What to Do if Your Health Insurance Claim is Denied

Having a health insurance claim denied can be incredibly frustrating, especially when you expected those medical costs to be covered. Perhaps you underwent a treatment after verifying it was an approved procedure with your insurer. 

Or maybe the denial came as a complete surprise after receiving the medical service. In any case, receiving notice that your claim was denied can be upsetting, disappointing, and potentially costly.

However, it’s important not to simply give up after an initial claim denial. Insurance companies do occasionally make mistakes or have disagreements over what should be covered expenses. 

You have rights as a policyholder to appeal their decision through a defined process. Understanding these appeal options and procedures can maximize your chances of overturning an improper denial.

Many claim denials stem from routine issues like data entry errors, lack of prior authorization, failure to specify medical necessity, or coverage exclusions based on plan details. Once you identify the stated reason, you can prepare an appropriate response and supporting evidence.

Understanding the Claim Denial Letter

The first step is carefully reviewing the claim denial notification from your insurance company to understand their justification and reasoning:

Look for the specifically stated cause for denial, which is normally cited. Common reasons include lack of prior authorization, treatment deemed not medically necessary, exclusion of a pre-existing condition, and limits on a covered service.

Reference the particular language in your policy’s documentation that the insurer cites to supposedly exclude coverage for the treatment or procedure in question. Locate this section so you can directly counter their interpretation.

Take note of any instructions or deadlines provided for initiating an internal appeal of the denial. Health insurers have defined processes and limited windows for you to contest their decision.

Grasping the full details of the denial explanation and your insurer’s stated rationale will be crucial for formulating an effective appeal strategy.

Gather Supporting Documentation

To successfully appeal the denial, you’ll need to arm yourself with corroborating documentation and proof that your treatment should have been covered:

Obtain full copies of all medical records related to the diagnosis and treatment that was denied coverage. These may include doctor notes, test results, imaging scans, and any other evidence from your healthcare provider establishing medical necessity.

Collect documentation confirming you did receive proper prior authorization or approval before undergoing any treatment requiring it.

Ask your doctor to provide a formal written statement explaining why the procedure was medically necessary for your condition and health situation. This documentation carries significant weight.

Assembling robust documentation showing the legitimacy and need for the treatment is vital evidence to counter the insurer’s denial rationale.

Request a Coded Claim Summary  

As part of strengthening your evidence, you should also request an itemized claim summary showing all coded diagnoses and treatment procedures related to the denied claim:  

Insurance claims are processed and tracked based on specific medical coding corresponding to conditions, procedures, treatments, etc. Coding errors can lead to denials.

Get this summary showing all coded items and carefully review the accuracy of each coded entry for any potential mistakes compared to your actual medical records.

Having the right diagnosis and treatment codes properly represented can reinforce your appeal case and point out if the denial stemmed from an administrative error.

Sometimes fixing miscoded items on the insurer’s end is all that’s needed to get a initially denied claim approved.

Appeal Internally First

With your documentation prepared, the next step is to follow the formal internal appeal process established by your health insurance provider:

Each insurer has specific internal appeal procedures to contest denials within the company first before external escalations.  

Carefully review what documentation and information they require for internal appeals. Provide a copy of your formal written statement explaining why the denial is incorrect.

Be meticulous about meeting all internal appeal deadlines and submission windows stipulated by the insurer. Missed deadlines can derail your appeal.

While this first appeal phase remains internal within the same insurance company, it’s still your chance to put forth a compelling case supported by documentation and medical evidence.

Escalate to an External Review

If your internal appeal is denied by your health insurance company, your next recourse is to request an external third-party review of your claim:

After exhausting the internal process, federal law allows you to escalate appeals to an independent external review by a certified expert not affiliated with the insurer.

Your state’s insurance department oversees and can guide you through the proper protocols for this external review process based on where you live.

These external reviews are conducted by outside medical experts who provide an impartial assessment and ruling on whether your insurer’s denial was appropriate based on medical evidence and your policy’s terms.

This serves as a valuable third-party check on claim denials before having to resort to more aggressive actions.

Leverage Other Assistance Resources

Don’t feel like you have to go through the complicated appeals process alone. There are assistance resources and professionals who can advocate for you:

Professional Patient Advocate services employ experts who manage the entire appeals process, compile evidence, and represent your interests against the insurance company.

Health insurance appeals lawyers and legal firms specialize in understanding the nuances of insurance law to forcefully make your case using the proper legal arguments.

Disease-specific advocacy organizations like the American Cancer Society and Lupus Foundation provide guidance for patients appealing denials related to those conditions.

While these third-party services involve fees, they can be well worth it for complex claims with high dollar amounts at stake.

Negotiating a Compromise

In some cases, your health insurance company may offer a settlement or compromise before you escalate to the final external review phase. This allows them to close out the claim:

The insurer could propose covering a percentage of the originally denied charges as a settlement before proceeding to a third-party external review ruling.

Don’t automatically accept the settlement offer without evaluating whether it’s a fair compromise based on the evidence you’ve assembled.

Having skilled negotiation abilities increases the chances of getting a higher percentage covered through back-and-forth settlement talks.

While not ideal if you believe the full claim was justified, these settlements allow an opportunity to recoup some of the denied charges if pursuing further appeals seems questionable.

Filing a Complaint and Lawsuit

For cases where all reasonable appeals and negotiations have been utterly unproductive with your insurance provider, one of the final options is legal action:

First, file an official complaint against your insurer’s denial practices with your state’s department of insurance. This demonstrates your intent to escalate the matter further.

As a last resort, you may need to hire legal counsel and file a lawsuit against the health insurance company for violating their duty to cover the prescribed treatments outlined in your policy’s terms.

Lawsuits are time-consuming and can involve significant legal fees, so they should only be pursued in egregious cases involving very high dollar claim amounts the insurer refuses to appropriately address.

However, this threat of legal action does put pressure on insurers to uphold their obligations and not wrongfully deny justified claims without proper cause.

Conclusion

Going through the process of appealing a health insurance claim denial is understandably frustrating and draining. However, it’s a battle worth waging so you receive the coverage you are rightfully owed and paid for. With diligence, preparation, and assembled evidence, many initial claim denials can be successfully overturned.

Don’t simply give up after an initial denial notice. Leverage all your internal and external appeal rights offered through your insurance company and state regulations. If needed, seek assistance from professional advocates, appeal firms, or legal counsel who can assert arguments with maximum effectiveness.

Above all, be persistent in advocating for yourself as the patient. Thoroughly understand your insurance policy’s coverages and your rights to affordable care. With proper strategizing and negotiating skills when denials are unwarranted, you maximize the chances of getting that claim approved.