More and more Americans are receiving health insurance denial letters in the mail every day. The health insurance sector has long been complicated, inefficient, and confusing. From negligent insurance companies to poorly trained employees, the likelihood that your health insurance claim will be denied at some point is high.
While some insurance denials are justified, many others are made erroneously. The insurer may have overlooked important details or even misread your policy. The unfortunate part is how devastating an insurance denial can be to patients. A denial letter may leave you thousands of dollars in debt after paying your premiums on time for many years.
This is why it’s important to file an appeal for any denied claim. Contesting a denial is an important step towards receiving the care that you truly need and deserve. You may find that your claim was simply denied due to administrative errors, or you may need to provide further documents in support of your claim. Regardless of the reason, you should know which steps to follow after receiving a denial letter. This piece will walk you through what you need to do after an insurance denial.
Why Was Your Claim Denied?
Even before you take specific steps in response to a denied claim, it’s important to understand why your claim may have been denied. Understanding the specific reason for a denial will form the basis for your appeal moving forward. Here are some of the most common reasons why an appeal may have been denied.
- Lack of enough medical evidence
Many claims are denied because of insufficient medical evidence. This often occurs because your initial claim didn’t contain enough supporting information regarding the treatment you received. Most insurers will look to see if your treatment was medically necessary.
Some treatment options are typically carried out for other reasons than medical reasons. For example, a weight loss procedure may be primarily carried out to help patients shed off unnecessary fat. However, the same procedure may be necessary for helping obese patients or patients with heart complications. You and your doctor often have to provide enough evidence to show that the weight loss treatment is necessary for your actual health. Insufficient medical evidence in your claim may result in a denial.
- Your policy does not cover the procedure
Another common reason why you may receive a denial letter is that the treatment policy doesn't cover the treatment you underwent. Some insurers include exemptions for various medical procedures.
These exemptions vary widely from one insurance company to another, so it’s important to carefully read your policy and find out why treatment was denied.
- Using an out of network provider
In an attempt to reduce treatment costs, health insurance companies typically negotiate lower rates with healthcare providers. As a result, they establish a network of doctors, hospitals, and surgeons who provide their services at a discounted rate.
If you receive treatment from an out of network provider, you may incur higher costs for your insurance company to settle. Therefore, your insurer may deny coverage for out of network treatment (unless there are exceptions such as receiving emergency care).
- The procedure is determined to be experimental
Health insurance companies typically do not cover experimental treatment procedures. An experimental procedure is one that isn’t backed by adequate medical evidence or isn’t commonly practiced by healthcare professionals.
The debate between experimental/non-experimental procedures is a common reason for conflict between insurance companies and patients. Some procedures, though classified as experimental in nature, may be the only available option for a patient. In addition, a procedure may be classified as experimental by one insurer, only to be classified as medically necessary by another. Such cases are why preparing an appeal after insurance denial is an important step.
- Exceeding the limits of your policy
Some health insurance policies also have a limitation of liability. This means that if you exceed a certain amount in treatment expenses during the year, you may not receive coverage for any subsequent treatments you undergo.
In such cases, it may help to seek a cheaper alternative or negotiate for a reduced rate from your healthcare provider.
The Consequences of a Denied Claim
If you receive a denial letter from your health insurance company, you may feel overwhelmed and confused about what the next step should be. Indeed, the consequences of a denial letter can be extensive.
Here are some common consequences that patients face when they are denied coverage for medical treatment.
- High medical bills
As you would expect, being denied coverage for a medical procedure will cause you to incur high medical bills. If you’ve already undergone the treatment in question, you may find yourself staring at thousands of dollars that need to be paid. Many patients often get into debt because they can’t afford to pay for a treatment that was denied by their health insurer.
High medical bills are a big reason why you should contest a denied insurance claim as strongly as you can. You should only accept liability if you’ve exhausted the appeals process with the help of a lawyer.
- Lack of treatment that you really need
Perhaps an even worse consequence of health insurance denial is a patient not receiving the care that they really need. For example, if you needed to undergo surgery for a tumor removal and the surgical procedure is determined to be experimental, you may end up not being able to receive the treatment you need.
Many patients struggle with poor healthcare because they can’t afford the treatment option presented by their doctor (and because their health insurance company won’t cover the recommended treatment).
- Lifestyle changes
If you’ve been denied coverage for medical care, you may end up having to adjust to new lifestyle changes. For example, you may have to save up and pay for treatment out of pocket, or you may have to live with the medical condition that you didn’t receive coverage for.
The consequences of a denied claim can be extensive to patients and their families. This is why it’s important to contest a denied claim so you can receive the coverage you truly deserve.
Steps to Follow If Your Claim Was Denied
If you’ve received a denial letter, it’s important to know what you will do next. Your ultimate goal should be to understand why your claim was denied, after which you can prepare for a strong appeal. Here are useful steps you should follow after being denied coverage.
- Thoroughly Read Through Your Medical Policy Statement
For any patient, the medical policy statement is the most important document to review. This statement contains all the important information pertaining to your policy. It lists your coverage limits, out of network coverage options, hospitalization requirements, and much more. It also contains the insurance company definitions, which describe situations where your insurer may not cover treatment. You should particularly pay attention to the definitions section. This section covers all exemptions to coverage, and you may find the reason why your claim was denied in this section.
Unfortunately, most health insurance companies don’t take enough time to review all claims that they receive thoroughly. They may simply examine a claim and look for a reason to deny it. If your claim falls within any of the exemptions listed, you may automatically receive a denial without a thorough review. This is one of the reasons why it’s important to read through your policy and find out exactly why the claim was denied.
- Compare the Denial Letter to Your Policy Statement
The next step is to compare the information in your policy to the reason why your claim was denied. Your goal is to identify any inconsistencies between the policy statement and your denial letter. If your denial stated that a particular provider was out-of-network, and yet you only received emergency care from that particular provider, you can clearly contest the denial and reverse the decision made.
You can also examine your policy to verify that the following information is correct.
- The identity of the person who received treatment
- The policy number is accurate, and all premiums are up to date
- The procedure undertaken falls within the guidelines of the policy (including exemptions)
- The provider was in-network (and you met all the requirements for an out of network treatment)
There are also cases where your healthcare provider may misrepresent the treatment you underwent. For example, you may have gone through a routine surgical procedure, only for your physician to classify the procedure as being “novel and experimental accidentally.”
Such a routine mistake may lead to a denied claim. Make sure you thoroughly review the bill received from your healthcare provider and ensure that they communicated an accurate message to your insurer.
- Gather the Necessary Information to Support Your Claim
After looking through your policy and denial letter, you may find that you have sufficient grounds for an appeal. Remember that filing for an appeal is not only suitable when you find glaring errors in the denial letter. You can also prepare an appeal for a breach in fiduciary duty.
For example, you may have received out-of-network care for a procedure that wasn’t available within your health insurer’s network. If the care that you received was necessary for your overall health, you might have valid grounds to appeal a denial.
Preparing a strong appeal requires lots of supporting documentation. As you begin the process, make sure you have the following information handy.
- Your claim number: having your claim number handy will make it much easier to locate your initial application and match it up with your appeal documents.
- Healthcare provider information: have all the contact information of your healthcare provider handy. This includes their address, phone numbers, and medical documents that show the treatment you received.
- Dates of treatment: some insurance companies require you to submit an appeal within a certain amount of time following denial. To ensure that your appeal isn’t considered late, make sure you have all necessary documents that prove the dates when you received service.
- Submit the Appeal to Your Insurer
After you’ve gathered all supporting documentation, the next step is to submit the appeal to your insurance company. It may be helpful to first submit the appeal informally by talking to an official within the insurance company. While this may take time over the phone, you will receive valuable insights by talking to a CSR within your insurance company and walking them through your appeal request.
This informal appeal may reveal additional steps you need to take when strengthening your claim. The CSR may also enlighten you on other available options (such as discounted coverage options) in case your appeal is unsuccessful.
With enough information handy, you can now formally submit your appeal. Preparing a formal appeal should be done in collaboration with a lawyer. Your lawyer will guide you in identifying loopholes in the policy statement and justifying the reason why you should receive coverage.
Make sure you have multiple copies of your appeal letter. One should be sent to the insurance company, another to a specific contact within the company (such as the company president), and another kept for your personal records. It may take up to 2 weeks to receive a response, so be patient but prepared to follow up your initial request. Make sure you officially receive confirmation that your appeal is being reviewed.
Understanding the appeals process
After you submit your formal appeal, it will typically go through the following stages of review.
- Level 1 appeal
A level 1 appeal is the first step of review by your insurance company. Most insurers put a special committee in place to give a second look to contested claims. The committee may also include a medical director who will assist in reviewing the appeal and arriving at a second decision.
During the level 1 appeal, administrative errors (such as conflicts between the policy statement and denial letter) can be easily identified and corrected.
- Level 2 appeal
A level 2 appeal involves an independent review of your application by a medical director. The medical director chosen will not have been involved during your level 1 appeal, and the idea is to give a fresh perspective to your application.
At this stage, more complex issues can be examined and resolved. For example, if you underwent an experimental procedure that was the only available option for treatment, the decision whether or not to cover treatment costs may be hotly contested. The insurance company’s medical director will address such issues during a level 2 appeal.
- Level 3 appeal
During a level 3 appeal, an independent reviewer and a board-certified physician will be consulted to review your claim. This independent review is the last level of internal appeal you can file with your insurance company.
Beyond a level 3 appeal, you may consider having your claim reviewed by an external body altogether.
- Consider Involving the State Insurance Commission
Your state insurance commission can conduct an independent review of your appeal. The insurance commission office plays the role of providing an external review after all internal processes (relevant to the insurance company) have been exhausted.
In addition, many insurance companies wouldn’t wish to get on the bad side of the commission. Insurers often need to file an application with the state commission before they can increase their rates. State commissions can also fine an insurance company if they determine any wrongdoing.
Therefore, filing a claim with the state insurance commission will compel your insurance company to review your application closely. However, the commission can’t make a final decision (nor compel the insurer to make a decision) one way or another.
- Consider Filing a Lawsuit
If no other options are on the table, you may consider filing a lawsuit against the insurance company. Keep in mind that lawsuits are expensive, and you should only pursue this option if you have a strong case.
A lawyer can help you examine the details of your appeal and whether it will be worth filing a lawsuit over. Make sure you work closely with legal representation if you choose to pursue this option.
Your Health Insurer Has a Contractual Obligation to Provide Care
Preparing an appeal for health insurance denial may seem like a complicated process. However, remember that your insurer has a fiduciary duty to provide reasonable care in return for your premiums. Rather than accepting a denial and footing the bill yourself, it’s important to explore all appeal avenues that you may have available. Seeking legal representation will help you navigate the complex legal frameworks that lie ahead.
If you’ve received a denial letter, the professionals at Stop Health Insurance Denial can help. We have experience in pursuing denied claims for many different reasons. Your claim may have been denied due to a technical error or for a more complicated reason such as an experimental procedure. Regardless of the details, we will work closely with you to file an appeal and pursue the coverage that you deserve. Don’t choke under the stress of a denied claim. Contact our offices today at 310-695-5241.