In working to increase access to health care, Haley King draws on everything from her biomedical and mechanical engineering degrees and her experience at medical devices company Medtronic to the technical lessons learned in her father’s metal-stamping factory. But in building a business to help patients access insurance reimbursements for life-changing procedures, she has another advantage: two co-founders with personal experience of these inequities.
In 2023, King and her co-founders started Paxos Appeals to help patients challenge insurance denials. So far, its appeals have won back over $2 million on behalf of more than 150 patients, and the company has partnerships with six medical providers and seven health insurance attorneys. But, given the scale of the challenge, King is focusing on scaling the business as rapidly as possible.
Patients who are denied reimbursement for procedures they thought their health insurance would cover face substantial financial burdens, often running into tens of thousands of dollars in out-of-pocket payments that, in many cases, lead to unsustainable debt and even bankruptcy.
The problem, King explains, is that many patients do not know that they can appeal insurance denials, and even if they do, they often struggle to navigate the cumbersome process or cannot find or afford professional assistance from law firms. “Very few of these cases are taken on by lawyers, especially if the claim amount is less than $50,000 due to constraints in existing health insurance legislation,” she says.
The seeds of Paxos appeals were sown when, while she was enrolled in the MBA program at Stanford GSB, King met fellow student Alex Lacey, a former product manager who, despite years suffering from respiratory and dental issues, had faced three insurance denials for jaw surgery.
Seeking support for his surgery denial, Lacey had turned to a Reddit jaw-surgery forum, where an anonymous user who had experienced a similar denial helped him succeed in overturning his denial through an appeal.
On learning of King’s professional experience in health care, Lacey invited her to join him in applying to the GSB’s 2023 Impact Design Immersion Fellowship. The pair secured the fellowship and spent the summer exploring the viability of a business that would write insurance appeals for underserved patients and help people find health plans that would meet their medical needs.
That was when they heard that another Stanford student, Malcolm Asher, who was studying human biology with a concentration in health equity, had a similar idea for a business. To their surprise, Asher turned out to be the anonymous user Lacey had met on Reddit and who had helped Lacey write his appeal for his own surgery.
That settled it. The three teamed up to build a business helping people find their way through the complexities of the health insurance appeals process to access the care they need, even in the face of denials. “My vision is for us to become the go-to resource for anyone experiencing a health insurance issue or concerned that they may face one,” says King.
The Problem
For people with a condition affecting the jaw or mouth who find speaking, eating, and breathing difficult, maxillofacial surgery (a type of jaw surgery) is a life-changing therapy. Yet too often, as Lacey and Asher discovered, insurers deny coverage for this procedure. And maxillofacial surgery is among thousands of transformative medical procedures for which insurers regularly deny reimbursement.
Denials are on the rise, in fact. Analysis by healthcare technology company Kodiak found that initial denial rates rose by 18% from 2020 to 2023. Use of artificial intelligence by insurance companies to automate claims processing is further pushing up denials, with several firms facing lawsuits alleging that this practice is leading to unfair or wrongful reimbursement denials.
Most affected are low-income patients with cheaper health plans. While their monthly premiums may be more affordable, the deductibles for procedures can be high enough to put a family into a cycle of debt, and denial rates tend to be higher in these plans. In a 2023 study, the Department of Health and Human Services found that, in 2019, the Medicaid managed-care organizations it reviewed had denied one in eight requests for prior authorization (which providers submit when seeking approval from health plans for medical reimbursements).
Part of the problem is that insurers do not necessarily have a full understanding of the patient’s overall condition. And sometimes doctors submit prior authorization requests with insufficient or incorrect documentation. But even when this is not the case, insurers can deny reimbursement for medically necessary procedures, sometimes because they have been reported to encourage reviewers to deny claims.
As with many health inequities, misaligned incentives are part of the problem. Since reimbursements eat into their profits, insurers have a vested interest in making it hard for patients to appeal denials, says King.
She explains that the process can be intimidating, whether because of an overly complex website or hard-to-understand terminology. “The letters you receive from health insurance companies when you get denied are super official-looking with very formal language,” she says.
These strategies are clearly working: While 40% of appeals are successful, less than 1% of patients challenge their denials. “Insurers are required by law to include instructions on how to appeal,” says King. “But a lot of people don’t realize that the chances of success are actually pretty high if you fight back.”
Instead, she says, too many patients are left either with mountains of debt or unable to receive critical surgeries and other treatments.
The Solution
For Paxos Appeals, information and advocacy are the key to reversing this trend. The company offers two key services: writing insurance appeals and patient consulting (such as policy clarification, documentation assistance, cost estimation, and appeal strategy planning). And so far, the team’s efforts are paying off: since its inception, the company has saved more than $2 million for patients who have used its service.
The team is exploring cross-subsidization models through provider partnerships, and aims to make this service affordable for any patients who end up in these situations. Meanwhile, a set of free guides for the insurance appeals process is available on the Paxos Appeals website explaining how to write appeals, save money on out-of-network procedures, and file regulatory complaints.
Many clients are individual patients who have found Paxos Appeals via word of mouth or, in some cases, through Reddit and other online patient forums.
However, King sees great potential in partnering with medical providers, lawyers, and health systems, who often direct patients to the company. “Physicians want their patients to get access to these treatments,” she says. “They’re doing their best to help patients with appeals, but sometimes that’s not enough. As one surgeon we partner with told us, ‘I practice medicine, not insurance.’”
For now, as part of a pilot program, the company offers its service at no cost to providers and has affordable fees and free guides for patients. However, King’s long-term plan is to have providers pay for the services. She believes that, since they are likely to see those services as a benefit they can offer patients while increasing their practice’s treatment volume, many providers will be interested in working with Paxos Appeals.
Meanwhile, to expand its reach, the team is making technology investments and tapping into the power of AI technologies. While patient privacy and data security are priorities, says King, AI can optimize the speed and quality of the appeals the company writes. AI algorithms can also predict the likelihood of winning a case, while natural language processing enables rapid review of documents to identify the most relevant information.
“Even five years ago, a business like this would have been hard to scale. You’d have needed a human writing every appeal,” says King. “We’re using technology to improve the quality of appeals and to increase our operational efficiency. While we still have a human working on every case, AI enables us to serve patients affordably and at scale.”
The Innovator
King has long been interested in the intersection of health care and technology. Growing up in rural Indiana, she witnessed firsthand the challenges communities faced in accessing care. And at her father’s factory she became fascinated by the design and manufacture of mechanical components.
She combined these dual interests by pursuing mechanical and biomedical engineering degrees as a first-generation college student. She subsequently spent six years at Medtronic, where she designed and developed cardiovascular implants, aiming to improve patient outcomes through innovative medical devices. However, frustrated with the length of time it took to get these products to market, she began to consider entrepreneurship as a means of innovating more rapidly to increase the impact of her work.
This took her to Stanford GSB and to her work creating the health care information and patient insurance advocacy startup that is now Paxos Appeals. Ultimately, however, King wants to go beyond helping patients navigate health system flaws — she wants to help fix those flaws.
For example, Paxos Appeals encourages patients to file regulatory complaints. And as the company assists more patients, it will amass a wealth of information that can be used to shed light on — and change — poor health insurance practices. “There’s so much we can do with this data to drive transparency and ensure patients receive the fair health care access they are entitled to under their insurance plans,” says King.
Having recently graduated from Stanford, King and her co-founders are now focused on the most critical part of their mission: scaling to serve more patients. The team is also exploring the possibility of helping patients secure reimbursement for other types of insurance, such as disability insurance and dental insurance.
“If the U.S. health care system was set up appropriately and not broken, this business wouldn’t need to exist,” says King. “Until systemic change happens, we’ll be here. More than half a million people file for bankruptcy each year due to medical bills. We want to help as many of those people as possible.”
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