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Tips for appealing a denied health insurance claim

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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. Health claim denied

This option is also available to people who receive surprise medical bills. These bills can leave Americans with hefty unexpected bills.

Many times, surprise billing isn’t your fault. You may still get a surprise bill -- even if you checked to ensure a hospital and the doctor performing the surgery are in-network. This could happen if an out-of-network provider helped during the operation. 

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 why you might get denied and what to do about it.

 

Health insurance claim denial reasons

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 between 1 and 4% of claims were denied among seven major insurers. The Department of Labor estimated a larger number -- one out of every seven claims.

 

How to appeal health insurance claim denial

Fighting a health insurance company over a claim denial might sound like a David vs. Goliath struggle, but the battle is worth waging if you've got a legitimate case. Plus, winning is easier than you might think.

Many wrongful claim denials stem from coding errors, missing information, oversights or misunderstandings.

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 for winning an appeal:

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.

"You want to know how under the gun you are," Stephenson says.

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, Stephenson says.

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," 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 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, Goencz says.

"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," Jolley says.

Save emotional rants for understanding friends. Stick to the facts.

"[Insurers] don't want to know about your grief and how sick you've been," Stephenson says.

Send by certified mail to get notification that the packet was received, she adds.

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," 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. 

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.

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.

 

How to appeal a prior authorization denial

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. Pre-authorization

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 says 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." 

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.

--Barbara Marquand contributed to this report.