What to do when your health insurance claim gets denied

What to do when your health insurance claim gets denied

A health insurance denial is not a final answer. It is the start of a process most people do not know how to navigate. More than half of denied claims that go through a formal appeal are overturned. Here is the process, step by step.

Most people receive a denial, feel frustrated, and pay the bill or let the debt go to collections. That is exactly what insurance companies are counting on. The appeals process exists by law, carries real weight, and produces reversals at meaningful rates when used correctly.1 Knowing the process is most of the battle.

Step 1: Read the denial letter before doing anything else

The denial letter contains the specific reason for the denial, and that reason determines your entire strategy. Common denial reasons each require a different response.1

'Not medically necessary' means the insurer does not believe the service was clinically required. Your response is physician documentation that establishes why it was. 'Out of network' means the provider was not in your plan's network. Your response depends on whether an in-network equivalent was available. 'Prior authorization not obtained' means the insurer required advance approval that was not requested. Your response addresses why the authorization requirement was not met or was not communicated. 'Experimental or investigational' means the insurer considers the treatment unproven. Your response includes peer-reviewed clinical evidence supporting the treatment.

Save the letter, the denial code, and the reference number. You will need all three for the appeal. If anything in the letter is unclear, call the member services number and ask for a plain-language explanation of the specific denial reason before proceeding.

Step 2: Call the insurance company before filing anything

Before filing a formal appeal, call member services and ask about the denial. A significant portion of denials are resolved at this stage without a formal appeal, particularly denials related to coding errors, missing information, or prior authorization that was requested but not documented in the insurer's system.2

Ask specifically whether the denial can be resolved by resubmission with corrected information. Ask whether the provider can submit additional clinical documentation directly. Ask whether a peer-to-peer review is available, which allows your physician to speak directly with the insurer's medical reviewer. Note the name and ID number of the representative you speak with and the date of the call.

Step 3: Gather your documentation

If the phone call does not resolve it, a formal appeal requires a specific set of documents. Assemble these before writing anything: the denial letter with its code and reference number, your Explanation of Benefits (EOB) for the denied service, your physician's clinical notes related to the service or treatment, any referrals or prior authorization requests that were submitted, and any clinical guidelines that support the medical necessity of the treatment.1

The clinical guidelines piece is worth doing. The USPSTF (uspreventiveservicestaskforce.org), medical specialty societies, and major academic medical centers publish treatment guidelines that carry weight with insurance reviewers. A denial for a treatment that is explicitly recommended by a relevant clinical guideline is much easier to reverse than one where the evidence is ambiguous.

Step 4: File the internal appeal within 180 days

Every health insurer is required by federal law under the ACA to have a formal internal appeals process.1 You have 180 days from the date of the denial to file. For urgent or emergency care situations, you can request an expedited internal review, which must be decided within 72 hours.

Write a one-page appeal letter. It should state your name and member ID, the service being denied and the date of service, the specific denial reason from the letter, the evidence that contradicts the denial reason, and your specific request for reversal. Keep it factual and direct. Attach the documentation you assembled in Step 3.

Submit by certified mail with return receipt, or through the insurer's secure online appeals portal if one is available. Keep a copy of everything you send.

Step 5: Get your physician involved with a specific letter

The most effective single element in a successful internal appeal is a letter from the treating physician that addresses the insurer's stated denial reason directly.2 A generic letter of support does not move the needle. A letter that says 'this service was medically necessary because of the following clinical findings, and it aligns with the following published clinical guidelines' is what produces reversals.

Most physicians and their office staff are familiar with the appeals process. Ask the office manager or clinical coordinator to request a physician appeal letter on your behalf. Provide them with the denial letter so the physician can address the specific denial reason. Some offices handle this routinely without needing detailed instruction.

Step 6: Request external review if the internal appeal fails

If the internal appeal is denied, you are entitled to an independent external review under the ACA.1 An independent organization with no financial relationship to your insurer reviews the denial. Insurance companies lose external reviews at a meaningful rate, which is why the process exists.

You must request the external review within 60 days of receiving the final internal appeal denial. The insurer is required to provide the instructions and contact information for requesting it in the denial letter. The process is typically free to you. The external reviewer must issue a decision within 60 days for standard reviews or 72 hours for expedited urgent care reviews.

Step 7: Other escalation paths

Your state's insurance commissioner can investigate complaints about insurer behavior and in some cases intervene in appeal outcomes. Filing a complaint is free and sometimes produces movement that formal appeals do not. Find your state's commissioner at naic.org.

The Patient Advocate Foundation (patientadvocate.org) provides free case management for people dealing with insurance denials, particularly for complex medical situations or patients who lack the time or capacity to manage the process themselves.3 They have staff who navigate these processes daily and can take over management of a case.

If a Medicare claim is denied, the appeals process follows a different five-level structure beginning with a redetermination request to Medicare within 120 days of the denial. The process is similar in principle but the forms and deadlines differ from commercial insurance appeals.1

While the appeal is in process

Contact the hospital or provider's billing department immediately and inform them that the claim is under active appeal. Most providers will hold the account from collections during a formal appeal period. Get confirmation in writing or document the name and date of the person you spoke with. Do not wait for collections action to make this call.2

What to do next

If you have an open denied claim, pull out the denial letter today and identify the specific denial code. Run that code through your insurer's website or call member services to get the plain-language explanation if it is not clear. Decide whether a phone call or a formal written appeal is the right next step based on the denial type. Most people find the phone call faster for simple issues and the formal appeal necessary for medical necessity denials.

Sources

1. U.S. Department of Health and Human Services, Your Rights to Appeal Health Plan Decisions Under the ACA. hhs.gov/healthcare/rights/appeals/index.html

2. Centers for Medicare and Medicaid Services, Internal Appeals and External Review: Consumer Rights and Protections. cms.gov/cciio/resources/consumer-assistance

3. Patient Advocate Foundation, Case Management Services and Appeals Assistance. patientadvocate.org

4. Kaiser Family Foundation, Claims Denials and Appeals in ACA Marketplace Plans. kff.org/health-reform/issue-brief/claims-denials-and-appeals-in-aca-marketplace-plans