What To Do When Your Claim Is Denied

It happens all too often—an insurer receives a claim for healthcare services and denies it, requiring the patient to either pay the cost out of pocket or challenge the denial. To avoid the time and energy involved in dealing with a claim denial, it is important to check with the physician practice or medical center to ensure that all tests and treatments ordered are authorized in advance and that the proper coding and eligibility are checked ahead of time.

But if all seems in order and service is still denied, the first step is to ask the insurer why the claim was denied. It may help to review the health plan and benefits that are covered, and obtain a letter from the physician explaining or justifying the care delivered.

The claim can be re-submitted along with the denial letter, a copy of the physician’s explanation of services and any other supporting documentation. It may be that the service or test in question required different coding, or a billing error needed correction.

It is possible that the claim may still be denied, but patients have the right to appeal, says Jen Flory, director of the Disability Rights Legal Center in Los Angeles. “If it was medically necessary, you are more likely to be successful, but you have the right to appeal regardless.”

The patient should formally appeal the denial to the insurance company, preferably in writing, a process known as an internal appeal. It may be helpful to contact the state insurance regulator to learn about laws regarding health insurance claims or the consumer services division of the specific state’s insurance department or commission.

A second-level internal review can also be requested—an appeal also conducted by the insurance company. At this level, more documentation is usually requested. But if this appeal is also denied, there are still other options.

“If the appeal is denied, then you should file an external appeal, if available,” Flory says. “We found out that a lot of people don’t realize that they have the option of making a formal appeal.”

Individuals who are not connected with the health plan conduct an independent external review. The Affordable Care Act stipulates that health insurance companies in every state must participate in external review processes that meet minimum consumer protection standards. External appeals generally must be filed within 60 days of the date of the insurance company’s final denial of claim, although some states may allow for a longer time period.

The Consumer Assistance Program can help patients file an appeal or a review (visit HealthCare.gov and search for “consumer assistance program”).