A health insurance denial occurs when your health insurance company refuses to pay for an expense. If this happens after you have received medical services and filed a claim, it is called a claim denial. Insurance companies also sometimes state up front during the pre-authorization process that they will not pay for a particular service; this is called a pre-authorization or prior authorization denial. In both cases, you can appeal, and you can have your insurance company reverse their decision and agree to pay for at least some of the services you need.
This article will explain how and why a claim denial or pre-authorization denial occurs, and what you can do if this happens.
Why health insurance companies issue denials
There are literally hundreds of reasons a health plan might refuse to pay for health care services. Some causes are simple and relatively easy to fix, while others are more difficult to fix.
Common reasons for denying health insurance include:
Paperwork errors or confusion
For example, your healthcare provider’s office filed a claim for John Q. Public, but your insurance company lists you as John O. Public. Alternatively, the practitioner’s office may have submitted a claim using the wrong billing code.
Questions about medical necessity
The insurance company believes that the requested service is not medically necessary. There are two possible reasons for this:
- You don’t really need the requested service.
- You need this service, but you haven’t convinced your health insurance company yet. Maybe you and your healthcare provider need to provide more information about why you need the service you are requesting.
Insurance companies want you to try another, often cheaper option first. In this case, if you try the cheaper option first and it doesn’t work, the requested service will be approved multiple times (step therapy with prescription drugs is a common example).
Your plan does not cover this service
The requested service is not a covered benefit. This is common for things like cosmetic surgery or treatments that aren’t FDA-approved. It is also common for services that do not fall within your state’s definition of Affordable Care Act essential health benefits, which may include services such as acupuncture or chiropractic services, if your plan is obtained in the individual or small group market. (Please note that if you have an employer-sponsored plan that is self-insured or obtained in the large group market, you do not need to cover ACA’s basic health benefits; check your plan details to make sure you understand what is and what is what is not covered by your policy).
Significant gaps in covered benefits are also common if you purchase a plan that is not covered by Affordable Care Act rules (such as a short-term health plan or a defined compensation plan), so services you provide do not have to be covered or the health plan may be expected Covers prescription drugs, mental health care, maternity care, and more.
Supplier Network Issues
Depending on the structure of your health plan’s managed care system, you may only be covered for services provided by health care providers and facilities that are part of your plan’s provider network. If you leave the provider network, you can expect your insurance company to deny the claim.
If you are seeking prior authorization for services to be provided by an out-of-network provider, insurance companies may be willing to consider if you choose another health care provider in your plan’s network. Alternatively, you can try to convince the insurance company that the provider you choose is the only one that can offer this service. In this case, they can make exceptions and provide guarantees.
Note that the provider may bill you based on the difference between what your insurer pays and what the provider charges because the provider has not signed a network agreement with your insurer. The No Accidents Act, effective January 2022, prohibits surprise Balanced billing refers to emergencies or care provided by an out-of-network provider at an in-network facility. However, if you intend to seek care from an out-of-network provider, balance billing is still allowed.
A claim or pre-authorization request may not have provided sufficient information. For example, you requested an MRI of your foot, but your healthcare provider’s office did not send any information about your foot problem.
You are not following the rules of your health plan
Suppose your health plan requires you to get preauthorization for certain non-emergency tests. You completed the test without prior authorization from your insurance company. Your insurance company has the right to refuse to pay for the test — even if you do need it — because you didn’t follow the health plan’s rules.
In any non-emergency situation, your best bet is to contact your insurance company before scheduling a medical procedure to make sure you follow any of their rules regarding provider networks, prior authorization, step-by-step treatment, etc.
How to handle rejections
Whether your health plan denies a claim for services you’ve already received, or denies a preauthorization request, being denied is frustrating.But denial doesn’t mean you’re not allow Have specific health care services. Instead, it either means your insurance company won’t pay for services, or you need to appeal the decision, and if your appeal is successful, you may get coverage.
If you are willing to pay for your treatment out of pocket, you may be able to get health care right away.
If you can’t afford the out-of-pocket cost, or if you don’t want to, you may want to investigate the reason for the rejection to see if you can overturn it. This process is called an appeal of a denial, and it can be done in response to a previously authorized denial or post-denial of service claim.
All non-grandfathered health plans have an appeal process for denials codified by the Affordable Care Act (Grandfathering programs typically have their own appeals process, but they do not have to follow the ACA’s specific requirements for internal and external appeals processes). When you receive notice that your claim or pre-authorization request was denied, the information you receive will outline the appeals process.
Follow your health plan’s appeals process carefully. Properly document every step you take, when you take it, and who you talk to on the phone. In most cases, your healthcare provider’s office will also be closely involved in the appeals process and will handle most of the necessary documentation that must be sent to the insurance company.
If you cannot resolve the problem by working inside your health plan, you can request an external review of the denial.This means that a government agency or other neutral third party will review your claim for rejection (If your health plan is grandfathered, external review is not guaranteed, but the plan may still be voluntary).
There are many reasons for denying claims and denying prior authorization. Some are due to errors, some are due to coverage issues, and some are due to not following steps required by the health plan, such as prior authorization or step-by-step treatment. If the health plan denies a claim or request for prior authorization, the decision may be reversed after additional information is provided to the health plan or the appeal is successful.
Don’t panic if your health plan declines a claim or request for prior authorization. Probably a simple typo caused the problem. If they receive more information or can see that you have tried lower-cost measures without success, your plan may cover the procedure. Your doctor or hospital may take the lead in the appeal process.