When people agree to an insurance contract, pay the premium, and sign the paperwork, there is an inherent expectation that when there is a need for coverage, it will come through. Whether health, car, homeowner’s insurance, or similar, insurance protection is the safety net people pay for to take care of them when a rare but potential risk happens that is far too expensive to handle out of pocket. So, when an insurance provider instead sends a denial letter refusing coverage for what seems to be a proper claim, the insured person is understandably in shock. What did they pay for if not that coverage? An insurance claim denial attorney becomes essential as the matter continues.
The Impact of Denial
With health insurance, a denied claim can have a dramatic impact. The cost of healthcare continues to skyrocket, with even the simplest of procedures costing thousands of dollars out the door. Long-term care costs, particularly for seniors, can be even higher. Insurance is a necessity for many to manage such expenses successfully and not see their hard-earned savings burned away in an instant.
The first step in any denial is to understand exactly what was decided. Typically, an insurance provider sends a standard form letter spelling out the specific claim, the associated dollar amount, and the reason why the claim was denied. Unfortunately, in this last part, the reasoning isn’t always clear for the average person. Insurance providers are very adept in using code and technical language, so it’s important to also have the coverage policy handy to cross-reference what the provider is stating as a denial justification. This helps clear up the communication a little bit.
However, in some cases, what may really be going on is that the provider simply wants to reduce costs. One of the less ethical ways of keeping risk management costs down is to deny otherwise viable claims in the home that people won’t push the issue and accept the denial. Cash not paid is cash savings for an insurance provider. It’s not a widespread practice, but some providers in the discount side of the market rely on this tactic to keep their claim costs down. This becomes evident when, time after time, as a claim is appealed, it ends up getting approved.
For example, the Kaiser Foundation measures numerous statistics regarding health and people’s access to it. When patients did appeal through the California Affordable Care Act program, 4 out of 10 won their appeals and approval of denied claims simply by asking. By 2021, the same channel for coverage was only seeing 17 percent of claims denied, but again a share of 1 percent (0.2 percent specifically) actually appealed in the same year. So, don’t take “no” for an answer; always appeal and get a second decision. The filing is formally referred to as the “internal” appeal.
Keep Good Records
In the meantime, while pulling everything together for the internal appeal as well as waiting for a response, try to put together good notes of everything beyond just what you used for the appeal justification. Every appointment, diagnosis communication, documentation from the insurance provider and your policy details should be in the file. This will be needed later if you need to go to the next level beyond an internal appeal. Usually, your doctor can help in this regard, pointing out everything about your condition and filling in the gaps for missing records and what services or healthcare steps were communicated to the insurance provider. This becomes invaluable when compared to the provider’s own documentation of coverage to be provided with a paid policy (i.e. you’re catching the provider in their own commitment and words).
As noted earlier, timing isn’t always conducive for the patient, so if your medical need is urgent, an expedited appeal can be asked for.
Bigger Denials, Bigger Steps With an External Appeal
The key defense of an insurance provider is its bureaucracy, particularly in the internal appeal process. Again, by making things so onerous, the hope is that the patient just drops the matter. And the statistics noted above support that assumption. Add in the fact that people need care right away; waiting for a provider to make a favorable decision frequently doesn’t work for people’s deadlines of need.
Most times, providers perk up immediately when they realize a patient has gotten serious about an external appeal. And the most effective way to send that message is through an insurance denial attorney. Representation does a lot more than simply tell a provider a patient has representation. It also means that the risk of loss just jumped significantly.
California law has long had protections on the books known as “bad faith denial of coverage” laws, which in essence, put the insurance provider on the hook for triple damages if the patient wins the lawsuit. That can be a hefty price for denying a procedure that was originally far less in cost. As soon as counsel is brought into the picture, many providers shift strategy to immediately trying to close the matter in settlement as quickly as possible and to avoid extended matters. Otherwise, the provider could find itself on the hook for coverage, penalties, and attorney fees costs combined.
Before filing a lawsuit, a California resident has the option of an administrative external appeal by the state government to review the insurance provider’s decision and dual denials after the internal appeal is exhausted. While an attorney is not required for this external appeal application, the guidance can help tremendously. Again, a good number of cases are resolved at this level because providers don’t like to entertain the idea of a formal lawsuit, which would be the next step. The cost and risk for them in a loss on the matter just continue to increase. However, so few appeals are filed at this stage insurance companies like to resist with the hope that the matter never reaches the external appeal phase.
If all administrative appeals are exhausted, that is not the end of the road. A California patient can absolutely sue for being denied coverage. This channel of possible recovery is outside the above processes and is accessed through a licensed attorney. Ideally, a patient should be working with an experienced insurance denial attorney because the nuances of both procedural law (the system of filing a lawsuit with a state court) and the merits of the case (the actual argument) can be very complicated. It’s a given that the insurance provider will be represented by their counsel as well. However, with the help of an insurance claim denial attorney at your side, there is a very good chance the provider will finally realize the better path to resolve the matter and stop fighting.