What to Do When Health Insurance Denies Your Claim
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Health insurance is meant to protect you from unexpected, high medical costs, along with regular care for more common ailments. Whether you’re billed $30,000 for a three-day hospital stay or just need a strep throat test and diagnosis that can cost $115 or more, insurance can be cheaper than care you’d pay for on your own.
But what do you do when your insurance company sends you a denial letter and won’t pay your medical bill?
You can appeal and have the decision reviewed by your insurer and, if necessary, a third party.
It’s not as complicated as it sounds. We’ll go over how appeals work, how federal laws protect patients, how to file an appeal and get help if needed, and some common reasons why claims are denied, among other aspects of health insurance.
In this article
Why insurers deny claims
Health plans deny claims for many reasons, some simple mistakes. Paperwork errors, such as your name not being listed correctly or the wrong billing code, can cause denials. If you get care from an out-of-network provider, your claim may be denied unless you can prove it’s the only place that provides the service you need and that you can’t find an in-network provider.
Other reasons for denial include the following:
- Service not medically necessary
- Less expensive medical options must be tried first
- Service such as cosmetic surgery isn’t a covered benefit
- Service not approved by the FDA
- Service not in your state’s definition of essential health benefits of the Affordable Care Act, such as acupuncture or chiropractic services
- Preauthorization for service not requested, such as for a non-emergency test
- Missing information on the claim
Preauthorization can help you avoid having a non-emergency medical service denied after you’ve received the service. For example, even if you needed a medical test, your insurer may deny payment if you didn’t follow its rules and got preauthorization before getting the test.
Even during a preauthorization request, some insurers may still give you a claim denial before the medical service has been provided. This can also be appealed, and you may get a decision reversed entirely, or the insurer may agree to pay for part of the service.
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‘This is not a bill’
In all of the mail you get from your health insurance company, chances are you’ve received something that says, “This is not a bill.” That sounds like an odd piece of mail from a company you’re expecting a bill from.
It’s worth looking closely at because although it’s not a bill, it may be the first sign that your insurer may not pay for your health services. Or at least not fully paid.
It could be an explanation of benefits or EOB. This is the insurance company’s written explanation regarding a claim. It shows what the insurer paid and what the patient must pay. It may include a benefits check, though the insurer usually sends payment directly to the medical provider.
The explanation of benefits isn’t a bill, though it may look like one. It will explain any charges you still owe as the patient or what you’ve already paid, such as a copay when you received the medical care.
If you owe additional money after the insurance company has paid its portion, the medical provider will send a separate bill. This bill should match the patient’s portion listed in the explanation of benefits.
If those numbers don’t jibe, or the amount you may soon owe is much more than you expected, then it could mean that the insurer isn’t paying for all or part of the medical services you’ve received. In other words, your claim may soon be denied.
No more surprise bills
Patients who unknowingly or involuntarily seek medical care from an out-of-network provider or facility as an emergency room visit may receive an unexpected or “surprise” medical bill. As of 2022, this practice is illegal under the No Surprises Act.
The practice is also called “balance billing” because patients are responsible for the balance of the bills — the difference between what the health plan covers and what the provider or facility charges.
Surprise bills were common from out-of-network providers at in-network facilities, such as anesthesiologists, radiologists, and labs. New protections in the federal law require out-of-network providers to give patients written, 72-hour notice that includes a good faith estimate of out-of-network charges and a list of other in-network providers at that facility. Certain providers, such as radiologists and anesthesiologists, must stay at the in-network rate.
The law allows patients to dispute a medical bill if their final charges are at least $400 higher than their good faith estimate. A dispute claim must be filed within 120 days of the date on the bill.
Protections under the Affordable Care Act
The Affordable Care Act, or ACA, was a healthcare reform law enacted in 2010 to make health insurance affordable to more people. It also expanded the Medicaid program and was designed to lower health care costs generally.
The law has many consumer protections, including the right to appeal a health insurer’s refusal to pay a claim. Insurers must tell customers why a claim has been denied and let them know how to dispute the company’s decisions.
There are two ways to appeal a health plan decision:
- Internal appeal: You may ask your insurance company to conduct a full and fair review of its decision. If the case is urgent, it must speed up this process.
- External review: You can take your appeal to an independent third party for review. The insurance company no longer has the final say over paying a claim.
Below are details on how each works.
Internal appeal
If prior authorization or a claim is denied, the insurer must notify the member why the decision was made. It must clarify that they have the right to an internal and external review if necessary.
Internal reviews must generally be requested in writing within six months of receiving the benefit denial letter. If the medical care is urgent, you can ask verbally for an internal appeal. You can also ask for an external review simultaneously, though an external review is usually requested if the internal review leads to another denial.
After the consumer’s request, the health plan has 30 days to issue a decision for prior authorization reviews and 60 days to decide on post-care claims. An expedited review must be completed within 72 hours for urgent medical issues.
These are all federal standards. States can set shorter timeframes.
If the health plan member is in mid-treatment during the review process, the health plan must provide ongoing coverage while the appeal is pending.
Consumers should follow their health plan’s appeal process carefully. They should keep good records of each step in the process, including who they spoke with. The healthcare provider will often be closely involved in the appeals process and handle much of the documentation that must be sent to the insurer.
External review
If your health plan doesn’t resolve the internal review, you can request an external review of the denial. A government agency or other neutral third party will review your claim denial.
If you have a state-regulated health plan, your state insurance department or health department may conduct the external review.
If your state doesn’t have an external review process, it may use a federal one. You can ask for instructions on requesting such a review from the HealthCare.gov website.
Most people with employer-sponsored health insurance are enrolled in self-insured health plans subject to federal oversight instead of by their state.
The external review process is final and binding when it’s completed.
You must be given at least four months to request an external review. Once the request is received, the decision must be completed within 45 days.
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Where to get help
You’re not alone in appealing a health plan decision. A good place to start looking for help is to check if your state has a Consumer Assistance Program. It can help you file an appeal or ask for a review of your insurance company’s decision if you aren’t sure what steps to take.
Call your health plan or state insurance regulator for questions about internal or external appeals.
You can also contact HealthCare.gov for help filing an appeal.
A patient advocate foundation, like the National Patient Advocate Foundation, can also help you wade through healthcare rules.
Before filing an appeal, you may get help from the insurance agent who sold you the health insurance policy, or your Human Resources department at work may be able to help.
If you are enrolled in Medicare or Medicaid, there are different rules for appeals. For Medicare, call 1-800-MEDICARE for help. For Medicaid, contact your state’s Medicaid agency.
How to start a claim
Once you’ve got some help on how the appeals process works, you can start working on an appeal under the rules required through the Affordable Care Act. The regulations are lengthy, which is why you may want help.
Internal appeal letter
When writing an internal appeal letter, a good place to start is with your healthcare providers, such as your doctor or hospital. This is how most appeals are filed — by healthcare providers and hospitals on behalf of their patients. Contact the customer service number, which should be on your insurance card or any letters you receive from providers.
If your healthcare provider doesn’t appeal your case, you should contact your health plan (insurance company) to find out how to file an internal appeal.
You can ask your healthcare provider to contact your health plan and make this request for you if the denial is for a medical reason. Your healthcare provider could provide additional information that shows why the services you received are medically necessary.
The appeal letter you’re writing should be short and to the point. The point of the letter is to state why you think the denied benefits should have been covered and why you and your healthcare provider believe they’re medically necessary.
Include in your letter your name, claim number, health insurance ID number, and any information that helps support your claim. Tell the insurer that you can provide additional information if they need it.
A letter from your provider may help explain the medical necessity better than you can. The National Association of Insurance Commissioners has a sample letter that anyone can use for free.
External review letter
If you get a denial letter from your health plan for your internal appeal, you can ask for an external review, which we detailed earlier. The written request must be filed within four months of getting a denied claim letter.
Writing an external review letter is similar to an internal appeal letter. It should include more detailed information about your situation, though you don’t need to resubmit documents sent for your internal appeal. The University of Rochester Medical Center offers a good sample letter.
HealthCare.gov gives three examples of the types of denials that can go to external review:
- Medical judgment where you or your provider may disagree with the health insurance plan
- Determination that a treatment is experimental or investigational
- Cancellation of coverage based on your insurer’s claim that you gave false or incomplete information when you applied for coverage
How to get claims approved
There’s no secret to getting an appeal approved. Start by checking the reasons we listed earlier on why insurers deny claims. The problem may be as simple to fix as an incorrect spelling of your name.
Having a valid reason for your claim to be approved is the best way to win an appeal. With the help of your doctor, hospital, and other medical care providers, you may be able to convince an insurance company that you should get reimbursement for a medical bill.
It can also help to understand the explanation of benefits and what type of care isn’t covered by your insurance plan. Services from an out-of-network provider may not be covered at all, except for urgent care in an emergency. An insurer may require a less expensive service before approving a more expensive one.
During the appeals process, be sure to keep a record of everyone you’ve talked to, details of all conversations, deadlines for expected responses or information from your insurance company, and the date and time of all calls.
You can follow up each call with a brief letter stating your understanding of the situation and ask for a written response within 30 days. Send letters by registered mail and keep copies of the receipts.
Also, keep all the paperwork about your healthcare, including bills from your provider, notices from your health plan, copies of denial letters, appeal requests, and medical information related to your case.
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Costs
There is no charge if your health insurance company uses the federal external review process.
If your insurer has contracted with an independent review organization or uses a state external review process, you may be charged no more than $25 per external review.
Pros and cons
Pros
- The Affordable Care Act allows consumers to appeal a health insurance company’s denial to pay a healthcare claim.
- Healthcare providers often help patients file an appeal.
- Many assistance programs are available to help consumers.
Cons
- Filing an appeal can be overwhelming to some people.
- If an internal appeal is denied, an external review can add 45 days to the appeals process.
- Understanding the benefits of your health insurance can be complicated.
The bottom line
If your health insurance company says it won’t pay for a healthcare procedure that it says isn’t covered under your policy, you can appeal it if it was medically necessary, among other reasons. Don’t let a denial letter from your insurer dissuade you from appealing. An appeal letter is easy to write, and anyone should be able to do it alone. If not, plenty of patient advocacy groups offer free help.
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Writer
Aaron Crowe is a freelance journalist who specializes in personal finance writing and editing. He has worked at newspapers, where he won a Pulitzer Prize, and has written for numerous online publications. These include AOL, US News & World Report, WiseBread, Bankrate, AARP, and many websites focusing on housing, credit and insurance. He lives in California with his wife and daughter.
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