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How to avoid a health insurance claim denial -- and what to do when you can't

Everyone has to visit the doctor sooner or later, and these trips don't come at a small cost. That's why you have health insurance. What happens when you know you need care and your insurance company says you don't? Most people are taken by surprise when one of their health insurance claims is denied.

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Sample letters of appeal

For help in writing an appeal for a denial based on the grounds that the procedure or care was not medically necessary, see:
* Sample appeal letter

If the first appeal is denied, follow-up with:
* Second-level of appeal letter

Some denials are a consequence of actions within your control. For example, health plans often deny or return pre-authorization requests because of missing data. You can avoid this by ensuring that your pre-authorization requests include accurate patient information. Ask your doctor to check diagnosis and procedure (ICD9) codes for accuracy.

Good documentation can also help you avoid denials. While it may seem paranoid, write down the name of every person you talk to in reference to your health insurance problems and keep backups of all correspondence and paperwork. This documentation can be invaluable if an insurer denies your claim.

Additionally, it is important to know the health plan's requirements. Many patients do not read the handbooks their health plans provide, so they're unfamiliar with the plans' requirements. Consequently, many appeals stem from ignorance. Make sure the treatment you are planning on receiving is covered under your insurance before treatment is received.

What to do if your claim is denied

Enlist your doctor's help in making your case. Most plans grant or deny treatment based on whether medical intervention is necessary for your well-being and whether the treatment you seek is appropriate for your health condition. Ask your doctor to contact the plan's decision maker — usually the plan's medical director.

When an appeal is necessary

More on how to appeal a health insurance claim denial

Claim denials: Sometimes following the rules is not enough

How to make claims under a self-insured health plan

The Kaiser Family Foundation offers a detailed Consumer Guide to Handling Disputes with Your Private or Employer Health Plan

Every plan should have a clear appeals process that you must follow to the letter. You may only have a limited time from the date you had the procedure to get an appeal under way, possibly only 60 days. Depending on your plan's procedure, you may have to start with a phone complaint, then move to a written appeal.

There are two methods of appeal: internal and external. The internal appeal is to the insurer itself; an external appeal is to your state department of insurance or other governing body.

Internal and external appeals

The internal appeal is the first step of the appeal process. Here, you request more information and ask the insurer to reconsider its decision. External appeals are filed when internal appeals have been exhausted and the insurer won't reconsider your case. Many states have implemented laws governing external appeals that in certain cases give you the right to a review by an independent board of qualified experts. If the appeal is determined in your favor, your insurance company cannot deny your claim.

Information your insurer should provide to you when denying your claim:
  • A statement of specific medical and scientific reason for denial.
  • A statement identifying the provision that excludes treatment.
  • The name, state of licensing, medical license number, and title of the person making the denial decision.
  • A description of alternative treatment, services, or supplies that are covered, if any.
  • Instructions for initiating internal appeals of denial, including whether your appeal has to be in writing, time limits, schedules for filing, and the name and phone number of a contact person.
  • Instructions for filing an external request for review if the denial is upheld in the internal review.

If you do not receive this information from the insurer, ask for it in writing.

Source: State departments of insurance

Sometimes these reviews are called grievances and sometimes appeals, depending on the state and the type of issue involved. Most states that have passed these laws give a patient the right only to obtain a review of the original decision by persons associated with the health plan, although an increasing number of states have also passed laws that guarantee a patient's right to appeal certain decisions to independent review organizations or government agencies that are not affiliated with the patient's health plan.

In addition, not all health plans are subject to the laws of the states in which they operate. If your plan is self-insured (meaning the employer pays 100 percent of the claims), it is not subject to state laws. If your plan isn't self-insured, contact the department of insurance in your state to determine what laws apply.

When appealing your denial, it is important that you find the correct person to whom you should send your appeal letter. If you're not sure, call your health plan administrator and ask for the name and address of the appropriate person. Also, send all letters by certified mail so you have a record of having sent the letter and a receipt that it was received.

What affects your appeals process?

The National Committee for Quality Assurance (NCQA) requires that physicians review any denial and that health plans provide the right to independent external appeals for those insurers seeking NCQA accreditation. Additionally, there are state and federal mandates of which you should be aware:

Federal mandates

  • Managed care plans that contract with Medicare must follow grievance and appeal procedures as part of their Medicare contracts.

State regulations

It is important that you find the correct person to whom you should send your appeal letter.
  • In many states, a health care professional with appropriate expertise is required to participate in the appeals process. Some states limit the authority of anyone but a licensed physician to deny claims.
  • Laws in some states specify a role for physicians, recognizing that they may appeal a claim on behalf of a patient.
  • Many states protect a physician's right to advocate for medically appropriate care by prohibiting plans from punishing doctors who do so.
  • Some states sponsor patient-assistant groups to help consumers with their appeals.

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