Consumer’s Guide to Filing a Health Insurance Claim

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The AMA reports that 10% of insurance claims are processed improperly. That doesn’t sound like a lot, but claim errors add up to about $7 billion in wasteful spending and cause headaches for affected patients. At the same time, health insurance costs are on the rise, meaning that patients are paying more for the same medical access. With this in mind, there’s never been a better time to assess what you’re getting for your insurance dollars, and to make sure that your insurance company delivers on what you’ve paid for. Verifying your health insurance claims, and following up on any denied claims is an essential part of utilizing your health insurance as it’s intended, and this guide explains how you can do it.

The Health Claims Process

In a typical doctor’s visit, you may be billed $130 for services, but only be responsible for a $30 copay. The remaining $100 is billed to your insurance carrier, and this is an insurance claim. For many patients, insurance claims go through as expected, but in some cases, they can hit a snag along the way, potentially resulting in expensive medical bills and unaffordable treatment.

Claims will often be filed on your behalf by your medical provider. That’s why most offices and hospitals require you to provide your insurance card when you come in for a visit or procedure. Once billed, your insurance company will compare your coverage with the services billed and reimburse your provider accordingly. If any part of your claim is not covered, you’ll be responsible for the balance as described in your explanation of benefits.

In some situations, policyholders will be required to submit their own claims, so be sure to find out before you’re billed. Patients with Preferred Provider Organizations (PPOs) that use an out-of-network provider will likely need to file their own claims paperwork. The same is true for those with an indemnity or fee-for-services coverage. If this is the case, it’s a good idea to ask your provider with help so that you can enter the correct dates, procedures, and codes on the claim form. Keep in mind that when submitting your own claim, most providers will require you to pay up front and then be reimbursed by your insurance company.

Some insurance companies also require claims to be filed before receiving a treatment or service. This is what’s known as “prior authorization,” and skipping this step may result in denial of some or your entire claim. Before going through any major medical procedure or incurring an expense, check with your insurance company to verify whether prior authorization is necessary.

Denied Claims

If for some reason your claim is denied or incorrect, don’t panic. Claims problems often stem from errors and eligibility issues that can be easily resolved. And in any case, you have rights. The Affordable Care Act requires that health plans meet certain standards in claims and appeals. You have a right to find out why your claim has been denied, to be informed how to dispute the decision, a right to an appeal, and a right to an independent review.

Common Reasons Claims are Denied:

  • Coding and factual errors (the most common reason for denial)
  • No prior authorization for treatment
  • Missing or incorrect data
  • Claims that fall outside of time limits
  • Treatment is not covered by the policy
  • Treatment is deemed medically unnecessary or is considered experimental

Your Right to an Appeal

If you’re denied a claim or coverage, the worst thing you can do is simply give up. Yes, it may be intimidating to file an appeal. But taking the time and effort to appeal a denied claim can really payoff: a report from the U.S. Government Accountability Office indicates that 59% of health insurance appeals were decided in favor of the patient. The odds are on your side as a patient, but to win, you’ll have to take action.

Your insurer is required by law to explain your plan’s decision, all the way down to any experts consulted. Look at the information the insurance company has sent to explain why the claim has been denied, and verify whether or not those reasons are valid. Review your coverage and benefits. Are they in line with your claim?

When denying claims, there is a specific timetable that insurers must stick to. If your claim is denied, your insurance company most notify you in writing within 15 days for prior authorization, within 30 days for medical services already received, and within 72 hours for urgent care cases. In addition to explaining why your claim or coverage was denied, your insurer must also share the name of any Consumer Assistance Program (CAP) in your state. These programs can help you file your appeal.

Internal Appeals

The first, and sometimes only, step in overturning a denial is an internal appeal with your insurer. In this process, you’ll ask your insurance company to take another look at your claim and conduct a review of its decision. Get started by collecting the appropriate information to refute your claim denial, including a letter of medical necessity from your doctor, or corrected data, and contact your insurance company to start an internal appeal. The company is required to explain how you can initiate the review, so carefully follow through the process they have laid out. In many cases, claims that are incorrectly denied can be resolved in the internal review process, but you’ll need to act quickly: internal appeals must be filed within 180 days (6 months) of receiving notice that your claim was denied.

To file an internal appeal, you will complete all appeal forms required by your insurer, or write with your name, claim number, and insurance ID number explaining that you are appealing the denial. With your forms or letter, be sure to include any additional information that should be considered. If you need help, contact your state CAP, and they can file the appeal for you.

Paperwork for an internal appeal includes:

  • The Explanation of Benefits.
  • Documents with additional information, including a letter of medical necessity from your doctor.
  • Phone records and notes from conversations with your insurer or doctor relating to your appeal.
  • Corrected data or codes.

Your insurer must make a decision on the appeal within 30 days for prior authorization, within 60 days for medical services already received, and within 72 hours for urgent care cases.

External Reviews

If you’re not satisfied with the outcome of your internal appeal, the ultimate decision may not rest with the insurance company. You still have another option: the external review. In this process, your claim will be assessed by an impartial third party, in some cases a U.S. Department of Health and Human Services federal review. Others are provided with state external appeals or an accredited independent review organization process. In all cases, the review will be conducted by an impartial expert who is not related to your health insurer. Like the internal appeal, keep in mind that you’ll need to file this review quickly: most policyholders have only 60 days to file a request for external review.

It is important to note that not every claim is eligible for external review. This process is available to denials that involve medical judgment, determination of experimental or investigational treatment, or rescission of coverage, wherein your insurance company retroactively cancels your coverage going back to your enrollment date. Most reviews will fall under medical judgment, which includes medical necessity, appropriateness, level of care, effectiveness of a benefit, and health care setting.

You can request a federal external appeal by accessing the electronic portal at You may also call toll free at (877) 549-8152, fax (202) 606-0036, email, or mail P.O. Box 791, Washington, D.C. 20044. If your health plan does not participate in the federal review process, you will be given information on how to request an external review. Be sure to follow all directions and deadlines carefully. Your external review will require all of the same information that you used in the internal appeal, as well as information from your insurer used in the internal appeal decision.

The external review will take no longer than 60 days, and will either uphold or overturn your insurer’s decision. Your insurer is required by law to accept this decision. If the reviewer determines that your claim is to be paid, your insurer has to do so immediately.

Urgent Cases

The internal and external appeals process can take months. For patients with urgent medical needs, that’s simply not fast enough. If you have an urgent care situation, you can ask for an expedited review that follows both the internal appeals process and the external review at the same time. This applies if your health is in serious jeopardy, you have uncontrollable pain, you are currently under the care of emergency services, or you may be in danger of failing to regain maximum function. In urgent care appeals, a decision must be made as quickly as your medical condition requires, but at least within four business days. Urgent internal and external appeals may be requested over the phone.

Preventive Measures

Just as in medicine, preventive care can help stop insurance trouble before it starts. We recommend patients take the following measures before potentially costly visits and procedures:

  • Always call your insurer directly. Don’t rely on providers to tell you that a product or procedure is covered. When contacting your insurer, keep all paperwork, or record the details of your phone call.
  • In addition, contact your medical provider as well to verify that your insurance is accepted there.
  • Know what your health plan covers, and find out what your plan allows for in terms of in-network and out-of-network providers.
  • Know your deductible and copay amounts, and when you need to pay them.
  • Find out if you’ll need a referral or pre-authorization before your treatment, especially for major medical treatments.
  • Verify estimates for services, both with your insurance company and provider. You may also ask for Common Procedural Terminology (CPT) or hospital Healthcare Common Procedural Codes (HCPCS) codes so that you can verify the correct codes and costs were billed.
  • Keep all of your paperwork, and go over it to make sure that it lists all services performed complete with insurance codes and costs. Don’t throw away receipts or itemized bills, as you may need to submit them with your claim, or use them to back it up later.
  • Review your medical bills. Some insurance companies pay rewards to patients who find errors on medical bills, so it pays to carefully scrutinize your paperwork whether your claim is denied or not.
  • Verify that your charges are in line with what’s typical. Check the Health Care Blue Book for a realistic price on your medical services.

Health insurance exists to help you when you need it the most, and often, it does. For many patients, health insurance claims go through without a hitch, but for some, further attention is needed. Although it is unpleasant to deal with denied claims just after you’ve recovered, it’s essential that you address them immediately. Odds are good that you’ll be able to follow through with your claim, but remember that if you fail to appeal, you’re probably leaving money on the table.

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