According to the U.S. Department of Labor, about 1 claim in 7 made under the employer health plans that it oversees is initially denied; that’s about 200 million claims out of the 1.4 billion submitted yearly. And that’s not all.
The American Medical Association estimated that 7.1 of the paid health insurance claims in 2013 contained an error. In fact, according to the consumer advocacy group NerdWallet, medical billing errors cost millions of dollars annually in the form of overpayments by insurers and patients.
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Most people don’t notice billing errors or even know to look for them, however. Nor are they aware that if a claim has been denied, they have the right to appeal.
Your health insurance company is required by the Affordable Care Act (ACA) to provide you, the consumer, with information on the appeals process, yet despite this, many people don’t know it’s an option, nor do they know how to get started. And the insurance company benefits from assuming most people won’t bother with an appeal.
While the process for appealing a health insurance claim denial has been standardized by the ACA, it can still be arduous and overwhelming, filled with paperwork, multiple steps, and various timeframes and deadlines to remember. But don’t let that scare you. It’s your right to appeal the denial and a worthwhile endeavor since both your physical and financial health are on the line.
Download our free legal guide, “Medical Billing Hacks that can Save you Money,” to learn how to read your medical bills, how to spot billing errors, and what to do if you find one, plus a list of 5 reasons insurance companies deny claims.
The Appeals Process
The ACA gives you the right to not only appeal a health insurance company’s decision to pay a claim but to also have it reviewed by a third party.
Internal appeals: In Colorado, the process starts by asking the insurance company to conduct a full and fair review of its decision. Click here for information on the deadline for filing an internal appeal.
Your denial letter should include instructions for how to file an appeal; the process will likely include submitting a form provided by your insurance company or writing a letter to your insurer requesting a review of your claim.
Along with your appeal request, you’ll submit evidence supporting your claims, such as a letter from your doctor and articles containing supporting research for why you require the medical treatment or service.
In step one of this process, the claim is reviewed by someone who was not involved in the original decision and decides whether to reverse that decision or to let the denial stand.
If the decision to deny the claim stands after step one, you can request a second internal review. This is step two of the internal review process and requires a healthcare professional who was not involved in the original review or the first appeal review to examine the claim.
During the second review, you are allowed to be present for the review and to bring an attorney as an advocate.
External review: If both your first and second appeals to the insurance company fail, then you may request a third-party review by an independent review entity. The third-party reviewer will review your case in collaboration with a physician who is board-certified in the same specialty as your physician. In Colorado, the independent external review entity is appointed by the Colorado Division of Insurance.
The independent reviewer must be an expert in the medical treatment and condition in question.
Following the decision of the independent reviewer, either party (you or your insurance company) can challenge that decision in court.
Timing and Deadlines
Your health insurance company must notify you of a decision to deny a claim (and their reason for the denial) in writing within the following time frames:
- 15 days if you’re requesting prior authorization for treatment.
- 30 days for a treatment or medical services already received.
- 72 hours for urgent cases.
Internal appeals must be filed within 180 days (six months) of the date on your denial letter.
Timing for internal appeals:
- 30 days: your internal appeal must be completed within this time frame if your appeal is for a service you haven’t received yet.
- 60 days: your internal appeal must be completed within this time frame if your appeal is for a service you’ve already received.
Your insurance company must notify you of their decision in writing. If their final decision is still to deny your claim, they must inform you of your right to an external review and how to start that process.
Under the ACA, you cannot be denied coverage due to a pre-existing condition, nor can you be charged more or be subjected to rate increases because of your pre-existing condition. Health insurers are also prohibited from limiting benefits for your pre-existing condition. These rules have been in effect for plan years beginning on or after January 1, 2014.
There are exceptions for grandfathered plans, which is an individual health insurance policy that you bought for yourself or your family on or before March 23, 2010, through an insurance company, agent, or broker.
In short, it is illegal for a health insurance company (with the exception of those grandfathered plans) to deny your claim on the basis that the condition being treated was pre-existing.
Your health insurance policy is a form of a contract. As with any contract, both parties owe one another the duty to deal in good faith, meaning that neither party will deny the other benefits for which they have been contracted.
Don’t forget to download our free legal guide “Medical Billing Hacks that can Save you Money” for a list of reasons health insurance companies deny claims and our tips for what to do if you need to appeal a health insurance claim denial.
Bad Faith Health Insurance Claim Denials
Basically, when you file a claim with your health insurance company, they have an obligation to cover what they said they’d cover in your policy (the contract). If they unreasonably or wrongfully deny your claim then they’re acting in bad faith and you could be entitled to compensation beyond the value of your health benefits.
Health insurance companies act in bad faith by using tactics like delaying the review of a claim or an appeal and then offering to settle the claim for less than the number of your medical costs or outright denying the claim, citing a lack of details or information.
Typically, Colorado law requires that you can prove both of the following factors when filing a bad faith claim against your insurance company:
- The insurer’s actions in denying or delaying payment were unreasonable under the circumstances.
- The insurer either had knowledge of or reckless disregard for the fact that its actions were unreasonable.
Insurance companies benefit when customers don’t advocate or stand up for themselves, but you deserve to have your health care expenses covered and it’s your right to appeal denials and to fight back against bad faith practices.