What Is a Health Insurance Claim Denial?

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Get a denial notice from your health insurance company? Here's what you need to know. Image © Peter Dazeley/Getty Images

A health insurance denial happens when your health insurance company refuses to pay for something.

Also known as a claim denial, your insurer can refuse to pay for a treatment, test, or procedure after you’ve had it done or while you’re seeking pre-authorization before you’ve received the health care service.

Why Health Insurers Issue Denials

There are literally hundreds of reasons a health plan might deny payment for a health care service.

Some reasons are simple and relatively easy to fix, some are more difficult to address.

Reasons for a health insurance denial include:

  • Paperwork mix-ups. For example, your doctor’s office submitted a claim for John Q. Public, but your insurer has you listed as John O. Public.
  • The insurer believes the requested service is not medically necessary. There are two possible reasons for this:
  1. You really don’t need the requested service.
  2. You need the service, but you haven’t convinced your health insurer of that. Perhaps you need to provide more information about why you need the requested service.
  • The insurer wants you to try a different, usually less expensive, option first. In this case, many times the requested service will be approved if you try the less expensive option first and it doesn’t work.
  • The requested service isn’t a covered benefit. This is common for things like cosmetic surgery or treatments not approved by the FDA.
  • Your health plan won’t approve the service if it’s provided by that particular health care provider, but will approve the service if you use a different provider. In this case, the service might be approved if you choose a different health care provider. Alternately, you might try to convince the insurance company that your chosen provider is the only provider capable of providing this service.
  • Insufficient information provided with the claim or pre-authorization request. For example, you’ve requested an MRI of your foot, but your doctor’s office didn’t send any information about what was wrong with your foot.
  • You didn’t follow the rules. Let’s say your health plan requires you to get pre-authorization for a particular non-emergency test. You have the test done without getting pre-authorization from your insurer. Your insurer has the right to deny payment for that test, even if you really needed it, because you didn’t follow the health plan’s rules.

What to Do About a Denial

Whether your health plan denies a claim for a service you’ve already received or denies a pre-authorization request, getting a denial is frustrating. If you get a pre-authorization denial, you may think you’re forbidden to get the treatment, test, or procedure. Think again.

A denial doesn’t mean you’re not allowed to have that particular health care service. Instead, it just means your insurer won’t pay for it.

If you’re willing to pay for it yourself, out-of-pocket, you’ll probably be able to have the health care service without further delay.

If you can’t afford to pay out-of-pocket, or if you’d rather not, you may want to look into the cause of the denial to see if you can get it overturned. This process is called appealing a denial.

All health plans have a process in place for appealing denials. That process will be outlined in the information you receive when you’re notified that your claim or pre-authorization request has been denied. Follow your health plan’s appeals process carefully. Keep good records of each step you’ve taken, when you took it, and who you spoke with if you’re doing things on the telephone.

If you’re not able to resolve the issue by working internally within your health plan, you may request an external review of the denial. This means a government agency or other neutral third party will review your claim denial.

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