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What Happens When My Medical Claim is Denied?

Needing medical care can be stressful and overwhelming. For many of us, that burden is somewhat lifted because we have health insurance. But what if your insurance company denies your medical claim? Are you stuck with the bill, or can you appeal? Let’s find out…

Here are the top 3 most common reasons a medical claim is denied:

  1. Your service or treatment is considered a “non-covered service.”

  2. You didn’t get the appropriate pre-approvals prior to receiving treatment.

  3. Your service was considered “not medically necessary.”

Today, let’s look at each of the 3 most common denial reasons and see what to do if this happens to you. For a more comprehensive list, check out the bottom of this blog.*

1. Your Service Is a Non-Covered Service

Sometimes, your service is considered non-covered. That means when your employer and health insurer decide how much healthcare to cover, this didn’t make the list. That means they expect you to pay for this service yourself and it is not part of your health benefits. However, there are always exceptions.

Example 1: Sandra was diagnosed with breast cancer and had to undergo chemo and lost her hair. She had a high-profile job where her appearance was important and going to work bald was considered disruptive. Ordinarily the insurance company would not cover a wig, but in this case they felt it was necessary for her to continue working. The insurance company decided to make an exception and cover the wig for Sandra. The wig was called a “cranial prosthetic.”

Example 2: Normally cosmetic plastic surgery is not covered by health insurance. However, Jim was in a fire and suffered severe damage to his face and hands. The insurance company may consider covering plastic surgery in his case because it is not for cosmetic reasons.

What to do if this happens to you? If you get your Explanation of Benefits or a bill from the doctor saying your service was denied as a  non-covered service, first call your insurance company’s customer service number.

Make sure you get enough information from them to understand their opinion and why they made this determination.. If you still believe your treatment should have been covered, you can file an appeal.  Check your insurer’s website to find out how their appeals process works.

If you do end up having to pay cash, always ask for a discount from the provider.

2. You Didn’t Get the Appropriate Pre-Approvals

Many insurance companies will require a pre-certification, pre-authorization, or a referral to a specialist before you receive care. If you don’t get the appropriate pre-approvals, the insurance company can deny your claim. Most of the time, the provider you are visiting will obtain the prior approvals for you.  Be sure to check with your insurer before receiving care.

Example: Sujatha fell and hurt her knee.  She has a friend who is a physical therapist, so Sujatha made an appointment to see her friend at her clinic.  When she got to the clinic, she was asked to pay cash for the visit.  After she received her bill, Sujatha submitted it to her insurer for reimbursement.  The claim was denied.  She needed both a doctor’s order and a per-certification specifying the number of approved visits.

What to do if this happens to you? If you didn’t get the appropriate pre-approvals, you can still try to appeal. First call the customer service number for your insurance company and talk to the agent. Ask them if there is any way you can get these claims paid for if you get a referral now.

If the insurance company says they won’t pay, follow their official process to appeal. Once you submit your appeal, it will be reviewed and either approved or denied.

3. Your Service Was Considered Not Medically Necessary

Your insurance company reviews claims and determines whether or not they are medically necessary. That means, does your treatment fall within normal and usual course of action for your illness. If your insurance company believes your treatment is outside the usual course of treatment, it may deny the service.

Example: Tom’s doctor prescribed Lipitor instead of a low-cost generic medication. His insurance company denied coverage because a less-expensive drug was available. Generic drugs are just as safe and effective at treating his condition, so the insurance company denied his medication.

In Tom’s case though, he has a bad reaction to an inactive ingredient (an ingredient like a binder that keeps the pill together) in the generic version of Lipitor. That’s why his doctor needed to prescribe the brand-name drug.

What to do if this happens to you? This one may be the “easiest” of the three to get fixed. If your doctor prescribed a medication or ordered a procedure, he thought it was medically necessary.

Again, call your insurance company and find out what information they need to get this claim covered. They may ask your doctor to fill out and send in a Medical Necessity form.

Contact your provider and tell them your service was denied because it was not considered medically necessary. Then give them the information they need to help you out. Most physicians will help you as a normal part of their practice.

Medicare Corner

Traditional (Original) Medicare Medicare works a little bit differently. If a Medicare claim was denied, follow the steps to file a traditional Medicare appeal. There are 5 levels of Medicare appeals. If you disagree with the outcome of a certain level, you can generally go to the next appeal level.

Medicare Advantage If you have a Medicare Advantage (Managed Medicare) plan, the appeals process is slightly different than  traditional (original) Medicare. If you’d like to file an appeal, follow these steps to file a Medicare Advantage appeal.

So, if your medical claim is denied, you still have options. But the bottom line is, step outside the rules, and you could pay more.

*An insurance company can deny a medical claim for a number of reasons not listed above. Here are a few other reasons your medical claim could be denied:

  1. Your procedure is considered experimental (not covered by the FDA).

  2. Your doctor’s office may have incorrect insurance information on file for you, so the insurance denied your claim due to an administrative error.

  3. If you changed insurance policies in the middle of a medical procedure, that could lead to a denial.

  4. Coordination of benefits, meaning another insurance company  was responsible for your bill (called the primary insurer) and should have been billed first.

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