Having a health insurance claim denied may result in an unexpected medical bill, but it isn’t the final word.
Insurers and states have appeal processes for you to argue your case.
This option is also available to people who receive surprise medical bills. These bills are leaving Americans will hefty unexpected bills.
Many times, surprise billing isn’t not your fault. You may still get a surprise bill -- even if you checked to make sure a hospital and the doctor performing the surgery are in-network. This could happen if another out-of-network provider helps during the operation.
Your health plan finds the provider is not in its network and denies paying for that part of your health insurance claim. You don’t realize that until you get a bill a month later. You’re now stuck paying more for your care or possibly footing the entire bill for that specific service.
That scenario can lead to thousands of dollars of medical bills.
Surprise medical bills are a growing concern. A recent JAMA study said ambulance transports, inpatient stays and emergency room visits are especially problematic.
However, a health insurance claim denial isn't always the final word. Here's what to do when you get denied.
Why would a health insurer deny a medical claim?
An insurer might deny your claim for several reasons:
- A provider or facility isn’t in the health plan’s network.
- A provider or facility didn’t submit the right information to the insurer.
- A health plan needed more information to pay for the services.
- A health plan didn’t deem a procedure medically necessary.
- A clerical error.
Cheryl Fish-Parcham, director of access initiatives at Families USA, a nonprofit that advocates for accessible, affordable health care, says clerical error is often to blame.
"A large group of claims is denied based on billing or coding errors that the doctor's office can readily straighten out," she says.
Fish-Parcham adds that "even when something is denied because the insurer says the benefit is not covered by the policy, that might be disputed. People should look to see what the plan documents actually say about whether a benefit is covered, and get help from their insurance department or an expert consumer assistance program if there is any doubt."
The denial rate of health insurers varies. The American Medical Association concluded that among seven major insurers, between 1 and 4% of claims were denied. The Department of Labor estimated a larger number -- one out of every seven claims.
How to appeal a denied health insurance claim
Pat Jolley, director of clinical initiatives at the Patient Advocate Foundation, says when a claim is denied, your insurance company will send you a denial letter outlining why. The denial letter will provide the appeals process and the deadline to appeal.
After you receive the letter, here are the steps to follow;
- 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," Jolley says. 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 this as evidence for your appeal, too. 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."
- Write an appeal letter: 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," Jolley says.
- Get copies of all documents: Ask your insurance company for a copy of any documentation they used to review your denial. Also, make copies of any documents you provide for your appeal.
- Submit everything on time: 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.
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.
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," Jolley says.
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. 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.
How to appeal a surprise bill
Sometimes, you have to pay more than expected for your care because a doctor or hospital isn’t in your plan’s network.
In that case, here’s what you should do:
- Notify the health care provider or hospital and see if you can get a lower rate, such as paying the Medicare rate. The Medicare rate is lower than an employer-sponsored health plan rate. You can also see if the facility or provider has a payment plan.
- Notify your insurer and see if it will negotiate a lower rate with the provider.
- Talk to your state’s insurance department to see if they can get your a lower price or how best to appeal the decision.
- Appeal the decision. You usually have the right to appeal internally twice and once externally for a surprise medical bill.
Oftentimes, ambulance companies are considered out-of-network. In that case, you may have little recourse to get a lower rate if you receive a surprise medical bill from an ambulance company. In that case, you may want to contact your state department of insurance for help.
What is prior authorization?
An insurer may decline you even before a test or procedure. Health insurers created the prior authorization process as a way to limit care that it deems unnecessary.
With prior authorization, your healthcare provider must get the insurer's OK. For example, your doctor may want to perform an MRI if she spots a mass on one of your organs. However, your health plan may want to review your medical records before it approves the request. They do this to make sure an MRI is necessary for your specific case.
Some studies and surveys have indicated that prior authorization may affect patient care. In one survey, 93% of radiation oncologists said PAs delay patient care. One-third of them also said they decided on different treatment for 10% of patients because of these delays. However, health plans argue differently. They point to studies that indicate up to 30% of medical care is unnecessary and that physicians sometimes prescribe the wrong treatment.
Cathryn Donaldson, a spokesperson for America's Health Insurance Plans, says prior authorization isn't meant to hinder patient care.
"Just like doctors use scientific evidence to determine the safest, most-effective treatments, health insurance providers rely on data and evidence to understand what tools, treatments and technologies best improve patient health," Donaldson says. "Insurance providers partner with doctors and nurses to identify alternative approaches that have better results and improve outcomes. But doctors are attacking an important tool. Prior authorization works and helps ensure that patients receive care that is safe, effective and necessary."
Health insurers are collaborating with physicians, hospitals, medical groups and other care providers to improve prior authorization. Donaldson said AHIP and these groups "are committed to timeliness. In fact, most prior authorizations are approved within 72 hours for urgent care and under two weeks for nonurgent care."
What to do if your prior authorization gets rejected
You have several options if your insurer denies prior authorization.
"You can gather more medical evidence and appeal -- first informally, and then following the formal procedures outlined in the notices you get from your insurance plan," Fish-Parcham says. "Before filing the formal appeal, take enough time to understand the reasons for a denial and gather evidence to refute those reasons. But don't hesitate to work with your doctor or other provider to informally push the plan to reexamine the decision."
If you submit all this evidence and your insurer still rejects your appeal, you can do several things. You can file a lawsuit against your insurer, but that approach is incredibly costly and lengthy. A better option may be to go through your state's appeals process.
Most states allow consumers to request an independent review of their claim. During this process, an independent doctor will review the insurance company's decision and come to a final decision about your claim. Check with your state's department of insurance to find out when you can ask for an external review. In Massachusetts, for example, you can request an external review up to four months after you receive a letter from your insurance company denying your appeal.
As a consumer, it's important to understand the appeal and review process after a claim denial. Jolley says all consumers should know that they have a right to appeal. Studies have shown appeals are often more successful than not.
One Government Accountability Office study found that between 39-59% of appeals made directly to insurance companies resulted in reversals, so if you receive a denial letter from your insurer company, it doesn't hurt to take the time to contest it.