New Weapons for Fighting Insurance Denials

Physicians have a couple of new weapons when fighting insurance carriers who deny claims for payment—their patients and the Affordable Care Act.

Data collected by Capital Public Radio in California found that about half the time a patient challenges a denied health care service through a third party, the patient wins.

The Affordable Care Act has made the right to appeal denied health care uniform and universal for every insured person in the U.S. According to healthcare.gov, patients can ask his or her insurance company to reconsider its decision. Insurers have to tell them why the claim has been denied and how to dispute the decisions.

There are two ways to appeal a health plan decision:

Internal appeal: If the claim is denied, the patient has the right to an internal appeal. He or she may ask the insurance company to conduct a full and fair review of its decision. If the case is urgent, the insurance company must speed up this process.

External review: Patients have the right to take an appeal to an independent third party for review. This is called external review. External review means that the insurance company no longer gets the final say over whether to pay a claim.

One patient used as an example in the California story had received four denial letters by the carrier. He filed an appeal with the California Department of Insurance, which regulates his health plan. The insurer’s denial was overturned.

Peter Kongstvedt used to manage health plans and is now at George Mason University. He says most health care denials involve administrative errors or mechanical problems. He says patients are often just as successful challenging denials directly to the insurer as they would be through a third party.

“It can be an error on the health plan side, ” says Kongstvedt. “Maybe they put somebody in the system wrong and they don’t know that they’re eligible yet. Or it gets a data entry error that occurs, so it doesn’t appear that it makes any sense to the system. The computer says ‘Oh, we don’t pay for this service on that diagnosis, ‘—that type of thing.”

Insurers say only about 3% of claims are denied. Robert Zirkelbach of America’s Health Insurance Plans says in the radio program that coverage decisions are based on medical evidence. “It’s the medical evidence that drives coverage decisions, and the more evidence that’s available about the appropriateness and effectiveness of a particular drug or treatment or technology, that’s what drives what’s covered.”

The lesson for providers is to teach their patients more about how to appeal a denial of service through their individual state health insurance regulators. Keep your state regulator’s information handy for patients.