Health insurance is supposed to provide you with a sense of security, allowing you to breathe a sigh of relief when unexpected and massive medical bills come through showing that your insurance company has paid for most if not all of them. In reality, though, insurance companies are businesses focused on making money, and the best way for them to make a profit is to deny claims.
A claim denial can feel like a punch to the gut. But if you’ve faced a health insurance claim denial, you’re certainly not alone. Studies have shown that some insurance companies even deny claims at a rate as high as 49%, with 17% of all in-network claims being denied. Why are these denial rates so hight? Let’s take a closer look.
Top reasons why health insurance claims are denied
Insurance companies can get creative in their justifications for claim denials. That said, here are the tops reasons why health insurance claims are denied:
- Services were excluded: An insurance company is going to pay for medical care only if it’s covered under your policy. Therefore, they’re going to look for ways to argue that the care you received falls outside the plan’s coverage. If possible, you should confirm that your care is covered before receiving it. About 14% of all in-network claim denials fall under this category.
- Lack of preauthorization: A lot of medical treatment and testing is obtained after recommendations are made by your doctor. But your doctor isn’t going to double-check your insurance policy to see if the recommended treatment is covered. After all, they want what’s best for your health, not your bank account. That’s why about 8% of in-network claims are denied because there was no preauthorization given by the insurance company before securing the treatment or testing in question.
- Lack of medical necessity: In 2% of claims that are denied, insurance companies allege that the treatment obtained wasn’t medically necessary. In other words, the insurance company indicates that the treatment that your own doctor said you needed was something extra that you actually didn’t need.
- All other reasons: Shockingly, 77% of all in-network claim denials are classified as “all other reasons.” What does that mean? Good question. There’s no definition provided for these causes, but it might include things such as lack of information. Again, this highlights how the insurance company tries to be tricky in its attempts to deny your claim, and the various options they have to get where they want to go.
Insurance claim denial appeals
While 17% of in-network health insurance claims are denied, only a fraction of those who are subjected to a claim denial end up appealing. Yet, appealing a denial could get you the outcome that you want. You simply need to understand your policy, the insurance company’s stated reason for your claim denial, and how you can present evidence that’s contrary to that justification.
This will require some legwork and close reading on your end, but if you’ve been hit with a massive medical bill due to a claim denial, then you owe it to yourself to take action when justified to do so.
Are you ready to appeal your claim denial?
If so, then you shouldn’t hesitate to build you case. In addition to gathering evidence and understanding your policy, you have to know how to navigate the claims and appellate processes. Fortunately, you can take the guesswork out of them by educating and preparing yourself as much as possible before moving forward. Help is out there to assist you with that preparation if you need it.