Tips for When Your Medical Insurance Company Will Not Pay

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If you have health insurance and have needed significant medical care—or sometimes, even minor care—you have likely experienced a situation where the company won't pay. They may deny the full amount of a claim, of most of it. Do you have to just accept their refusal to cover your medical claim? No. There are actually things you can do. Here are some tips to help.

Read Your Policy Carefully to Determine If the Claim Was Legitimately Denied

Your insurance company may have interpreted a clause in your policy differently from the way you understand it. Respect your sense of fairness and what you expect the policy to cover. If the ruling doesn’t sound fair, there’s a good chance that it isn’t. At a minimum, if a claim is denied, you should contact the insurance company to ask for a thorough explanation of the denial.

Ask Your Insurance Agent or HR Department for Help

The insurance agent from whom you purchased your insurance, or your benefits manager at your job, have a duty to make sure the coverage protects your interests. Contact them for support in contesting any claims denials. Depending on the situation, they'll be able to help you understand the claims and appeal process, make sense of your explanation of benefits, and contact the insurer on your behalf.

And if you can enlist your doctors’ support for your claim, you have a better chance of successfully challenging a claim.

Contact the Insurance Company Directly

If your insurance agent or HR department can't help to resolve your problem within 30 days, telephone the insurance company yourself. Be polite but persistent, and keep going up the corporate ladder. Be sure to make a detailed record of all phone calls, including the names and positions of everyone with whom you speak, as well as a call reference number (sometimes called a ticket number) associated with the call. Follow up each call with a brief letter stating your understanding of the conversations, and request a written response within 30 days.

Begin with the person who denied your claim, then write to the person’s supervisor. Include your policy number, copies of all relevant forms, bills, and supporting documents and a clear, concise description of the problem. You should request that the insurer responds in writing within three weeks. Keep copies of all the correspondence. Make sure to send letters by registered mail, and keep copies of the receipts. Explain what negative effects the denial of your claim is having. Use a courteous, unemotional tone and avoid rude or blaming statements.

Your Right to Appeal the Claim Denial Is Protected

As long as your health plan isn't grandfathered, the Affordable Care Act ensures your right to appeal claim denials. You have a right to an internal appeal, conducted by your insurance company. But if they still deny your claim, you also have a right to an independent external appeal. This appeals process applies to both pre-service and post-service denials, so if you're trying to get pre-authorization for care you haven't yet received and your insurer rejects your request, your right to appeal is protected.

External reviews can be a powerful tool. As an example, the California Department of Managed Health Care, which performs independent external reviews, overturned between 60 and 80 percent of the claim denials that they reviewed in 2016. There's no harm in requesting an internal appeal and then escalating it to an external appeal, and it could very well end up in your favor.

Even before the ACA's expanded appeal rights took effect, a study by the Government Accountability Office (GAO) found that a significant portion of appealed claims ended up being decided in the policy holder's favor (the analysis covered six states, and appeals resulted in reversed rulings by the insurers in 39 to 59 percent of the cases).

Your State Insurance Department May Be Able to Help You

Each state has an Insurance Commissioner who is responsible for overseeing insurance products in the state. You can find your state's Insurance Commissioner and Insurance Department by clicking on your state on this map. Helping consumers with insurance issues is a big part of the insurance department's job, so don't be shy about reaching out for help.

Once you explain your situation to the consumer assistance rep, they'll let you know what your next steps should be. Be aware, however, that state insurance departments don't regulate self-insured group health insurance plans, as those are regulated under federal law (ERISA) instead. So if you have coverage under a self-insured employer-sponsored plan, the insurance department in your state will be able to point you in the right direction, but may not be able to get directly involved on your behalf. The ACA's provision for internal and external appeals does apply to self-insured plans though, as long as they're not grandfathered.

Make Sure the Claim Was Properly Coded and Submitted

In most cases, policyholders don't file claims with their insurers. Instead, doctors and hospitals file the claims on behalf of their patients. As long as you stay within your insurance plan's network, the claim filing process, and in many cases, the precertification process, will be handled by your doctor, clinic, or hospital.

But errors sometimes occur. The billing codes might be incorrect, or there could be inconsistencies in the claim. If you receive an explanation of benefits indicating that the claim was denied and you're supposed to pay the bill yourself, make sure you fully understand why before you break out your checkbook. Call both the insurance company and the medical office—if you can get them on a conference call, that's even better. Make sure that there are no errors in the claim, and that the reason for the denial is spelled out for you. At that point, the claim denial could still be erroneous, and you still have a right to appeal. But at least you've ensured that it's not something as simple as an incorrect billing code that's causing the claim denial.

If you see an out-of-network provider, you'll likely have to file the claim yourself. The doctor or hospital may make you pay up front, and then seek reimbursement from your insurance company; the amount that you can expect to receive depends on the type of coverage you have, whether you've met your out-of-network deductible yet, and the specific details of your benefits. Make sure you understand your plan's requirements for filing out-of-network claims, as they typically have to be submitted within a specified time frame (a year or two is common). If you're unsure of how to go about submitting the claim, call your insurer and ask for help. And if you end up with a claim denial, call them and ask them to walk you through the reason, as it's possible that it could just be an error in how the claim was filed.

If your treatment was out-of-network, there's no network-negotiated rate that applies to the medical services you received. In general, even if your health plan covers out-of-network care, they're going to want to pay considerably less than the doctor bills, and the doctor is not obligated to accept the insurer's amount as payment in full (this is where balance billing comes into play). But if your insurance company pays less than you expected for care provided, check around to see what the usual and customary rate for that service is in your area, and know that you can challenge your insurer if it seems like the usual and customary amount they allow is well below the average.

Understand Your Out-Of-Pocket Requirements

People sometimes think that their claim has been denied when they're actually just having to pay the out-of-pocket costs associated with their coverage. It's important to read the explanation of benefits that your insurer sends you, as it will clarify why you're being asked to pay some or all of the claim.

For example, let's say you have a plan with a $5,000 deductible and you haven't received any health care yet this year. Then you get an MRI, which is billed at 2,000. Assuming the imaging center is in your health plan's network, your insurer will likely have a network-negotiated discount with the imaging center—let's say it's $1,300. The insurer will then communicate to both you and the imaging center that they're not paying any of the bill, because you haven't met your deductible yet. The whole $1,300 will count towards your deductible, and the imaging center will send you a bill for $1,300.

But that doesn't mean your claim was denied. It was still "covered," but covered services count towards your deductible until you've paid the amount of your deductible, and then they're covered, either in full or in part, by your insurance. So let's say the MRI showed damage in your knee that requires surgery, and your insurer agrees that it's medically necessary. If the surgery ends up costing $30,000, your insurance is going to pay almost all of the bill, since you'll only need to pay another $3,700 before your deductible is met. After that, you may or may not have coinsurance to pay before you reach your plan's out-of-pocket maximum. But all of the services, including the MRI, are still considered covered services, and the claim wasn't denied, even though you had to pay the full (network-negotiated) cost of the MRI.

If All Else Fails, Contact the Media—Or an Attorney

If you're certain that your claim should have been covered and it's still being denied, contacting the media sometimes works. There have been numerous cases in recent years of claim denials being reversed once reporters get involved (in Kentucky, and in Arizona for example—the latter is an example of out-of-network balance billing).

You can also contact an attorney, although the attorney's fees may make this cost ineffective for smaller claims.

A Word from Verywell

There are other resources that can help you with information and support in helping to get the health care coverage and reimbursements you deserve. You can contact these groups for more assistance. 

Consumer Coalition for Quality Health Care
1275 K St. NW, Ste. 602
Washington, DC 20005
Phone: 202-789-3606
Website: http://www.consumers.org
Consumers for Quality Care
1750 Ocean Park Ave., Ste. 200
Santa Monica, CA 90405
Phone: 310-392-0522
Website: http://www.consumerwatchdog.org

You may also want to read the book Fight Back & Win – How to Get Your HMO and Health Insurance to Pay Up, by William M. Shernoff, for additional information. Be ready to fight your denied claim. 

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