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.
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