THE BLOG
06/21/2011 04:09 pm ET Updated Aug 21, 2011

Health Insurance Claim Denied? Don't Despair. Fight Back.

According to a recent report from the U.S. Government Accountability Office (GAO), fighting back when you have a health insurance claim denied is well worth your time.

Michelle Andrews in Kaiser Health News explains:

The... Report found that more claims problems stemmed from annoying but often straightforward billing and eligibility issues than from disagreements over whether care was medically appropriate. What's more, the odds are about 50/50 that if you appeal an insurer's decision, you'll win.

It can be overwhelming to be sick and then just as you start feeling better, you get a denial from your insurance company. Clearly, it pays not to ignore it or panic. The US GAO report explains that many denials are simple coding or other factual errors -- the diagnosis didn't fit the description of the treatment; someone didn't fill out the right box; prior authorization was required but you didn't know about it and didn't ask for it.

Michelle gives the example of Natasha Friedus:

When Natasha Friedus's son, Nofi, was born almost two years ago, her insurer refused to pay $1,500 of Friedus's $7,500 hospital bill because she hadn't gotten prior authorization for the hospital stay near her home in Seattle. The plan also sent a $600 bill to Nofi, because he'd neglected to inform the insurer that he'd be in the hospital for a few days. "Apparently he was supposed to call before being born," Friedus says.
The new mother spent hours on the phone trying to sort out the problem, but she got nowhere. Finally, someone suggested appealing the decision to the insurer and asking for retroactive approval for her hospital stay. That did the trick, says Friedus, even though the insurer had never informed her that she could appeal the bills.

Occasionally, in a minority of cases, the denial is because the treatment was not defined by the insurance company as "medically necessary" or "medically appropriate." What do these terms mean? Both very little and a whole lot.

These terms are used to define what the insurance company will pay for and what they will not. And it pays YOU to know what is covered before you buy insurance. What is medically necessary is defined by guidelines and policies that the insurance company sets up to help them decide whether or not the treatment has evidence of effectiveness for your particular condition and therefore if it will be reimbursed.

If you thought that insurers just threw a dart at a board to deny a claim, you would be wrong. The insurer's rationale for medical policies is to establish an evidence base for deciding whether or not a treatment or service should be covered. A lot of research goes into these medical policies, and frankly if you work with the insurer instead of against them, you will have a better chance at overturning your claim on appeal.

Here is what you can do if you or someone you know receives a denial:

1. Call the Customer Service number on the back of your insurance card and ask for an explanation of why the claim was denied.

At this point, you most likely will be talking to an "entry level" customer service person. Don't get mad at them. They have a computer screen in front of them and they can only tell you what the screen tells them.

If you do not get the answer you want, or the answer is not clear, ask to talk to a supervisor. You may not get the answer you want on the first try, but at the very least you should be able to get some information from a supervisor. Keep asking for someone until you do get a clear answer.

ALWAYS ask for the name of the person you are talking to, and before you hang up, ask them to put "in the record" that you are working to resolve this issue

2. If the insurer tells you that it is not their error but instead something your doctor or hospital can correct, your next step may be to call them. Did your doctor's office put the correct "CPT or ICD-9 code" in the claim? Were all the facts submitted accurately? Ask them to review the claim again, tell them what you know from the insurance company, and if there was a simple error they can resubmit the claim.

In the case of a significant hospital bill, ask the hospital medical records clerk, or whomever you are talking to, to put in their record that you are working on resolving this claim. They should insert that information so that your claim does not go to a collection agency.

3. Here's where it gets a bit more complicated. If the denial is neither an accounting or administrative error of some kind, but was denied because the treatment for which reimbursement is being requested was not "medically necessary or appropriate," you must pursue a slightly different tack. But don't give up!! It's not as hard as you think. I have done research on medical necessity and coverage policies, and there are some actions you can take to be sure that you win those appeals.

First, you can try your doctor's office (or hospital records office) to find out if THEY know why the claim was not considered to be medically necessary. If they do, they may be able to resubmit the claim merely by adding more information to the request. If they do not know why, you can check it out yourself.

Check the diagnosis and the treatment definitions on the claim and go to the website of the insurance company and look up their guidelines/policies.

These clinical policies are one of the best kept secrets of insurance!! Most health plans nowadays post their "clinical policies" online, mostly for use by providers. But most of these sites are open to members as well. Simply search for "medical policies" or "clinical policies" on the site or just google your plan name and "clinical policies."

4. Here's how these policies work:

Let's say you have a serious knee injury and your doctor wants to fit you with a customized knee brace before any surgery or other treatments are considered. Your doctor has submitted a request to the insurance company, but the customized brace was denied because it did not meet "clinical policy guidelines" or was "not medically necessary."

What does the insurance company define as necessary for a customized brace? This is Anthem's definition:

Custom-made (custom fabricated, custom molded) unloader knee braces are considered medically necessary as an alternative to a prefabricated (custom-fitted) knee brace for the treatment of unicompartmental osteoarthritis with or without valgus/varus deformity, when any of the following criteria are met:
• Individual is a candidate for high tibial osteotomy or total knee arthroplasty (replacement) and may elect non-surgical treatment; or
• To predict the success of high tibial osteotomy versus total knee arthroplasty; or
• Individual has severe patellofemoral arthrosis in conjunction with medial or lateral compartment arthrosis.

Custom-made (custom fabricated, custom molded) functional knee braces may be medically necessary as an alternative to a prefabricated (custom-fitted) knee brace when the individual meets any of the following criteria, including but not limited to:
• Abnormal limb contour (disproportionate size of thigh and calf); or
• Knee deformity that interferes with fitting (valgus or varus limb); or
• Minimal muscle mass upon which to suspend an orthosis.
Not Medically Necessary:
Custom-made (custom molded, custom fabricated) knee braces, functional or unloader, are considered not medically necessary when the above criteria are not met.

Doesn't make any sense to you? Don't worry, it will to your doctor. If you look this up, print it out and take it to your doctor, your doctor can fit the request more precisely to the requirements above. The doctor deals with a dozen different insurance companies every day, so don't blame her if she doesn't know all the detailed policies. This is a way you as a patient can help.

6. You are now at a point where you need to re-file your claim and appeal the decision. As of July 1, 2011, the health reform law requires insurance companies to tell you how to appeal these claims. So get the forms you need and fill them out (or have your doctor fill them out) and send them off.

The good news about all of this is that you have at least a 50-50 chance of getting your appeal approved if it's an issue of medical necessity. Other appeals that are simply correcting inaccuracies are usually approved without further hassle. The medical necessity appeals may take a little longer but if the amount of money is significant or the issue important enough to you, it is worth the time you take to make it right.

There is a lot of talk about fraud and abuse in health care. Most of that fraud comes from providers who bill for things they didn't do. It doesn't usually come from the random member/patient who gets caught in the bureaucracy and complexity of health insurance. Unfortunately, many of the policies that insurance companies put in place to guard against overbilling are NOT your fault, even though you get caught up in them. Bottom line? Take the time to correct the record. You have an excellent chance of winning.

Update: Just released June 23 in Health Affairs, an excellent article on the new rules for appeals in the Affordable Care Act.