When your healthcare provider recommends a test, medication, or procedure and your health insurance won’t pay for it, it can be frightening. If there’s an alternate test, medication, or procedure that will work and that your health plan will cover, then this situation is just an irritating nuisance. But, if the test, medication, or procedure is the only thing that will work, the situation can be life-threatening.
When this claim or pre-authorization denial happens to you, it’s common to be angry and want to fight the denial. However, before you spend your energy on this battle, first make sure you know exactly what happened and why your health plan won’t pay.
While investigating the cause for the claim denial or refusal of your pre-authorization request, you’ll gain valuable insight into the standards of treatment for your particular medical problem, as well as how your health insurance company “thinks.” You’ll be a more competent warrior if a fight with your health insurance company becomes necessary.
Reasons Your Health Insurance Won’t Pay for the Care Your Healthcare Provider Says You Need
1. What you need isn’t a covered benefit of your health plan.
When your health plan denies your claim or refuses your pre-authorization request for this reason, it’s basically saying that your policy doesn’t cover that test, treatment, or drug no matter what the circumstances are.
Your insurer should know exactly what benefits your policy provides and what isn’t covered, but sometimes your insurer is wrong. Check your policy carefully. If your health insurance is through your job, check with your employee benefits office to see if you actually do have coverage for the service your health insurance says isn’t covered.
In the United States, small group and individual health plans with effective dates of January 2014 or later have to cover the Affordable Care Act’s essential health benefits, but large group employer-based plans and grandfathered/grandmothered plans don’t have to provide this same coverage. [In most states, “small group” means an employer with up to 50 employees. But in California, Colorado, New York, and Vermont, groups with up to 100 employees are considered small groups, which means their health plans cover the essential health benefits unless they’re grandfathered.]
If you feel you’re being denied the benefits of coverage your policy says you actually have, follow the appeals procedure your health plan booklet outlines. Also, enlist the help of your employee benefits office if your coverage is job-based, or your state’s insurance commissioner (be aware that if your plan is a self-insured employer-sponsored plan, the insurance commissioner won’t be able to help you, as self-insured plans are not regulated at the state level).
2. You got the care from an out-of-network provider when your health plan coverage is limited to in-network providers.
If you have an HMO or EPO, with very few exceptions, your coverage is limited to in-network providers that your health plan has a contract with. Your health insurance won’t pay if you use an out-of-network provider.
If you’re asking for pre-authorization and your pre-authorization request was denied due to your chosen provider, you can simply re-submit the request using an in-network provider rather than an out-of-network provider.
However, if you’ve already gotten the care and your health plan won’t pay your claim because you went out-of-network, you’re going to have a more difficult fight on your hands. You may be successful if you can show that no in-network providers were capable of providing that particular service so you had to go out-of-network. You might also be successful if you can show that it was an emergency and you went to the closest provider capable of rendering the care you needed.
3. Your health plan doesn’t think the test, treatment or drug is medically necessary.
If your claim or pre-authorization request has received a medical necessity denial, it sounds as though your health insurance won’t pay because it thinks you don’t really need the care your healthcare provider has recommended. This might be what your health plan is actually saying, but it might not be.
There are some reasons for a medical necessity denial that don’t really mean your health plan thinks the care is unnecessary. In order to figure out just what, exactly, your medical necessity denial means, you’ll have to do some digging. The good news is this digging may well show you the path to getting your pre-authorization request approved, or your claim paid, if you just tweak your approach a bit.
If you’ve received a claim or pre-authorization based on medical necessity, this is a scenario in which you can and should enlist the help of your practitioner. Your healthcare provider has recommended the service for a reason, and they’ll be able to communicate that reason to your insurer. In some cases, the insurer might then approve the procedure, or they might work with your practitioner to approve another approach that both the insurer and the healthcare provider consider medically necessary.
For non-grandfathered health plans, the Affordable Care Act guarantees consumers the right to an internal and external appeals process. So if your claim or pre-authorization is denied, don’t give up! You and your healthcare provider can work together to navigate the appeal process, and you may find that your procedure is approved or an alternate arrangement is reached that allows you to still have coverage for care that will be appropriate for your situation.
4. Your health plan doesn’t recognize you as a benefited member, and other mix-ups.
This type of scenario is more common than most people would imagine. In today’s complex healthcare system, information about your coverage must flow correctly from your employer, insurance broker, or health insurance exchange to your health plan. If there’s a glitch or delay anywhere along the way, it can appear as though you don’t have health insurance even though you actually do.
Along these same lines, it’s common for health insurers to outsource to a medical management company the decision-making about whether or not your test, treatment, or drug will be covered. In this case, information about your coverage must flow correctly from your health plan to the medical management contractor. Likewise, information about your medical situation must flow correctly from your healthcare provider’s office to the health plan or its medical management contractor. Any glitch in the flow of this information can result in a claim denial or a refusal of your request for pre-authorization.
The good news is that these claim denials or pre-authorization refusals can be relatively easy to overturn once you understand exactly what the problem is. For more information, see “How Silly Mix-Ups Cause a Health Insurance Claim Denial.”
5. You didn’t get the correct referral or prior authorization
Depending on your health plan’s rules, you may be required to have a referral from your primary care provider and/or an approved prior authorization before receiving various types of medical care. If you didn’t do that, you may be facing a claim denial. For example, maybe you’re used to having a PPO that allowed you to self-refer to a specialist, and you forgot that your new HMO requires a referral from your primary care doctor.
Depending on the circumstances, you might be out of luck. But you might be able to get your insurer to work with you on this if your primary care doctor can provide a statement to your insurer about the necessity of the services you received.
6. Your hospital stay was incorrectly classified as inpatient vs observation.
If Medicare or your health plan is refusing to pay for a hospital stay, the reason may have to do with a disagreement about the correct status of your hospitalization rather than a disagreement about whether or not you actually needed the care. When patients are placed in the hospital, they’re assigned either observation status or inpatient status according to a complex set of rules and guidelines.
Sometimes, the hospital and your admitting healthcare provider may believe you should be admitted to inpatient status, while Medicare or your health plan thinks you should have been hospitalized in observation status. Here’s the catch: if you’re admitted to the wrong status, your health plan or Medicare might refuse to pay for the entire admission even though your insurer agrees that you needed the care the hospital provided. It’s kind of like a technical foul.