How to avoid a health insurance claim denial — and what to do when you can't

By Insure.com

Everyone has to visit the doctor sooner or later, and these trips don't come at a small cost. That's why you have health insurance. What happens when you know you need care and your insurance company says you don't? Most people are taken by surprise when one of their health insurance claims is denied.

Some denials are a consequence of actions within your control. For example, health plans often deny or return pre-authorization requests because of missing data. You can avoid this by ensuring that your pre-authorization requests include accurate patient information. Ask your doctor to check diagnosis and procedure (ICD9) codes for accuracy.

Good documentation can also help you avoid denials. While it may seem paranoid, write down the name of every person you talk to in reference to your health insurance problems and keep backups of all correspondence and paperwork. This documentation can be invaluable if an insurer denies your claim.

Additionally, it is important to know the health plan's requirements. Most patients do not read the handbooks their health plans provide, according to a study by the U.S. General Accounting Office, so they're unfamiliar with the plans' requirements. Consequently, many appeals stem from ignorance. Make sure the treatment you are planning on receiving is covered under your insurance before treatment is received.

What to do if your claim is denied

If your health insurance claim is denied, consider requesting a face-to-face appeal hearing. Most plans' appeals processes allow the patient to attend at least one appeal hearing.

Enlist your doctor's help in making your case. Most plans grant or deny treatment based on whether medical intervention is necessary for your well-being and whether the treatment you seek is appropriate for your health condition. Ask your doctor to contact the plan's decision maker — usually the plan's medical director.

When an appeal is necessary

If you must appeal a health insurance claim denial, your chances for success may be better than you think. According to the 1999 Kaiser Family Foundation study, 42 percent of physicians said that their most recent treatment denial was ultimately resolved in the patient's favor.

Every plan should have a clear appeals process that you must follow to the letter. You may only have a limited time from the date you had the procedure to get an appeal under way, possibly only 60 days. Depending on your plan's procedure, you may have to start with a phone complaint, then move to a written appeal.

There are two methods of appeal: internal and external. The internal appeal is to the insurer itself; an external appeal is to your state department of insurance or other governing body.

Internal and external appeals

The internal appeal is the first step of the appeal process. Here, you request more information and ask the insurer to reconsider its decision. External appeals are filed when internal appeals have been exhausted and the insurer won't reconsider your case. Many states have implemented laws governing external appeals that in certain cases give you the right to a review by an independent board of qualified experts. If the appeal is determined in your favor, your insurance company cannot deny your claim.

Sometimes these reviews are called grievances and sometimes appeals, depending on the state and the type of issue involved. Most states that have passed these laws give a patient the right only to obtain a review of the original decision by persons associated with the health plan, although an increasing number of states have also passed laws that guarantee a patient's right to appeal certain decisions to independent review organizations or government agencies that are not affiliated with the patient's health plan.

Use the Insure.com Health Insurance Laws and Benefits Tool to check your state's review laws. In addition, not all health plans are subject to the laws of the states in which they operate. If your plan is self-insured (meaning the employer pays 100 percent of the claims), it is not subject to state laws. If your plan isn't self-insured, contact the department of insurance in your state to determine what laws apply. You can find the contact information for your state department of insurance by selecting the state in which you live from the pull-down menu at the top of this page.

When appealing your denial, it is important that you find the correct person to whom you should send your appeal letter. If you're not sure, call your health plan administrator and ask for the name and address of the appropriate person. Also, send all letters by certified mail so you have a record of having sent the letter and a receipt that it was received.

What affects your appeals process?

The National Committee for Quality Assurance (NCQA) requires that physicians review any denial and that health plans provide the right to independent external appeals for those insurers seeking NCQA accreditation. Additionally, there are state and federal mandates of which you should be aware:

Federal mandates

For federal insurance programs, all executive agencies are required to implement grievance and appeal procedures recommended by the President's Advisory Commission on Consumer Protection and Quality in the Health Care Industry.
Managed care plans that contract with Medicare must follow grievance and appeal procedures as part of their Medicare contracts.
State regulations

In many states, a health care professional with appropriate expertise is required to participate in the appeals process. Some states limit the authority of anyone but a licensed physician to deny claims.
Laws in some states specify a role for physicians, recognizing that they may appeal a claim on behalf of a patient.
Many states protect a physician's right to advocate for medically appropriate care by prohibiting plans from punishing doctors who do so.
Some states sponsor patient-assistant groups to help consumers with their appeals.



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