What to do when your insurance denies a claim
Updated: February 18, 2023 · 6 Minute Read
- The first step is to understand why your insurance company denied your claim.
- There are a variety of directions that you can go to resolve the issue depending on your situation.
- You might need to work with your provider to share more documentation with your insurance.
- Mistakes happen. You might need to work with your insurance or provider to resolve any billing errors.
- If your insurance didn’t cover a service, you can check if you are liable and responsible to pay, negotiate a potential discount, or sign up for additional state support.
Having a child with special needs can open up a world of questions and uncertainty for families attempting to navigate the healthcare system. Health insurance can be one of the most challenging problems to navigate.
It is disheartening and frustrating when a health insurance company denies coverage for services. While not all denials are reversible, some are.
The first step to any resolution is understanding the reason behind a rejection. The various solutions are dependent on the type of denial. Depending on your situation, we’ll outline the best route for you.
Common reasons for claim denials
Lack of Medical Necessity: The insurance company needs proof
Insurance companies have clinical guidelines which determine when care is covered. For example, speech therapy might require that your child has a particular diagnosis (i.e., autism) listed on the claim for the service to be covered.
Often, a provider may either miscode a claim or not submit sufficient information to explain why your child needs the care. When your insurer explains that they denied a claim due to a lack of medical necessity, it is best to call your provider to discuss a supplementary medical rationale to submit and support the service that needs coverage. A provider can either resubmit the claim with additional information, request a peer-to-peer (when your provider talks to a provider at the health insurance company to get the claim overturned), or file an appeal.
Benefit Limit: You’ve run out of the number of covered services
Sometimes employers (if you have health insurance through your employer) and insurance companies make agreements to cover services up to a specific limit. For example, physical therapy has a cap of a certain number of visits. You can take a few steps when you encounter a benefit limit.
- Check if the calendar year or a “plan year” is a part of your coverage’s language (when your plan starts and stops). Most people enroll in their insurance plan during open enrollment periods in October and November. Then, that plan is active from the start of January to the end of the ensuing year. In this case, the benefit limit would apply to that calendar year and reset on the new year. In some instances, like for professional academics, the insurance plan can run on a plan year from the start of a school year in early August to late August the following year. Understanding how your plan is structured can allow you to space out those limited services and maximize your benefits within a given year. Either talk to your HR group or look at the insurance plan documents to see when your plan year starts and stops.
- Understand if your insurance can cover additional services (is the limit firm or flexible?). There are two types of benefit limits — ”soft limits” and “hard limits.” Soft limits are subject to medical necessity. The plan may state that after 30 visits, additional visits are allowed if deemed medically necessary. If this is the case, you can work with your provider to send supplementary documentation to the insurance company to prove the need for all additional services. Hard limits, however, are not flexible, and no amount of medical necessity will change a plan’s guidelines. Suppose you encounter a benefit limit, and that limit is a hard cap. In that case, you can look into public secondary insurance options such as Medi-Cal or work directly with your provider to arrange a reduced out-of-pocket cost.
Missing Prior Authorization: You (or your provider) did not submit a sufficient explanation of why service was necessary before care
In-network providers are required to submit prior authorizations to the insurance company on your behalf. Still, you may need to submit authorizations yourself if you visit an out-of-network provider. Sometimes a claim will be denied due to a lack of prior authorization. Certain medical services like high-cost medications or hospital stays require a prior authorization that your in-network doctor will submit on your behalf to the insurance company before they agree to cover the services. Suppose an in-network provider forgets to submit a prior authorization or denies said prior authorization, and you didn’t reach an agreement with the provider to pay regardless of coverage. In that case, you are not responsible for paying for the service. Always look under the explanation of benefits (receipt from your insurance company) to ensure that what you pay your doctor doesn’t exceed the amount listed under the “patient responsibility” section. (If your in-network doctor is charging you more than the listed patient responsibility, see №1 under the “Not Covered Service” section below.)
It’s best to be proactive with prior authorizations if you are using an out-of-network provider and call your insurer before any expensive procedure to confirm they have submitted an authorization to approve a service eventually. If your insurance still denies a claim due to a missing prior authorization, you can appeal that claim. Your provider can retroactively submit supplementary medical documentation demonstrating the need for those services.
Not Covered Service: The service is not a part of your insurance plan
Your insurance may deny a claim for a specific service. These services include experimental treatments and clinical trials which might show promising results but have yet to be officially evaluated for safety and are often not covered by insurance. When a benefit plan doesn’t cover these kinds of treatments, it’s usually not worth trying to appeal. There are still a few options available.
1. Check your patient responsibility: An in-network provider cannot balance bill a patient for non-covered services unless that patient has signed a separate form agreeing to cover any non-covered expenses. The provider has a contract with the health insurance company and can only charge the patient for the allowed amount. If the explanation of benefits from your health insurance shows a patient responsibility of $0, but your healthcare provider is still charging you, reach out to your health insurance company, and they will inform the provider that they are violating their network contract. If the patient’s responsibility for explaining benefits shows $0, the provider is on the hook for the service, and you do not owe anything.
2. Talk with your provider: If the provider is either out of network or has made a separate agreement with you to pay for the non-covered medical service, then you can work directly with that provider to negotiate a discount. Often health systems have payment plan options or may even be willing to give you a discounted rate on the total cost.
3. Sign-up for additional insurance coverage: Now is a great time to submit the not-covered claim to secondary insurance. A secondary insurance plan could be through a partner’s employer or a state-funded program. If you have a child with special needs, it is a good idea to check to see if you’re eligible for state insurance and enroll here as soon as your child has a qualifying diagnosis. California’s “Medi-Cal” serves as a financial buffer for individuals with developmental disabilities.
While health insurance can be aggravating, there are proactive steps you can take. Start by understanding the reason for any claim denial and then work through the options on why the rejection occurred. Partner with your healthcare provider to submit supplementary materials and try to connect with someone at your insurance company who can explain the problem and provide a route to a resolution.