You’re not alone if you’ve had a health claim denied. According to a 2023 Kaiser Family Foundation (KFF) consumer survey, 18% of insured adults said that during the previous year, their health insurance carrier had refused to pay for services they thought were covered.1
But a claim denial does not necessarily mean you will ultimately have to pay for everything out of pocket. There are steps you can take – including filing an appeal – that may help you get the denial overturned.
Reasons a health claim might be denied
Not all health insurance plans are created equal. Some will cover more services than others. With that in mind, it is also important to understand that “covered” does not always mean “paid for in full” by the plan.
These are some of the most common reasons your plan might deny your claim.
Services that aren’t covered
It is important to understand what your plan does and does not cover before you have any major tests or procedures. If you are not sure your plan covers a specific service, particularly if it’s a big-ticket item, you may want to call your plan ahead of time to find out.
Services that are not considered medically necessary
You and your healthcare provider may consider a diagnostic test necessary, but that does not mean your health plan will agree that it’s necessary. Your carrier may deny your claim unless it receives extra documentation that confirms that the test or procedure was medically necessary.
Out-of-network services
Some services may cost more – or may not be covered at all – if they are provided out of network. Unless you receive care from an out-of-network provider at an in-network facility or you receive care at an out-of-network facility in an emergency situation (the No Surprises Act protects you from unexpected medical bills in those situations), your plan may deny payment for your out-of-network care.
Services that require prior authorization
Some services require a prior authorization –also known as a preauthorization or precertification – before your plan will consider them for coverage. You or your provider must provide documentation to your plan that meets its coverage requirements and shows why the service is medically necessary. If a provider performs the test or procedure before your insurance carrier grants the approval, the plan may refuse to pay for it.
Services that require step therapy
Medications can get quite expensive. That is why many plans use step therapy to keep costs down. Step therapy requires that you try a less expensive treatment before you move up a step to a more expensive treatment. A plan may require you to stay on one step for a certain period of time to show whether or not a treatment has been successful, before you can move up to the next step. Plans may deny coverage if you do not follow the stepwise progression.
Coding issues
Even if a service is medically necessary, you could get a health claim denial if the wrong billing codes were used by your provider. It is important to communicate with your healthcare provider’s billing office if your claim was denied for any reason.
Timing issues
Some health plans require that a bill be filed within a certain number of days of a test or procedure. If a bill is filed too late – your healthcare provider sends it to the insurance company after the due date – your plan may deny payment for administrative reasons. In some cases, you may be the person who has to submit the claim to your plan. Be sure you talk to your healthcare provider beforehand to make sure you understand who is responsible for filing the claim.
Screening versus diagnostic
Under the ACA and various regulations associated with its implementation, non-grandfathered health plans in the individual and group markets are required to cover certain preventive care without any cost-sharing.2 But some services, such as colonoscopies and mammograms, can be considered screening tests or diagnostic tests, depending on the circumstances.
You might find that your health plan has applied the cost of your screening to your deductible (meaning you have to pay for it) because they consider it a diagnostic test rather than a screening test. This might be the case, but it might also be an error on the part of the medical provider’s office or the health plan.
What you can do when your claim is denied
According to the KFF survey, 26% of survey consumers reported that they had a health claim denial that caused a delay in care and 24% reported that they did not get the care they needed at all. Of surveyed consumers whose claims were denied, 24% reported having a decline in their physical or mental health. 1
Despite this, not everyone takes the necessary steps to try to overturn their denial. Of the surveyed consumers whose claims were denied, only 15% said they filed a formal appeal with their health plan. 1
The number may be even lower for Medicare Advantage plan enrollees. According to 2021 data from KFF, just 11% of Medicare Advantage denials were appealed. (Of the denials that were appealed, 82% of the appeals resulted in the initial denial being fully or partially overturned.)3
Part of the problem with the low rate of appeals is that many policyholders do not understand their rights when it comes to filing an appeal. The process can seem confusing and intimidating at first if you do not know where to start. But it doesn’t have to be that way if you follow these simple steps.
Step 1: Pay attention to filing deadlines.
The clock starts ticking when you have been notified about your health claim denial. You will receive a denial letter that will let you know how long you have to try to appeal the decision. Make sure you gather any necessary information, access any necessary forms (online or by mail), and complete any required paperwork before the due date.
Step 2: Find out the reason for the denial.
The denial letter may or may not give you the specific reason your service was denied. The Centers for Medicare & Medicaid Services (CMS) recently finalized a rule that will require more transparency with prior authorization denials in the near future. In the meantime, if you have any questions as to why your claim was denied, you may want to call your health plan to get more information so you can know how to proceed. This will help you gather the necessary information you will need to file an appeal.
TIP: Whenever you call your plan, be sure to have a pen and paper on hand. You will want to document the date and time of your call and the name of anyone you speak to. This information can be helpful to show you followed the proper steps.
Step 3: Gather the necessary information.
You will need to gather information to try to overturn your insurance denial and get the service covered. This may include your claim number, the name of the service, the reason the service was needed, the dates of service, copies of medical records related to that service, and any communications between you and your plan, including a copy of your denial letter.
Step 4: If necessary, reach out to your healthcare provider.
Your healthcare provider is likely willing to assist you when it comes to appealing the denial. If your insurance claim was denied because of a coding issue, you will want to reach out to your healthcare provider’s billing office. They may be able to change the medical or billing codes so that your service will be covered. If your insurance claim was denied for medical reasons, you will want to reach out to their office for medical records and may even ask that they write a letter on your behalf that explains why the service was necessary.
Step 5: File an internal appeal with your health plan.
When the Affordable Care Act (ACA) was passed in 2010, it guaranteed your right to appeal a health plan’s decision. Your first attempt to overturn a denial occurs through an internal appeal that you file directly with your health plan. Follow their protocols, making sure you complete all necessary forms and send all necessary materials by the deadline.
TIP: If you are still not sure how to proceed with an appeal, you may be able to reach out to a Consumer Assistance Program (CAP) in your state. (Not all states have a CAP.) These programs can help explain your health insurance options. If your health plan is regulated by the state (meaning it’s not a self-insured group plan), you can also reach out to your state’s insurance department for guidance.
Step 6: If your internal appeal is rejected, file an external appeal.
If your internal appeal is also denied, the ACA gives you the right to then proceed with an external appeal with a third party. This party is known as an Independent Review Organization (IRO) and is not affiliated with your health plan. This allows for an independent review of your claim. You must file the external appeal within four months of your internal appeal decision. The IRO decision in this case is final.
Health claims are denied every day. It is important to understand your rights to an appeal so that you can get the care to which you are entitled.
Tanya Feke M.D. is a licensed, board-certified family physician. As a practicing primary care physician and an urgent care physician for nearly ten years, she saw first-hand how health insurance impacted her patients. In recent years, her career path has shifted to consultant work with a focus on utilization review and medical necessity compliance. She currently works as a physician advisor at R1 RCM, Inc., where she performs case reviews for hospitals nationwide.
Dr. Feke has firsthand experience in the field of Medicare, having worked on the frontlines with both patients and hospital systems. To educate the public about ongoing issues with the program, she authored Medicare Essentials: A Physician Insider Reveals the Fine Print. She has been frequently referenced as a Medicare expert in the media and is a contributor to multiple online publications. As founder of Diagnosis Life, LLC, she also posts regular content about health and wellness to her site at diagnosislife.com.
Footnotes
- “Consumer Survey Highlights Problems with Denied Health Insurance Claims” KFF.org. Sept. 29, 2023 ⤶ ⤶ ⤶
- “Affordable Care Act Implementation FAQs – Set 18” CMS.gov, Accessed March 1, 2024 ⤶
- “Over 35 Million Prior Authorization Requests Were Submitted to Medicare Advantage Plans in 2021” KFF.org. Feb. 2, 2023 ⤶
