living. Nonprofit hospitals are supposed to operate in a manner that benefits anyone who needs care regardless of the financial means to pay for it; however, that is not the status quo. Reform is necessary since data shows many nonprofit hospitals are focused on generating profits instead of providing robust investment into their communities.

Senator Bernie Sanders succinctly described the dire situation when he expressed, “At a time when 85 million Americans are uninsured or underinsured, over 500,000 people go bankrupt because of medically-related debt, and over 60,000 Americans die each year because they cannot afford to go to a doctor when they need to, nonprofit hospitals should be providing more charity care to those who desperately need it, not less….And if they refuse to do so, they should lose their tax-exempt status.”

Read our related blog, In the United State, is Medical Debt is Truly Hospital Debt?

[1] Committee for a Responsible Federal Budget. (2024, June 12). The Federal Tax Benefits for Nonprofit Hospitals. Retrieved from https://www.crfb.org/papers/federal-tax-benefits-nonprofit-hospitals

[2] American Hospital Association. (2024, January). Fast facts on U.S. Hospitals. Retrieved from https://www.aha.org/statistics/fast-facts-us-hospitals

[3] Johns Hopkins Bloomberg School of Public Health. (2024, September 26). U.S. Nonprofit Hospitals Received More than $37 Billion in Total Tax Benefits in 2021. Retrieved from https://publichealth.jhu.edu/2024/us-nonprofit-hospitals-received-more-than-37-billion-in-total-tax-benefits-in-2021

[4] Levinson, Z., Hulver, S., Neuman, T. (2022, November 3). Hospital Charity Care: How It Works and Why It Matters. Retrieved from https://www.kff.org/health-costs/issue-brief/hospital-charity-care-how-it-works-and-why-it-matters/

[5] Bai, G., Letchuman, S., & Hyman, D. A. (2023). Do nonprofit hospitals deserve their tax exemption? New England Journal of Medicine, 389(3), 196–197. https://doi.org/10.1056/nejmp2303245

[6] Lown Institute. (2024, March). Hospital Community Benefit Spending: Improving transparency and accountability around standards for tax-exempt hospitals. Retrieved from https://lownhospitalsindex.org/wp-content/uploads/2024/03/lown-institute-fair-share-policy-brief-20240321.pdf

[7] Zare, H., Eisenberg, M. D., & Anderson, G. (2021). Comparing the value of community benefit and Tax‐Exemption in nonprofit hospitals. Health Services Research, 57(2), 270–284. https://doi.org/10.1111/1475-6773.13668

[8] United States Senate HELP Committee. (2023, October 10). Executive Charity Major Nonprofit Hospitals Take Advantage of Tax Breaks and Prioritize CEO Pay Over Helping Patients Afford Medical Care. Retrieved from https://www.sanders.senate.gov/wp-content/uploads/Executive-Charity-HELP-Committee-Majority-Staff-Report-Final.pdf

[9] Gooch, K. (2024, March 26). 20 hospitals, systems where charity care exceeds tax breaks. Retrieved from https://www.beckershospitalreview.com/finance/20-hospitals-systems-where-charity-care-exceeds-tax-breaks.html?oly_enc_id=8229J1560589D4S

[10] Thompson, I. (2023, September 5). Nonprofit Hospitals Pursue Aggressive Medical Debt Collection. Retrieved from https://nonprofitquarterly.org/nonprofit-hospitals-pursue-aggressive-medical-debt-collection/

[11] Rosenthal, E. (2024, July 22). Why many nonprofit (wink, wink) hospitals are rolling in money. Retrieved from https://www.washingtonpost.com/opinions/2024/07/22/nonprofit-hospital-health-care-industry/

[12] Texas Hospital Association. (2024, September). Charity Care and Community Benefit in Texas: Frequently Asked Questions. Retrieved from https://www.tha.org/wp-content/uploads/2024/09/Charity-care-FAQ-September-2024-FINAL.pdf

[13] Muoio, D. (2023, October 11). Sanders: Nonprofit hospitals 'should lose their tax-exempt status' if they 'refuse' to increase charity care. Retrieved from https://www.fiercehealthcare.com/providers/sen-sanders-nonprofit-hospitals-should-lose-their-tax-exempt-status-if-they-refuse

Disclaimer: Guest blogs do not necessarily reflect the views of the ADAP Advocacy Association, but rather they provide a neutral platform whereby the author serves to promote open, honest discussion about public health-related issues and updates.   

US District Court Sides with Patient Groups on Co-Pay Accumulators

By: Ranier Simons, ADAP Blog Guest Contributor

An important legal decision produced a financial win for patients on medication affordability. On September 29, 2023, U.S. District Court Judge John D. Bates struck down a federal rule left over from the Trump Administration that previously allowed broad use of copay accumulators by insurance companies, which shifted more cost-sharing to patients. For a detailed explanation of copay accumulators, please view a previous ADAP Advocacy blog post on the subject here. 

Photo Source: National Infusion Center Association

Copay accumulators, in essence, allow insurers to ‘double-dip’, maximizing profits while increasing financial burdens for patients. The accumulators allow insurers to refrain from applying drug manufacturer copay assistance payments to patients’ deductibles and out-of-pocket costs. Under copay accumulator policies, insurers pay less for medications by prolonging the cost-sharing time period before they are responsible for 100 percent of a medication’s cost.

The Trump-era rule is officially known as the U.S. Department of Health and Human Services (HHS) Notice of Benefit and Payment Parameters for 2021 (NBPP).[1] The HIV+Hepatitis Policy Institute, Diabetes Leadership Council, Diabetes Patient Advocacy Coalition, and three patients sued HHS over the rule. The win means that insurance companies must now abide by the federal rule that controlled 2020 health plans. Thus, copay accumulator programs are only allowed to be used for brand-name drugs that have generic equivalents.[1] According to a report issued by IQVIA, manufacturer copay assistance in 2022 was almost $19 billion.[2] This means insurers previously received billions in payments provided by manufacturers in addition to the overage they were predatorily siphoning directly from patients. 

The flawed federal rule allowed insurance companies to arbitrarily decide if copay assistance programs were considered a type of cost-sharing. This was based on contradictory interpretations of the law and problematic ambiguities of its language. Copay assistance should indeed be regarded as cost-sharing, given the rule states cost-sharing is “any expenditure required by or on behalf of an enrollee.”[1] Striking down the rule removes any ambiguity mandating that patients can go back to applying copay assistance payments towards deductibles and out-of-pocket maximums, thus significantly lowering their financial burden for high-cost medications.

Photo Source: National Bleeding Disorders Foundation

Health insurance policy and drug benefit design can be a bridge or a barrier to effective and optimal access to life-saving medications. High out-of-pocket costs for patients often result in medicine abandonment, poor medication adherence, or even failure to initiate necessary treatment.[3] Patients affected by copay accumulators are 1.5 times less likely to fill their prescriptions than those in high-deductible plans.[4]

The legal decision is a significant win. However, it must be aggressively and effectively enforced. The representatives of HHS attempted to use convoluted and flawed arguments to explain why copay accumulators were good for patients and how they somehow forced manufacturers to lower prices. The judge refuted their arguments, but he remanded to HHS in the event it should decide to offer new arguments concerning the legality of copay accumulators under the Affordable Care Act.[1] Swift and sweeping enforcement can ensure there is no delay in patients' financial relief. Languid implementation of the ruling will continue to harm patients while providing time for continued attempts to construct arguments in favor of the accumulators.

[1] HIV + HEP Policy Institute. (2023, October 2). Court strikes down HHS rule that allowed insurers to not count copay assistance. Retrieved from https://hivhep.org/press-releases/court-strikes-down-hhs-rule-that-allowed-insurers-to-not-count-copay-assistance/ 

[2] IQVIA Institute For Human Data Science. (2023). The Use of Medicines in the U.S. 2022: Usage and Spending Trends and Outlook to 2026. Retrieved from https://www.statnews.com/wp-content/uploads/2023/10/iqvia-institute-the-use-of-medicines-in-the-us-2022-1.pdf

[3] Simons, R. (2023, May 18). Affordable Care Act marketplace plans and drug benefit design. Retrieved from https://adapadvocacyassociation.blogspot.com/2023/05/affordable-care-act-marketplace-plans.html

[4] Silverman, E. (2023, October 3). Court strikes down Trump-era rule that allowed health insurers to broadly use copay accumulators. Retrieved from https://www.statnews.com/pharmalot/2023/10/02/trump-biden-hhs-copay-insurance-accumulator/

Disclaimer: Guest blogs do not necessarily reflect the views of the ADAP Advocacy Association, but rather they provide a neutral platform whereby the author serves to promote open, honest discussion about public health-related issues and updates.