Health insurance is meant to protect you and your loved ones. If you get hurt or seriously ill, you want to be sure that you are financially covered. It can thus be extremely frustrating if you file a claim with your insurance company, only to have it denied. Paying a claim out of pocket and not getting a reimbursement is not only frustrating, it’s also a financial drain.
Rest assured, however, that the insurance company does not have the final word. There are actions you can take in the face of your insurance denying claims.
Why Would a Health Insurance Company Deny a Claim?
Health insurance companies are ultimately businesses. Just like any other business, they need to make money. Cases of insurance denying claims are more common than you might expect, unfortunately. Of course, an insurer must provide a reason for not reimbursing you.
Before going on, however, it’s important to highlight the difference between a rejected and a denied claim. When a claim is rejected, it simply wasn’t processed because of an error in the claims form. You can simply correct the error and resubmit the information to restart the claims processing. If the claim is denied, however, the insurance company has reviewed your request and actively decided not to pay for whatever prescription, test, or procedure you had done.
Here are some of the common reasons insurers may give when denying a claim:
- The service or procedure you are seeking reimbursement for is not covered by your insurance plan
- The procedure or service you had done is considered not medically necessary, investigational, or cosmetic
- Pre-authorization was required to get coverage for the procedure or service in question, and you failed to obtain this
- You used an out-of-network provider (this would apply for a PPO or HMO, for example)
- The insurance claim wasn’t filed within the requisite timeframe
- Medical billing errors could be to blame
- Missing or incomplete information in the claim
- You have yet to meet your co-pay, patient portion, or deductible amounts
Don’t stress yet. Many denials can be recovered. You just have to take action and use the right tools. The first step in determining what action to take when an insurance claim was denied is to pinpoint the reason why.
What Are Your Options If Your Health Insurance Company Denies Your Claim?
You have a few options if your claim is denied. Read on for details.
Appeal the Decision
The Affordable Care Act, ACA, allows you to appeal a claim denial, provided your health plan isn’t exempt via a grandfather clause. When you receive a notice of insurance claim denial, identify the reason. Then, refer to your original insurance policy, which provides an explanation of benefits. This lays out the details and conditions of your coverage. If the insurer suggests that your procedure was not included in your plan but you believe it is, the policy will prove this.
If you are confused about why your claim was denied — the wording used by insurers can be technically and confusing — ask your insurance agent or, if it’s an employer-sponsored program, your HR department. You can also contact the insurance company directly.
To actually request an appeal, write a formal letter. This ensures that the appeal is on the record. In your letter, include an opening statement, an explanation of your medical history or health problems, and supporting details from your doctor as to why the health insurer should not have denied the claim. Always send an appeal by certified mail. This is proof that you submitted a request within the required time limit.
As you take these, steps keep a record of all correspondence with the insurer or HR. In case the situation escalates to the point that you do pursue legal action, this will be valuable evidence in your case. Additionally whenever you contact the insurer, make sure to have relevant details like your insurance policy number, on hand.
Get a Medical Bill Advocate
Some health insurance claims are simply more complicated than others. If you’ve been in a car accident, for example, you have a diversity of costs to consider. There are immediate medical expenses, like surgery and x-rays. Then there’s a recovery in the hospital, followed by potential physical therapy and perhaps even mental health counseling for trauma.
Car insurance won’t cover all of this, and all of these fees add up. A medical bill advocacy firm can help you navigate the denial of a claim if you’ve appealed and failed to successfully contest your health insurance claim denial.
File a Lawsuit
An insurance agreement is a type of legal contract. You agree to pay a certain amount of money (like your monthly premium) and, in exchange, you are supposed to get a predetermined level of healthcare coverage. If the insurance company fails to hold up their end of the bargain, you can file a breach of contract claim with the help of an attorney.
One of the most common ways to do this is to claim bad faith insurance. In a contract, both parties agree to act in good faith, meaning they won’t seek to deny the benefits or obligations that they’ve agreed to through the insurance contract. In the case of a claim denial, you can suggest that the insurer is acting in bad faith.
Here are some of the ways that an insurance company can act in bad faith:
- The insurer fabricated evidence or refuses to accept evidence
- The insurer is refusing to conduct an investigation into the claim
- The insurer has unreasonably delayed any investigation or processing of the claim
- The insurer has required unreasonable adherence on your part to minor administrative requirements, essentially using bureaucracy as an excuse to avoid paying you.
Finally, if you have any other grounds to suggest that the insurance company has essentially acted unfairly, you may have a bad faith claim on your hands. How can you be sure? See an attorney. Find a local lawyer who specializes in insurance law and is familiar with your state’s legislation and schedule a consultation. Some attorneys even offer consultations for free.
When you go to the appointment, bring a copy of the original claim, the original denial letter you received, and all correspondence you’ve had with your employer, HR department, or insurance provider. Also bring notes of any times you tried to reach the provider that is not on the record, such as telephone calls, and their contact information. Finally, bring your original medical records so the attorney can conduct a comprehensive external review.
Beware that bad faith claims have a statute of limitations, meaning you have to make them within a certain timeframe of the incident. Different states have different statutes of limitations. Don’t delay seeking legal assistance if the appeal process has failed you.
Get Financial Help Elsewhere
If you’ve exhausted all of the above resources and still haven’t managed to successfully secure your insurance coverage, it may be time to consider alternatives to help you cover out-of-pocket costs. Depending on the nature of your claim, you might consider applying to a patient assistance program (PAP) for example.
A PAP can help in cases where certain prescription drugs are not covered by your insurance, for example. Such initiatives are fun by state governments, pharmaceutical companies, and nonprofit groups. You can find them for a variety of needs, frequently for illnesses that require regular medication, like diabetes. There are also assistance programs run by the state, particularly for people who are elderly, disabled, or generally in financial need. Medicare Part D drug benefits are specifically targeted to help these vulnerable populations.
There is also the possibility of taking out a loan to cover medical costs. For example, if you own your home, you may be able to borrow against the mortgage. This can incur high interest rates, however, and end up with you having a pile of debt you can’t pay off. Prioritize the other measures described above first. You don’t want to end up with a poor credit rating that will haunt you for a lifetime just because of unpaid loans.
The Final Word About Insurance Denying Claims: Persist, Persist, Persist
If you’re dealing with insurance denying claims, it can be stressful. Be perseverant and focus on the end goal. Persistence is often the key to overcoming claims denial. The American Medical Association has a health insurer report card that highlights the inefficiencies in processing medical claims. According to the AMA, inefficient administration costs the health care system some $210 billion annually. Denial of claims is common and reapplying consistently actually increases the odds of a claim being approved.
Finally, realize that you aren’t in it alone. Healthcare providers are valuable advocates when sorting out claim denial, and can be useful allies — for example, if there were typographical errors on the initial claim. If all else fails, enlisting the help of an attorney can help you get the money you deserve.
Having this kind of support is especially valuable if you’ve experienced major illness or personal injury, for example in a car accident. You can focus on healing while others help fight your insurance claim denial.