Health Insurance: External Review or Third-Party Review

Man filling out health insurance claim form
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External review is a part of the health insurance claims denial process. External review typically occurs when an independent third party reviews an individual’s claim to determine whether or not the insurance company is obligated to pay.

External review is one of several steps that comprise the appeal and review process of a claim. External review is performed after the appellant has exhausted the insurance company's internal review process without success.

Health Insurance Denial

A health insurance denial, also known as a claim denial, occurs when a health insurance company refuses to pay for some particular visit, service, or medication. In such a situation, the insurance company has denied the request from an individual. An insurer can refuse to pay for a wide variety of services, although such potential denials are usually outlined in the plan.

An insurer can refuse to pay for or cover a procedure after you have already had it done, or ahead of time during the pre-authorization process.

Once a particular claim is denied, then the external review process can be utilized.

Reasons for Denial

Understanding why a claim might be denied by a health care provider could help you to avoid a potentially difficult situation.

There are a myriad of different reasons that a health plan might deny payment for a particular service. Some reasons are simple and relatively easy to address, while others can be much more difficult.

Some common reasons for a potential health insurance denial include:

·  Mix-ups with paper work, such as misspellings or incorrect names. These are usually easy to identify and simple enough to fix. 

·  The insurance company thinks that the requested service is not medically necessary, thus they will not cover it.

This happens often with issues such as elective cosmetic surgery.

·  The insurance company may suggest a different, less expensive, option initially. Often, the originally requested service will be approved by the insurer if the less expensive option is tried first and ends up being unsuccessful.

·  The requested service is not a benefit that is covered in the plan.

·  Insufficient information is provided regarding the issue. It is up to the patient to provide as much information as possible as to why a particular course of action is needed.

·  If your plan requires you to get pre-authorization for a particular non-emergency test, but you have the test done anyway, without getting pre-authorization, your insurer then has the right to deny payment for that procedure.

Most, but not all, states sponsor an external review program. A fee of $25 to 50 may be required in some states. For more information, see the FAQ on How to Resolve a Claims Dispute.

Also Known As: External review is also commonly known as third-party review, or claim denial.

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