5 Steps to Take if Your Health Insurance Claim is Denied

Photo (cc) by Joelk75

Whether it’s for a routine doctor’s visit or emergency surgery, you usually expect your health insurance company to pick up at least a portion of the tab.

Unfortunately, that’s not always the case. According to the American Medical Association, 1.82 percent of commercial health insurance claims were denied in 2013. That percentage may not sound like much, but with the AARP reporting at least 1.4 billion claims being filed each year, we’re talking about tens of millions of denials.

If you find yourself on the receiving end of a denial letter, here’s what you need to do:

Step 1: Check the fine print on your policy

When you receive your denial, it should come in the form of an Explanation of Benefits. This statement outlines what was billed to the insurer, the amount it paid and why it decided not to pay some, or all, of the claim.

Once you know the insurance company’s reason, you want to check your policy to confirm. If they say you used an out-of-network provider, does your policy paperwork or the company website list them as in network? If the company says your service wasn’t covered, does your policy say otherwise?

You’ll need this information for the next steps.

Step 2: Call your provider’s billing office

Now, you can go in two directions from here. You can call the health insurance company first, or you can call your health care provider’s billing office.

If your policy indicates the service should be covered, I prefer the latter approach. It’s often easier to get in touch with someone in the billing department rather than wait on hold with the insurance company. Plus, because your provider wants to be paid, their staff is often happy to help.

When you get the billing office on the line, explain that your insurance company denied the claim but your policy shows it’s a covered benefit. Ask if they can confirm the claim was coded correctly and resubmit it to the insurer. I’ve had several claims denied because of coding errors, and this simple step was enough to solve the problem.

However, if your policy specifically says the service is not covered or that the provider is out of network, the billing office won’t be able to help. In that case, you need to move on to Step 3.

Step 3: Initiate an internal appeal

The next step involves submitting an appeal for internal review. The government’s Health Insurance Marketplace website offers a good overview of this appeals process.

Essentially, you need to fill out a form supplied by your health insurer or send a letter outlining why the service should be covered. For instance, you may argue that an out-of-network provider is the only one offering a specific service in your area. Or for a prescription drug denial, you could include documentation to show you’ve tried other medications without success.

You need to file your appeal within 180 days of the denial, and the insurance company has 30 days to make a decision on a claim for a service you haven’t yet received and 60 days for a service you’ve already received. In emergency situations, expedited claims can be filed for decisions to be made in a few days.

Step 4: Look into your external review options

Not surprisingly, health insurance companies don’t always side with consumers during internal reviews. In that case, you have a right to an independent review, known as an external review.

How this process plays out depends on your state and the type of insurance you have. Some states run their own review process, while others let the federal Department of Health and Human Services oversee external reviews. What’s more, some health plans contract with independent review organizations to handle the appeals.

Your Explanation of Benefits as well as the denial letter from the internal appeal should outline the steps to initiate an external review. However, if you can’t find the information or need extra help, I recommend contacting your state’s insurance commissioner’s office. Generally speaking, these offices have knowledgeable representatives available to answer consumer questions.

You can find your state’s office through the National Association of Insurance Commissioners website.

Step 5: Shop for different health insurance

Finally, you may come to a point in which you’ve exhausted all your appeals, and the insurance company still won’t pay. If you feel strongly the insurer is in the wrong or if it’s a claim that represents a significant amount of money, your only other option may be to consult with an attorney.

But assuming we’re talking about a smaller claim that isn’t worthy of legal action, your final step may be to shop for new health insurance, particularly if you think more claim denials could be in your future. During the next open enrollment period, check out your options and see if you can find better coverage that includes the services and providers you use.

Incidentally, the American Medical Association says that Medicare denied 4.92 percent of claims in 2013, the highest denial rate among all insurers during that year. Meanwhile, Cigna had the lowest denial rate, just 0.54 percent.

Does that surprise you? Share your thoughts in the comments section below or on our Facebook Page.

Disclosure: The information you read here is always objective. However, we sometimes receive compensation when you click links within our stories.

Read Next
How to Achieve Your Financial Goals in 2020
How to Achieve Your Financial Goals in 2020

New year, new you. Get your finances on track with the help of these tools for investing, saving, budgeting and earning.

5 Keys to Making Your Car Last for 200,000 Miles
5 Keys to Making Your Car Last for 200,000 Miles

Pushing your car to 200,000 miles — and beyond — can save you piles of cash. Here’s how to get there.

The 10 Worst Types of Tickets for Your Car Insurance Rate
The 10 Worst Types of Tickets for Your Car Insurance Rate

Some types of traffic violations can drive your car insurance rate more than 25% higher.

6 Reasons I Will Never Trust Suze Orman
6 Reasons I Will Never Trust Suze Orman

Beware: The self-proclaimed personal finance expert has a track record that suggests more sizzle than steak.

3 Easy Ways to Get Laundry Soap for Nearly Nothing
3 Easy Ways to Get Laundry Soap for Nearly Nothing

Are you washing money down the drain?

View this page without ads

Help us produce more money-saving articles and videos by subscribing to a membership.

Get Started

Most Popular
7 Kirkland Signature Items to Avoid at Costco
7 Kirkland Signature Items to Avoid at Costco

Even if it seems you save a bundle buying Costco’s Kirkland Signature brand products, they may not be the bargain they appear to be.

How to Buy Gas At Costco Without a Membership
How to Buy Gas At Costco Without a Membership

The warehouse club often has some of the cheapest gas in town. Here’s how you can get it as a nonmember.

10 Things to Stop Buying If You Want a Clutter-Free Home
10 Things to Stop Buying If You Want a Clutter-Free Home

If you like to keep things simple, avoid these purchases.

If You Find This Thrift Shopping, Buy It
If You Find This Thrift Shopping, Buy It

Vacuums from this brand can last a half-century, if not longer — and they’re hot on the resale market.

A Simple Way to Silence Robocalls Today
A Simple Way to Silence Robocalls Today

A few steps can keep your phone from ringing when a spammer calls.

This Company Makes the Best Tires in America
This Company Makes the Best Tires in America

Driver satisfaction with tires is at an all-time high, but one brand stands out.

This Health Issue Can Hint at Dementia Years in Advance
This Health Issue Can Hint at Dementia Years in Advance

One type of pain is especially associated with cognitive decline.

Can I Switch to Spousal Social Security Benefits When My Ex Dies?
Can I Switch to Spousal Social Security Benefits When My Ex Dies?

Knowing when to claim can help you maximize benefits.

36 Things That Will Be Obsolete Soon
36 Things That Will Be Obsolete Soon

The writing is on the wall for dozens of things we have grown up with.

Medicare Will Not Cover These 6 Medical Costs
Medicare Will Not Cover These 6 Medical Costs

Don’t let these health care expenses catch you off guard in retirement.

8 Things You Should Always Buy on Amazon
8 Things You Should Always Buy on Amazon

The giant retailer shines when it comes to these things, from basics to hard-to-find specialty goods.

5 Ways to Get Amazon Prime for Free
5 Ways to Get Amazon Prime for Free

Hesitant to drop $119 a year on an Amazon Prime membership? Here’s how to get it for free.

8 Federal Income Tax Breaks for Homeowners
8 Federal Income Tax Breaks for Homeowners

Some of these deductions and credits are available to a wide swath of homeowners.

5 Ways to Fill Your Pantry With Free Food
5 Ways to Fill Your Pantry With Free Food

Anyone can take advantage of these resources.

3 Ways to Get Microsoft Office for Free
3 Ways to Get Microsoft Office for Free

With a little ingenuity, you can cut Office costs to zero.

10 Types of Retirement Income That Are Not Taxable
10 Types of Retirement Income That Are Not Taxable

There are lots of things Uncle Sam can’t touch — so long as you play by the rules.

6 Reasons You Should Stop Hiding Cash at Home
6 Reasons You Should Stop Hiding Cash at Home

Stashing money around the house is anything but harmless.

5 States With the Worst Health Care for Retirees
5 States With the Worst Health Care for Retirees

All of these states are located in the same region of the nation.

5 Products You Should Never Buy Generic
5 Products You Should Never Buy Generic

Sometimes the brand-name version is clearly superior.

View More Articles

View this page without ads

Help us produce more money-saving articles and videos by subscribing to a membership.

Get Started

Add a Comment

Our Policy: We welcome relevant and respectful comments in order to foster healthy and informative discussions. All other comments may be removed. Comments with links are automatically held for moderation.