Dealing With Rejection
Rejection and Insurance Woes
Reviewed By Gary Vogin
The prescription drug claims of an 80-year-old woman from Chicago's northern suburbs were consistently declined by her insurance company.
The company maintained that she wasn't enrolled in the health plan and refused to pay two years of medications worth $2,400. With the help of an insurance claims consultant, the woman took her case to the company's top management, which finally reimbursed her.
The insurer's explanation was that a simple record-keeping mistake had taken the woman off the benefits program those two years, recalls Bill McKechney, who runs Medical Insurance Recovery Associates in Winnetka, Ill., the company that helped her get reimbursed.
"A lot of claims are turned down by insurance [companies] because they don't know what they're doing," McKechney adds.
Mistakes in insurance companies' records are just one reason that medical claims are erroneously denied. Legally, insurance companies are required to provide understandable information on claim denials. Frequently, these explanations are too general or too difficult to decipher.
If you believe you've been incorrectly denied coverage, it's helpful to know how and why mistakes happen. Obviously, many claims are legitimately denied. Some of the common reasons that claims are denied often can be challenged, according to insurance claims experts.
Six Common Reasons Claims Are Denied
Reason 1: Doctor Error
Doctors make mistakes. Frequently, they write in the wrong insurance code or make another error on the insurance form, McKechney says.
Reason 2: Pre-Existing Condition
Pre-existing conditions are one of the most common reasons that insurers deny coverage. Sometimes claims on this basis aren't really denials. The insurer needs more information from your doctor or the hospital, says John Clark, a partner in the Atlanta-based law firm Clark & Mascaro. Other times, the claim is denied because it doesn't conform to the policy's actual language. For instance, Clark questions whether the policy specifically requires that the condition be diagnosed and treated for the "pre-existing" clause to apply or whether simply having the symptoms is enough.
Reason 3: Bad Processing
Sometimes Medicare errs in processing claims. In such an enormous program, McKechney says, the margin for human error is wide. Errors easily occur because Medicare claims are administered separately in each state, and each claim is filed in the state where the healthcare was provided. However, claims sometimes are re-routed because a number of seniors divide their time between separate residences in different states.
Reason 4: Not Medically Necessary
Frequently, insurers rule that a service or procedure was "not medically necessary," Clark says, adding that in reality, the person who reviews medical claims usually works for the insurance company, has never seen the patient and probably is not a healthcare practitioner.
Reason 5: Noncovered Benefit
Another typical explanation is that the care you received was a "noncovered benefit." Insurance policies always include a list of services that are and are not covered. Often the definitions of benefits are so vague that it's difficult to compare your situation with the policy's medical terms, Clark says.
Reason 6: Out of Network
An insurance company may deny your claim by contending that you used an "out-of-network" doctor or hospital. Sometimes a medical emergency may prevent you from getting treatment from a healthcare provider who is part of your insurance plan, Clark says . Or you may need a specialist for a certain condition, but there is none in your area.
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