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Health insurance claim denials: Sometimes following the rules is not enough

 HMO members know the drill. Got a sore throat? See your primary care physician (PCP). Need an allergy specialist? Ask your PCP for a referral. Having a cyst surgically removed? Make sure you get pre-approval for the surgery.

You understand that if you don't follow your health plan's rules, your claims won't be covered. Sometimes, even when you do everything right, your claim is still denied.

For example, let’s say you receive your insurer’s permission for surgery. Months after the operation, you receive a bill in the mail and discover your X-rays were read by a radiologist who doesn't participate in your health provider's network of doctors. X-ray claim denied.

Here’s another example. Your benefits handbook says your health insurance company fully covers diabetic test strips. When you pick them up, your pharmacist charges you the full price, saying your handbook — the only one you've ever been given — must be out of date. Claim denied.

How you can help prevent claims problems

When you have a group health plan through work, you're not responsible for negotiating your own health care contract. Even so, you should ask your employer plenty of questions about your group health plan. Here are five steps you can take to help minimize "claims surprises."

1. Never rely on what you think is true about benefits or providers covered under your plan — even if they are stated in your most recent benefits handbook. Always double-check with the plan on whether the benefits, services or providers you need are covered before you receive treatment.

Call your plan's customer-service department and take notes. Get the representative's name and write it down, along with the date, time and general details of your conversation.

If a claim problem arises and you need to file a grievance, these notes will be valuable. Most insurers’ customer-service phone calls are tape recorded. Having the date and time of your call will make locating your call history with the representative much easier.

2. If you have a problem with a claim, call the insurer and ask for an explanation. Again, remember to take detailed notes.

3. If the explanation is not consistent with your understanding of your health benefits, call or visit your employer’s benefits administrator. Because the administrator has greater knowledge of the health plan details, he or she may be able to quickly resolve your problem.

4. If you have a claim problem that's unresolved, file a grievance with your health plan. If you receive a denial, don't give up. In many states, the complaint eventually goes before a state sponsored grievance committee that's outside the plan (an "external review") or a "peer review committee" of other health care professionals. There's always a chance the denial might be reversed.

You may also want to complain to the officials who regulate your health plan. If your health plan is self-funded by your employer, it is regulated by the U.S. Department of Labor, which has regional offices. Otherwise, your health plan is regulated by your state's insurance department. Your state has a procedure for triggering an investigation into your problem.

5. If you discover your provider or benefits have changed, without you being notified, bring it to the attention of the person in your company responsible for benefits administration. Ask if this situation is covered under the company's contract with your health plan.

Employers have a say

There are some health plan rules that may be negotiated, particularly if the employer is large enough to command real bargaining power with the insurer. Yet few employers are aware of this. Some issues that might be open for negotiation include:

  • Who are the providers in the network?
  • What happens when the network loses a provider? (If the plan loses its only orthopedic surgeon, will it compensate by paying for its members to see an out-of-network surgeon?)
  • What happens when a new member can't find a network provider who's accepting new patients?
  • How long are provider directories and benefit handbooks valid? (For example, if the plan loses 5 percent or more of its providers, does it have to reprint its provider directory and notify plan members?)

If employers don't negotiate these issues with health insurers in the beginning, there are no guidelines in place for identifying who's responsible if claims problems arise.

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