Why Do Health Insurance Companies Deny Claims?

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Health insurance claim denial reasons can vary based on the specifics of your health plan. Some of the most common reasons for denied health insurance claims include:

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• Gaps in coverage: Approximately 14% of health insurance claims are denied because the treatment is considered an "excluded service", according to reporting across HealthCare.gov insurers.
• Lacking preauthorization: Approximately 8% of denied health insurance claims happen because a process or procedure was not preauthorized. This may include failing to seek a referral before receiving specialized care.
• Errors and inconsistencies: If your medical bills or claim submissions contain errors or missing information, they may be wrongly rejected. Unfortunately, inconsistent record-keeping is very common in healthcare.
• Out-of-network care: If a provider is out of network, your claim may be denied.
• Failing to file properly: If your doctor misses the submission deadline or does not file your claim appropriately, you may face claim denial.
• Medically unnecessary treatment: If your treatment is determined to be "experimental" in nature or medically unnecessary, the insurance company may deny coverage. In cases involving dental or vision insurance, these denials become especially confusing, as some insurers deny services that many think would be covered.

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How to Fight A Health Insurance Claim Denial

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A denied health insurance claim does not have to be the end of the road. It is possible to appeal a denial, however, less than 0.2% of patients attempt to do so. This is because many patients do not realize that appeal is an option or they do not understand how to take on the process alone. However, when patients do appeal health insurance claim denials, they have a strong likelihood of receiving a reversal. Patient appeals without supplemental professional help are shown to have a 39 to 59% success rate.

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Your healthcare provider is the first line of defense after most health insurance denials. They will usually submit the first appeal on your behalf, as well as have the option for a peer-to-peer call in order to explain their rationale behind recommending the treatment or therapy. Remember, not everyone has the resources for an extended appeals process. You might want to stay in touch with your provider's office to track the insurance denial appeal process. Once your provider has exhausted their ability to appeal, you may apply for a patient-led internal review.

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Typically, your insurance plan offers multiple stages of internal appeals, although some plans limit the number. You may be able to request additional review if new information becomes available about your health, the treatment, or your claim. You may also be able to successfully argue that your insurance company did not review your full claim, enabling you to submit for an additional internal appeal.

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Once you have exhausted the avenue for internal appeals, you can file for a review from an external board sometimes called an Independent Review Organization. A third-party organization will consider your claim and examine it for legitimacy, as well as account for the insurer's reasons for denial. However, it’s important to note that if the external review is denied, your options become more limited, as the insurance company can use this decision as evidence to uphold the denial for any future appeals. It’s recommended to seek professional guidance from an experienced appeals firm or legal firm before submitting an external appeal.

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Finally, if you disagree with the decision after the external review, you may have the option to submit a regulatory complaint. Regulatory complaints are typically undertaken once the review process has been exhausted. This step can be taken in conjunction with litigation or as a standalone action.

How to Appeal a Health Insurance Denial

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The health insurance appeals process can be complicated, involving multiple internal steps before patients can seek external review or legal action. Paxos Appeals simplifies this process, helping patients understand their options. If you are facing a health insurance denial, you should first:

1. Speak to your doctor. You will need to know if they can appeal the decision on your behalf, and when you can be involved in the process. It’s also important to keep in mind that doctors do not typically fully understand every single nuance of every single health plan’s clinical policy.
2. Consider if an appeal is possible. Paxos Appeals offers free guides online to help get you started with the process. Not every claim is eligible for legal action, but you may be able to take steps on your own to ensure that your internal appeal reaches the appropriate agency.
3. Contact a health insurance attorney or reach out through a service like Paxos Appeals. We can help you understand your options for the appeals process, connect you to legal help when necessary, as well as help you draft your patient-level appeal for eligible claims.

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How to Find the Right Health Insurance Dispute Attorney

Paxos Appeals can help connect you to an attorney, such as Justin Wallace, who specializes in these claims. We screen firms based on their internal guidelines for what kinds of claims they can take on, as well as ensure that your patient-appeals process is as streamlined as possible.
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Health Insurance Denying Your Claim? Speak to Paxos Appeals to Learn How We Can Help Write an Appeal

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If you need help understanding what stage of the patient-led appeals process you are in, as well as when and how to contact a healthcare insurance dispute attorney, contact Paxos Appeals for help. We can support you in navigating the patient-led appeals process and refer you to the right health insurance dispute lawyer.

This article was co-authored by Justin Wallace, JD, who specializes in health insurance litigation, and the Paxos Appeals team.