Understanding the Reasons behind the Denials of Health Insurance Claims

There are times when your doctor recommends you a medical procedure, test, or medication, and your health insurance company denies paying you the cost. This situation can be frightening because paying for such services from your pocket can take a toll on your expenses. However, if there is an alternate test, procedure, or medication that will work and your health plan will cover, then this can give you some relief, but if the test, procedure, or medication is the only thing that will work, then the situation can be life-threatening. When your claim or pre-authorization is denied by your carrier, then it is quite frustrating and may encourage you to fight for the denial. However, before moving ahead, you should first make sure that you understand exactly what happened and why you will not be paid by your insurer. Understanding the cause of denial will make you more competent if you fight with the health insurance company becomes necessary.

Find below some of the reasons behind your health insurance company denying the claims:   

Your healthcare need is not covered under your health plan – If your insurer denies your claim saying that your healthcare need is not covered, then it is saying that your health plan doesn’t cover the test, treatment, or drug irrespective of the circumstances. The health insurance companies generally know what is covered and what is not covered, but sometimes they may be wrong. So, you should carefully check your plan. If you have a job-based plan, then you should check with your employee benefits office to see whether the service is covered under your plan or not. Small group and individual health plans in the U.S. have to cover the essential health benefits, but large group employer-sponsored plans, as well as grandfathered plans, do not have to provide the same coverage. Thus, if you think that you have been denied the coverage, which your plan covers, then you should follow the appeal procedure outlined in the health plan booklet. You can also take the help of the employee benefits office or your state’s insurance commissioner.

Use an out-of-network provider when your plan is limited to in-network providers – If you are having an HMO or EPO plans, then you might be aware that your coverage is limited to in-network providers having a contract with your insurers with only very few exceptions. Your insurer will not pay anything if you use an out-of-network provider. If you requested for pre-authorization, and if your request was denied because of your chosen provider, then you can simply re-submit the request using an in-network provider rather than an out-of-network provider. You may also be able to receive the claim if you can manage to prove that it was a medical emergency and you went to the closet healthcare provider who was efficient to give you the required care.

Your Insurer thinks you don’t need the care recommended by your doctor – If you file a pre-authorization request or for a claim and receive a medical necessity denial, then it means that your insurer will not pay because according to them you don’t need the care recommended by your doctor. However, this might not be the case, because there are some reasons behind a medical necessity denial that doesn’t mean that your insurer thinks that care is unnecessary for you. You need to figure out what exactly your medical necessity denial means, and the best thing is that while figuring out you may find a path that will help you get your pre-authorization request approved or your claim paid. You just need to tweak your approach a little bit. In the scenario when you receive a claim or pre-authorization based on medical necessity, then you should take the help of your doctor. Since your doctor has recommended the service due to some reason so they will be able to better communicate the reason for your insurer. In some of the cases, the insurer may approve the procedure, or they may work along with the doctor to approve another service, which both the insurer and the doctor find medically necessary for you.

The ACA has guaranteed consumers the right to an internal and external appeals process for non-grandfathered health plans. So, if your claim or pre-authorization is denied you should not give up and should work along with your doctor to navigate the appeal process and may get your procedure approved or arrange for an alternate procedure that allows you to have coverage for care that will be apt for your situation.

The insurer doesn’t consider you as a benefitted member – the Healthcare system is quite complex today, and so information related to your coverage should correctly flow from your employer, insurance broker, or health insurance exchange to your health plan. If there is a glitch or fault anywhere, then it will appear that you don’t have health insurance even when you do have. Besides, it is also common for health insurers to outsource the decision making regarding your healthcare coverage to a medical management company. In such circumstances, your coverage information must correctly flow from your health plan to the medical management contractor. Similarly, your health condition information should also flow correctly from your doctor’s office to the insurer or its medical management contractor. Any error in this information flow can lead to claim denial or refusal of your request for pre-authorization. However, the best part is that you can easily overturn the denial or pre-authorization refusal if you exactly understand the problem.

Your hospital stay was not correctly classified – If your health plan or Medicare plan refuses to pay for a hospital stay, then the reason might be due to disagreement about your correct hospitalization status. When you are in the hospital, then you are assigned either observation status or inpatient status, as per a set of rules and guidelines. It is common for your admitting physician and the hospital to believe that you should be admitted to inpatient status, while your health plan or Medicare plan thinks that you should have been hospitalized in observation status. Thus, if you are admitted to the wrong status, then your plan might refuse to pay for the entire admission, even though your insurer agrees that you needed the care the hospital provided. It is simply a technical foul.

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