Here is what you need to know to navigate insurance denials and the appeal process:
Denials and Appeals
Health care coverage denials and appeals are integral parts of the health insurance process.
Denials of coverage most often occur during the prior authorization process when the insurer determines whether or not you need the care that your doctor has ordered. However, denial and appeals can also take place if the health insurer determines that care you are receiving is no longer needed.
- A denial is when your insurance company rejects the claim that your health care provider submits to your insurance company. A denial occurs when an insurance company refuses to pay for the specialized medical care, drugs or equipment you need. The health insurer sends the denial letter to the patient and the health care provider. The letter explains the reasons for the denial. It also includes instructions and next steps for submitting your appeal.
- An appeal is the process of challenging a denial. The goal of the appeal is to overturn the denial and secure the care your physician has ordered because it is medically necessary.
The Most Common Types of Denials
Insurance companies deny claims or coverage for various reasons, including:
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Lack of medical necessity: Insurance companies may reject claims they deem not necessary. The insurer may claim that you and your provider have not demonstrated that the care ordered is medically necessary for you. Or your insurance company may say the treatment is new, experimental, or not supported by medical evidence. In some cases, the claim may be denied because it may not meet specific criteria in the insurance policy.
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Medical Coding Error: Errors in medical coding or billing can lead to claim denials. Medical coding is the process of assigning a code to a specific service so that it will be paid. Every diagnosis, procedure, and medical service has a code. These codes can be incorrect due to human error and result in rejected claims. Incomplete information or discrepancies between the billed services and the medical records can also lead to claim denials.
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Out-of-network providers: If you receive care from an out-of-network provider, your claim may be denied or paid at a lower rate.
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Pre-existing condition exclusions: Some policies have exclusions for pre-existing conditions. This could result in denial of coverage for certain treatments. Make sure you understand the terms of your policy about pre-existing conditions. This way you can help avoid unexpected denials.
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Policy limitations and exclusions: Insurance policies often have limitations and exclusions. These could be for certain treatments, procedures, or services. The limitations may depend on the type of policy and the insurance provider. It is important to review your policy to understand what is covered and what is not. It’s a good idea to call your insurance provider to verify what is covered or not covered before you receive care. Your healthcare provider can also assist you in figuring out what you insurance company should be paying for.
Chances of Winning on Appeal
The “Four” Words
Medically Necessary, Safe. Effective. Reasonable. When appealing a denial, utilizing these four words will provide the best chance of success. This is how insurers make determinations regarding coverage. So, speaking their language is important.
Internal vs. External Appeals
The difference between an internal and external health insurance appeal lies in the stages and the entities involved in the process of challenging a health insurer's decision.
- An internal appeal occurs within the health insurance company itself. After your insurer denies a claim, or refuses to pay for a certain treatment, service, or medication, you can request the insurer to review its decision. The internal appeal process is essentially an attempt to resolve the issue within the company, by asking them to reconsider their denial or decision based on new information, supporting evidence, or a re-evaluation of the case. Additional information is typically submitted such as medical records, or a physician letter supporting the claim. The insurer must generally decide within a specific time frame (e.g., 30 days for urgent cases, 60 days for non-urgent cases). If the insurer agrees with the appeal, they will reverse their decision. If not, an external appeal is an option.
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An external appeal is an independent review process, where an external third-party entity (usually a state or federally approved organization) evaluates the insurer's decision after the internal appeal process has been exhausted. An external reviewer, who is independent from the insurer, makes the final determination. The review is conducted by an external body, often consisting of physicians or medical experts who are not affiliated with your insurance company. In some instances, you can pursue an Administrative Law Judge review of your appeal.
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