In 2017, health care costs for Americans averaged $10,739 per person. That translates to $3.5 billion in healthcare expenditures.
These figures help demonstrate the reality that medical care is expensive. Health insurance provides a way for millions to deflect the costs of healthcare. However, the product is not an automatic source of funding for your medicines, doctor’s visits, hospital stays or surgeries. As with other insurance, health insurance policies contain a number of grounds to deny or reject health insurance claims. Here are some common reasons.
Non-Covered Services
Health insurers refuse payments for services that are not “medically necessary.” After all, health insurance is designed to help you pay for medical treatment of diseases. Insurers also want some assurance that their expenditures are not wasted on treatments with little or no track record of success. As such, to meet the test of medical necessity, the service must be needed to treat your medical condition and satisfy accepted standards of medical practice.
Experimental treatments normally fail this test because, by their nature, they lack acceptance as a settled treatment option. These investigative approaches have as hallmarks:
- Absence of complete approval from the Food and Drug Administration
- Prescriptions or treatments Offered specifically as part of a trial
- Insufficient scientific or medical evidence of the effectiveness of the drug, therapy or procedure
- Established and accepted approaches provide more benefit than the treatment in question
- Lack of review or acceptance from medical peers or professionals
Despite the fact that many states and the District of Columbia allow it for medicinal purposes, medical marijuana claims will be rejected. The federal Drug Enforcement Administration rejects the medical necessity of marijuana, and the federal Food and Drug Administration has not approved it.
Cosmetic treatments, such as most breast augmentation or reduction procedures, removal of facial hair, cheek implants, tattoo removal and body or ear piercing, do not qualify as . Such procedures enhance appearance rather than treat medical problems.
What Can You Do About It?
If you’re denied because of cosmetic treatments, obtain documentation to show that it is medically necessary. For example, a breast reduction may be a medical necessity to address pain, back problems or the presence of cancer. A nose job may get insurance coverage if you present a diagnosis of breathing problems from a deviated septum.
No Prior Authorization
Prior authorization affords the insurer the chance to evaluate the medical necessity of the treatment. When you present a claim after-the-fact, the insurer has been deprived of its opportunity to review the diagnosis, proposed treatment and supporting documents.
Also, the insurer seeks to keep the costs of medical care in check. This means that the insurer may recommend a generic or less expensive version of the drugs your physician prescribes. After reviewing the diagnosis, the insurer or its peer review person or committee might suggest alternatives to more expensive surgical procedures. Your current treatment may be effective, or the insurer might conclude it has already been tried or is otherwise duplicative.
What Can You Do About It?
Ask your doctor to initially appeal the denial. This first appeal often involves a peer-to-peer review, typically an exchange of information between the doctors. If this is not successful, then you will proceed to an appeal to the insurer’s medical director and then a review by an outside physician. Often, the external review stage will practice in the same specialty as your treating physician. If you’ve had a denied health insurance claim during the prior authorization process, a healthcare lawyer can guide you through your insurer’s appeal process. The lawyer will pull your medical records, find an independent physician to render an opinion about the medical necessity of what you seek and research laws that may require the insurance company to cover the services.
Out-of-Network
Your insurer requires in-network care because of its contracts with the network providers. Specifically, doctors and healthcare facilities agree to accept as payment from the insurer a percentage of their charges. In effect, the insurer gets a discount. The insurer doesn’t enjoy the discount when you visit an out-of-network provider. The insurer and out-of-network provider do not have any contractual arrangement.
What Can You Do About It?
To avoid an out-of-network denial, make sure the healthcare provider accepts your insurance. The requirement that providers be in-network also applies to a hospital or specialist referred by your primary doctor. Many major healthcare organizations and corporations have under their umbrella primary care physicians, specialists and hospitals. As such, in-network referrals should generally not present a problem.
What if you need emergency care while at a tourist place or otherwise somewhere far away from home? Likely, such destinations do not have in-network emergency providers. Federal law prohibits your insurer from requiring pre-approvals to get emergency care from an out-of-network facility.
Claims Processing Mistakes
Subtle mistakes in data entry lead to denied or rejected claims. Usually, this happens when your doctor or the hospital’s billing office is submitting claims to the insurer. Many of these errors involve a misspelled name, erroneous date of birth, a wrongly-entered policy number, or a mistaken address of the medical provider.
Some processing-related denials involve incorrect or outdated billing or medical procedure codes. These include “Current Procedural Technology (CPT) codes maintained by the American Medical Association. With the “International Classification of Diseases” (ICD) codes, insurers and medical providers identify particular medical conditions.
What can You Do About It?
Review the “Explanation of Benefits” from your insurer, especially the reasons given for the rejection. It may reveal data entry errors involving your identification and the like. You can bring these mistakes to the medical provider’s attention to have the billing or insurance people resubmit the claim to the insurance company.
Late Claims Filings
Insurers impose time limits for the submission of claims to avoid stale claims. With the passage of time comes the risk of impaired memories or lost or even altered records. As a practical matter, the pre-authorization requirement obviates time limits because the request for payment is made before the services are rendered.
What Can You Do About It?
Make sure your providers have, in fact, billed insurance. If you find out that this has not happened, you may need to file yourself. As such, compile the medical bills and any records as soon as you have the procedure or get the medicine. Depending on your state, though, the medical provider may not be able to recover from the patient any charges that health insurance would have paid had the provider submitted a timely claim.
You rely upon the medical provider to follow the insurer’s rules in submitting a claim. That reliance brings with it your responsibility to understand your health insurance policy. If you have been rejected or denied claim, learn the reasons. Should the denial arise from other than typographical or data error, consider obtaining the assistance of an attorney who can help you appeal the denial.
