It is not uncommon to have your health insurance claim denied. But it is not the final word. The good news is the Affordable Care Act gives policyholders the right to appeal health insurance denial if their insurer refuses to pay.
If your health insurer refuses to pay a claim or ends your coverage, you have the right to appeal health insurance denial and have it reviewed by a third party. You can ask that your insurance company reconsider its decision. Insurers have to tell you why they’ve denied your claim or ended your coverage.
Reasons a Health Insurance Claim Could Be Denied
There are actually many of reasons a health plan might deny payment for a healthcare service. Some reasons are simple and relatively easy to fix, while some are more difficult to address.
Common reasons for health insurance denials include:
1: Paperwork errors or mix-ups: For example, your doctor’s office submitted a claim for Cynthia C. Public, but your insurer has you listed as Cynthia O. Public. Or maybe the doctor’s office submitted the claim with the wrong billing code.
2: Questions about medical necessity: The insurer believes the requested service is not medically necessary. There are two possible reasons for this:
- You really don’t need the requested service.
- You need the service, but you haven’t convinced your health insurer of that. Perhaps you and your doctor need to provide more information about why you need the requested service.
3:Cost control: The insurer wants you to try a different, usually less expensive, option first. In this case, many times the requested service will be approved if you try the less expensive option first and it doesn’t work.
4: The service just isn’t covered by your plan: The service you requested isn’t a covered benefit. This is common for things like cosmetic surgery or treatments not approved by the FDA. It’s also common for services that don’t fall within your state’s definition of the Affordable Care Act’s essential health benefits—if your plan is obtained in the individual or small group market—which can include things like acupuncture or chiropractic services. (Note that if you have an employer-sponsored plan that’s self-insured or obtained in the large group market, the ACA’s essential health benefits are not required to be covered; check your plan details to be sure you understand what is and isn’t covered by your policy).
Significant gaps in covered benefits are also common if you’ve purchased a plan that isn’t regulated by Affordable Care Act rules (such as a short-term health plan or fixed indemnity plan) and thus doesn’t have to cover services that you might otherwise expect a health plan to cover—things like prescription drugs, mental health care, maternity care, etc.
5: Provider network issues: Depending on how your health plan’s managed care system is structured, you may only have coverage for services provided by doctors and facilities that are part of your plan’s provider network.4 If you go outside the provider network, you can thus expect your insurer to deny the claim.
If you’re seeking prior authorization for a service to be performed by an out-of-network provider, the insurer might deny the authorization but be willing to consider it if you choose a different health care provider. Alternately, you might try to convince the insurance company that your chosen provider is the only provider capable of providing this service. In that case, they can make an exception and provide coverage. Be aware that the provider may balance bill you for the difference between what your insurer pays and what the provider charges, since this provider hasn’t signed a network agreement with your insurer.
But depending on the circumstances, your state might have restrictions on surprise balance billing, preventing you from facing additional charges if the out-of-network treatment was emergency care or care that was received from an out-of-network medical provider at an in-network facility.
6: Missing details: Perhaps there was insufficient information provided with the claim or pre-authorization request. For example, you’ve requested an MRI of your foot, but your doctor’s office didn’t send any information about what was wrong with your foot this will lead to your Health Insurance Claim Could Being Denied.
7: You didn’t follow your health plan’s rules: Let’s say your health plan requires you to get pre-authorization for a particular non-emergency test. You have the test done without getting pre-authorization from your insurer. Your insurer has the right to deny payment for that test—even if you really needed it—because you didn’t follow the health plan’s rules.
In any non-emergency situation, your best bet is to contact your insurer before scheduling a medical procedure, to make sure you follow any rules they have regarding provider networks, prior authorization, step therapy, etc.
How to Appeal Health Insurance Denial
To appeal health insurance denial might sound like a David vs. Goliath struggle to you, but the battle is worth waging if you’ve got a legitimate case. Plus, winning the case is easier than you might think.
Many wrongful claim denials stem from coding errors, missing information, oversights or misunderstandings as stated above.
Pat Jolley, director of clinical initiatives at the Patient Advocate Foundation, says that your insurance company will send you a denial letter outlining why when a claim is denied. The denial letter will provide the appeals process and the deadline to appeal.
Here are six steps to Appeal Health Insurance Denial:
1. Find out why the health insurance claim was denied: The insurance company should send you an explanation of benefits form that states how much the insurer paid or why it denied the claim.
Call the insurer if you don’t understand the explanation, says Katalin Goencz, director of MedBillsAssist, a claims assistance company in Stamford, CT.
If it’s a simple error, the insurer might offer to straighten it out. But double-check to make sure your insurer follows through, Goencz says.
“Get the name of the person you spoke to, the date, the reference number for the phone call and put it on your calendar to check back with the company in 30 days,” she says.
2. Read your health insurance policy: Understand exactly what’s covered under your policy and how co-pays are handled. Health insurance plans differ.
For example, find out if you have an HMO or a PPO. Usually, the health insurer includes a summary of benefits online, but you should read the policy itself, says Rebecca Stephenson, president and CEO of VersaClaim, a claims assistance and patient advocacy business in Austin, TX.
“This is not a document you store in the attic with your old tax records,” she says. “It needs to be close at hand.”
Can’t find it? Ask your employer’s benefits department, health insurance company or your broker, depending on how you get insurance, for a copy.
3. Learn the deadlines for appealing your health insurance claim denial: Read your health plan and understand the rules for filing an appeal.
If it’s a complex case and you’re concerned about meeting the deadline, send a letter stating you’re appealing the denial and will send further information later.
4. Make your case: Gather necessary documents from your healthcare provider.
“Get a letter of medical necessity from your healthcare provider that outlines why the recommended treatment you received was medically necessary.
In cases where you’re denied because the service or treatment you received wasn’t covered, provide peer-reviewed medical studies to support your case that the service was medically necessary. If you initially got a second opinion and the provider recommended the same treatment, use it as evidence for your appeal.
If you need additional evidence, Fish-Parcham says “consumers can reach out to professional societies or disease associations to gather additional information about why and when a particular type of treatment is considered medically necessary and is a best practice.”
Sometimes, the problem stems from something as simple as a billing mistake by a doctor’s office.
Stephenson tells of one client whose health insurance company denied a claim for surgery because her deviated septum was named as the diagnosis. The insurer didn’t cover surgeries for a deviated septum.
But she was also diagnosed with acute purulent sinusitis — the real reason for the surgery, which was never communicated to the insurance company.
Stephenson had the client submit copies of her medical reports, X-rays and a physician’s letter confirming the sinusitis diagnosis. The patient won.
5. Write a concise appeal letter: When you write an appeal letter, be sure to include your address, name, insurance identification number, date of birth for the person whose claim was denied, date the services were provided and the health insurance claim number.
“The first sentence should state that you are appealing the claim denial, and the body of the letter should explain why the medical bills should be paid,” Goencz says. “Put in a closing sentence demanding payment, and include supporting documentation.”
Include details on what you’re appealing and why you feel your claim should be paid.
“You need to appeal based on the reason that something has been denied. So, if something has been denied because it’s not a covered service, then saying that something is medically necessary doesn’t count.
Save emotional rants for understanding friends. Stick to the facts.
Send by certified mail to get notification that the packet was received.
Submit your letter of medical necessity, a copy of your denial letter and other supporting documents by the deadline. Track everything so you have proof of when you submitted your appeal. That could include a fax number or post office tracking number.
Follow up with your insurance company seven to 10 days after you submit your appeal to make sure it’s received, Jolley says.
Once you submit an appeal to your insurer, another medical professional, who didn’t initially review your claim, will check all the information for your appeal. Jolley says you can request a board-certified reviewer in the medical specialty associated with the claim.
The time it takes for your insurer to review your appeal varies. It could be as quickly as 72 hours. It could take 60 days. The timing depends on the insurer’s policies.
Once your insurer makes a decision, you’ll receive notification in writing, which will include details on:
- Why your appeal was approved or denied
- The basis of the decision
- The next step in the appeals process
“Every level of appeal that you go through, you’ll get an actual denial or approval letter from the insurance company, and on the denial letter it tells you exactly what your next step is and the next level of appeal you go to.
There are at least two or three levels of internal review you can go through with your insurance company before you can seek external review, Jolly says.
6: If you lose, try again: Once an external review is completed, you’ll receive a letter saying your denial rights have been exhausted. After this, you may have the option to pursue the matter through your state’s insurance commission or to file an appeal in federal court if you have an Employee Retirement Income Security Act (ERISA) health plan.
If your appeal gets denied, figure out why the health insurer rejected the appeal. “What other information do you need to give them to state your case?” Stephenson says.
Then, follow the health plan’s procedures for filing a second appeal.
If you exhaust the appeal process and are still unsatisfied, you can take the case to the state department of insurance, unless your coverage is through an employer that is self-insured. In that case, your next stop is the U.S. Department of Labor, although both Goencz and Stephenson say getting federal officials to act is a long shot.
If you need additional help, some states have consumer assistance programs to help navigate the appeals process. Fish-Parcham says the “explanation of benefits” in your plan summary may list the names of these programs. If you have an employer-sponsored plan, talk to your HR department about whether patient navigator programs can help with the appeals process.
Are you Overwhelmed? Hire a professional patient advocate or claims assistant. You can get names of claims assistance professionals in your area through the Alliance of Claims Assistance Professionals. Thank you.