You pay your health insurance premiums faithfully—but when it comes time, will your insurance company pay your claims? Approximately 17% of health insurance claims are denied, according to a recent report by the nonprofit health policy research firm KFF, and denial rates could rise even higher in the years ahead as insurers increasingly turn to unreliable artificial intelligence (AI) to process claims and medications and treatments become more costly. Medicare denial rates are somewhat lower but still significant.
It is frustrating and costly when our health insurance claims are denied, yet very few of us—in fact, less than 0.2%—take advantage of the best available option for fighting back…and that’s filing an appeal. The appeals process isn’t much fun—it may require wading through hard-to-understand insurance company paperwork and enduring long hold times waiting for phone representatives—but it sometimes is worth pursuing, particularly with large claims and when the reason for denial doesn’t add up. In fact, based on KFF research, around 41% of appeals are eventually successful.
Bottom Line Personal asked Caitlin Donovan, senior director of the National Patient Advocate Foundation, what steps to take when a health insurance provider or Medicare denies your health insurance claim…
Just because your insurer didn’t pay a medical bill doesn’t necessarily mean that the claim was denied. Examples: Paying the bill might be your responsibility because you haven’t yet met your policy’s annual deductible…or a portion of a bill might be your responsibility based on your policy’s “coinsurance” rules—perhaps your insurer is responsible for 80%, leaving you to pay the remaining 20%. In these situations, you can’t appeal a denial because your claim was processed according to the terms of your policy. If you’re not clear why your insurer won’t pay, read the Explanation of Benefits (EOB) statement that you should have received from the insurer.
Similar: You may assume that your health insurance claim has been denied because you received a bill from the health-care provider for the full cost of treatment. But that’s not the only possible explanation. If you haven’t also received an EOB and/or claim-denial statement from your insurer related to the treatment, the health-care provider might have failed to successfully submit its bill to the insurance provider…or the insurer might still be processing the claim. What to do: Contact the provider’s billing department to confirm that it billed your insurance. If it hasn’t, instruct them to do so. If it has, contact your insurance provider to confirm that it received the claim and inquire about the claim’s status. In the meantime, do not pay the bill—ask the provider to put it on hold until the insurance situation is resolved.
Your claim might have been denied simply because the health-care provider’s billing department failed to provide all the information required to process it…or mistyped a billing code or your birthdate…or misspelled your name…or billed the insurance policy that you had last year rather than your current coverage.
Carefully review all names, dates, policy numbers and other details cited on any paperwork you receive related to the health insurance claim in search of such errors. When a claim denial is due to a minor matter such as this, there’s no need to go through the formal appeals process—simply ask the provider to fix the error and resubmit its claim. But these mistakes aren’t always easy to spot—health-care billing codes can be extremely complex, making it difficult for patients to spot code errors.
The claim-denial document that you receive from your insurer should note why the claim was denied.
Common reasons for denial: The insurer deemed the procedure to be not medically necessary…the treatment was received from a provider or facility not in your plan’s provider network…the treatment is considered experimental, is not a covered benefit of the policy or is a listed exclusion…or you failed to receive prior authorization for the treatment as required by your policy.
Common reasons for denials of prescription medication coverage: The medication is not in the policy’s formulary of covered drugs…it was prescribed for an off-label purpose…preapproval was required before obtaining this medication…or your policy required you to try less expensive drugs before this one—this last reason for denial might mention the phrase “step therapy.”
If you are not 100% clear why a health insurance claim was denied, call the insurer and ask for clarification. Obtain as much detail as possible and take careful notes.
Contact your health-care provider, explain that your claim was denied by your insurer, and ask if the provider’s billing department can handle the appeal for you. If they agree to do so, ask for the contact information for the specific person who will take point on your appeal and share the details of your call to your insurer with this person.
Helpful: While you’re on the phone with the provider’s billing department, also ask it to confirm that the billing code it submitted to the insurer was correct—as noted above, billing code errors are a common cause of claim denials but difficult for patients to spot on their own. And if you haven’t already done so, ask the provider to put your bill on hold while you appeal your insurer’s decision.
If you’re having an issue with your state Medicaid insurance or Medicare, it might be helpful to contact your state or federal representative for assistance—they often have case managers in their office to assist constituents. Or your State Health Insurance Assistance Program (SHIP) might be able to serve in this support role.
If you have a chronic health condition, you might qualify for free case management from the nonprofit Patient Advocate Foundation (PatientAdvocate.org). If all else fails, ask a trusted friend or relative to assist you during the appeals process, especially if you’re still on the mend from a major medical procedure. Even your library may be able to direct you toward resources.
The paperwork that informed you that your health insurance claim was denied also should explain how to appeal and provide the appeals deadline. If the denial of coverage risks delaying urgently needed care, ask your insurer how you can pursue an expedited appeal—insurers are required to respond to these within 72 hours.
A sample appeals letter can be found at Education.PatientAdvocate.org (select “Denials & Appeals” from the menu at left then select Sample Appeal Letter for Claim Denial). The key to a successful appeal is contesting the specific reason why the claim was denied using facts, not emotions. Examples…
If your claim was denied because the treatment was deemed not medically necessary or because the drug was not in the plan’s formulary, ask your health-care provider to write a “Letter of Medical Necessity” laying out why it’s the best option in your case, ideally citing medical journal articles to bolster this case. The provider also could speak directly with the insurer.
If your claim was denied because the provider was out of network, you might be able to successfully appeal if the claim was the result of an emergency… if there was no in-network provider who offered the treatment…or if you received assurance in advance that the health-care provider or facility was in-network.
If you were told by your insurer that the provider was in-network, the claim should be covered as in-network. But it might be tricky to prove if this assurance was just verbal, which is why going onto the insurance portal and checking, then taking a screenshot, is always a good idea. Likewise, if you received that information over the phone, ask the insurer to e-mail you that confirmation as a follow-up so that you have it for your records.
The appeals process varies from insurer to insurer, but typically you must pursue two levels of “internal appeals” that are ruled on by the insurer itself before the appeal is eligible for an “external appeal,” which is ruled on by an independent review organization. If you believe your case is strong, it could be worth sticking with the appeals process through all of these. If a significant amount of money is at stake, it also might be worth hiring an attorney who specializes in health insurance disputes to represent you during the later stages of the appeals process if your initial appeal is rejected. Obviously attorneys can be quite expensive, so weigh the cost of the attorney with what the expected bills may be if you were to lose the appeal. If you’re looking at hundreds of thousands of dollars and have already been denied, an attorney might be the correct decision.
Some employers pay employees’ medical bills out of pocket rather than obtain third-party insurance coverage for them. These employers often pay insurance companies to administer their health coverage, so their employees generally face the same appeals process described above when their health insurance claims are denied. But these employees have an additional option as well—if all other appeals options fail, they could make one final appeal directly to their employer’s executives who might agree to pay the medical bill out of compassion or loyalty even if they’re not legally required to do so. On the downside, appealing to company execs means your employer will learn details about your health that might otherwise be private.
