What to Do If Your Insurance Claim Gets Denied

Back to Blog

You went to the doctor, got the treatment you needed, and expected your insurance to cover it. Then you get a letter or more likely, an explanation of benefits in the mail telling you your claim was denied. It's frustrating, confusing, and it feels final. But here's what the insurance company doesn't want you to know: a significant percentage of denied claims are overturned on appeal. You just have to know how to fight.

Step 1: Understand Why the Claim Was Denied

Before you do anything else, read the denial letter carefully. The insurer is legally required to explain why the claim was denied, and the reason matters because it determines your strategy. Common denial reasons include:

• Not medically necessary. The insurer determined the service wasn't needed based on their medical criteria. This is the most common reason and often the most successfully appealed.
• Out of network. You saw a provider who isn't in your plan's network, and the plan doesn't cover out-of-network care for that service.
• Prior authorization not obtained. The service required pre-approval from the insurer, and it wasn't obtained before the service was provided.
• Service not covered. The specific treatment or procedure isn't covered under your plan's benefits.
• Coding error. The provider submitted the claim with an incorrect billing code. This is more common than you'd think and is often the easiest to fix.

Step 2: Check for Simple Errors

Before launching a formal appeal, call your insurance company and ask for details about the denial. Sometimes claims are denied because of administrative mistakesa wrong code, a missing piece of information, or a data entry error. Your doctor's office may have submitted the claim with an incorrect diagnosis code or procedure code. A quick call to the billing department can often resolve these issues without a formal appeal.

Ask the insurance company: "What specific information would be needed to approve this claim?" Sometimes they'll tell you exactly what's missing, and your provider can resubmit with the correct information.

Step 3: File an Internal Appeal

If the denial isn't a simple error, your next step is a formal internal appeal. Under the ACA, you have the right to appeal any claim denial, and the insurer must review it using a different person (or team) than whoever made the original decision.

For your appeal to be effective:

• Get a letter from your doctor. Have your treating physician write a detailed letter explaining why the service was medically necessary. Include relevant medical records, test results, and any clinical guidelines that support the treatment.
• Reference your plan's own criteria. Request the insurer's medical necessity criteria for the denied service. Then show, point by point, how your situation meets those criteria.
• Be specific and organized. Include your claim number, date of service, provider information, and a clear timeline. Make it easy for the reviewer to understand your case.
• Meet the deadline. Most insurers give you 180 days to file an internal appeal, but don't wait. File as soon as possible while the details are fresh.

Step 4: Request an External Review

If your internal appeal is denied, you have the right to an external review an independent third party reviews your case. The external reviewer isn't employed by or affiliated with your insurer, and their decision is binding on the insurance company. This is a powerful tool, and studies show that external reviews overturn denials in a significant percentage of cases.

The external review process is usually free and must be completed within 45 days (or 72 hours for urgent situations). Your insurer is required to tell you how to request an external review in their denial letter.

Step 5: Know Your State's Resources

Every state has a Department of Insurance that can help consumers with claim disputes. They can investigate your complaint, mediate between you and the insurer, and take enforcement action if the insurer isn't following the rules. Some states also have consumer assistance programs specifically for health insurance issues.

Filing a complaint with your state's Department of Insurance often gets results faster than you'd expect insurers take regulatory inquiries seriously.

Insurance companies deny claims because the process works in their favor when people don't appeal. The system is designed to discourage you. Don't let it.

Prevention: Reducing Future Denials

While you can't prevent all claim denials, you can reduce the chances:

• Always verify that your provider is in-network before scheduling a service
• Ask your provider's office to check prior authorization requirements before any procedure
• Keep copies of all referrals, authorizations, and medical records
• Review your Explanation of Benefits (EOB) statements for every service don't wait for a surprise bill

Dealing with a denied claim is stressful, but you're not alone. Figueroa Family Insurance can help you understand your coverage and navigate disputes. Reach out for a free consultation anytime.