Navigating an Insurance Claim ​

Author: Jenni Nolan, BCPA

Purpose of this Guidance: Purpose statement

Understanding the Health Insurance Claims Process: Submission, Review, and Decision ​

The health insurance claims process starts with a visit to a doctor, hospital, or other provider of healthcare services. Once services are rendered, the provider (which could be a person or a facility like a hospital) submits a claim to your insurance company. Then, the company uses the claim to determine how much of the charges will be covered by your insurance and whether you will have any out-of-pocket costs. A typical claim includes your demographic and insurance information, the date(s) on which services were provided, the diagnosis (ICD-10) code(s) for which care was provided, the procedural (CPT) code(s) for the services provided, and the charge amounts for each procedure, along with the provider’s demographic and billing information.

Your health insurance company will review the claim for completeness and appropriate coding before processing the claim according to your specific plan benefits. If the claim is approved, the insurance company will then pay the claim based on the rates negotiated with the provider. The insurance company will generate an Explanation of Benefits (EOB) showing exactly how the claim was processed; a copy of the EOB will be sent to the provider, along with any payment, and a copy will be provided to you, either by US mail or via your insurance portal. Don’t throw this EOB away!

Finally, the provider will send you a bill for any portion of the charges for which you’re responsible (i.e., copays, deductible, coinsurance, non-covered services). Be sure to compare the bill to its corresponding insurance EOB to be sure the amount due is correct before paying the bill!

Common Reasons for Medical Claim Denials ​

Every insurance plan is different, making for a seemingly-infinite number of reasons for claims denials. Here are a few of the most common reasons for claims denials:

Coding issues

One common reason for denial is when the diagnosis code listed on the claim form isn’t appropriate for the corresponding procedure code – that is, the insurance plan won’t pay for the procedure with the diagnosis. For example, they shouldn’t have to pay for a splinter removal if the patient’s only listed problem is high cholesterol. Coding issues will need to be fixed by the provider/billing office and resubmitted to insurance as corrected claims.

No prior authorization

Many insurance companies require prior authorization for certain in-network procedures, medications, and out-of-network services. Obtaining prior authorization is the responsibility of the provider; however, the financial burden often falls on the patient when a prior authorization isn’t obtained. Some insurance companies allow for “retro” authorizations if they are requested within a certain time frame after the procedure is performed.

Services provided outside of policy coverage dates

This one seems like a no-brainer, but it is a common reason for claims denials. These denials often occur when a patient has new insurance, but the provider submits their claim to the patient’s old insurance company. If you receive an EOB from an inactive insurance plan, be sure to contact the provider of service with your updated insurance information so they can submit to the correct plan.

No out-of-network benefits

While many insurance policies cover out-of-network services (usually at a reduced rate), some insurance plans do not. If your plan does not include out-of-network benefits, you will be responsible for the full amount of the charges for out-of-network providers.

Policy exclusions/non-covered services

Nearly every insurance plan is different regarding the services it covers. Be sure to read your plan documents thoroughly before seeking medical care, so you know in advance whether the services you seek will be covered.

Pre-existing conditions

Pre-existing medical conditions are those that a patient has been treated for prior to becoming effective on a new health insurance policy. Fortunately, the Affordable Care Act of 2010 made denials for pre-existing conditions a thing of the past for ACA-compliant plans. Unfortunately, not all insurance policies are required to be ACA compliant. Short-term policies, indemnity plans, and cost-sharing plans are some that may not cover pre-existing conditions.

Coordination of benefits

If a patient is covered under two different health plans, then coordination of benefits is a process that determines which insurance policy is primary (pays first) and which is secondary. The secondary policy will deny payment of a claim unless it has the primary insurance EOB on file.

Lack of medical necessity

Often, insurance companies will deny services they deem as not medically necessary, despite the fact that a physician ordered or performed the services. Resolution of these denials usually requires an appeal and/or a peer review that involves the ordering/performing physician and a physician at the insurance company.

How to Appeal an Insurance Claim Denial: A Step-by-Step Guide ​

1. Find out exactly why the charges were denied; the specific reason for the denial _should_ be listed on the EOB, but may warrant a phone call to the insurance company for further clarification.
2. Review your plan documents to determine whether the services should have been covered. 
3. Familiarize yourself with your plan’s appeals process. Instructions for an appeal should be included with each EOB (usually located on the back or an additional page included with the EOB).
4. Once you know the exact reason for the denial, you need to compose a detailed appeal letter focused on that specific reason. Include any phone calls/documentation made prior to the services being rendered. Include any applicable medical records and any supporting documentation from your provider. 
5. Note: Typically, an emotional appeal won’t help you in this letter. Stick to the facts of your case.
6. Submit the appeal according to your plan’s instructions; usually, this is by US mail or fax. 
7. Be sure to keep a copy of everything you’re submitting, especially if sent by US mail!
8. Follow up with your insurance company to confirm that they’ve received the appeal and ask for an estimated timeframe for the appeal to be processed (usually 30-60 days).

Legal Recourse for Claim Denials ​

If your initial appeal is denied, don’t give up! Most policies offer either a secondary appeal opportunity or an external appeal opportunity; instructions for your next appeal option should be included with the denial letter you receive.

If you’ve exhausted the appeal process with your insurance company, contact your state’s department of insurance. Certain insurance plans are governed by the state, and you may be able to appeal with them.

If you have no other options, consider contacting an attorney or patient advocate who specializes in health insurance issues to further explore possibilities.

This work is licensed under a Creative Commons Attribution-ShareAlike 4.0 International License (CC-BY-SA-4.0), available at https://creativecommons.org/licenses/by-sa/4.0/. SPDX-License-Identifier: CC-BY-SA-4.0

Signed-off-by: Jenni Nolan