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  • Writer's pictureAhsan Malyk

Can Health Insurance Companies Deny Coverage?

When your health insurance provider declines to cover a cost, it results in a rejection. This is referred to be a claim denial if it occurs after you have received the medical service and a claim has been made.


Pre-authorization—or previous authorization—contradictions are when insurers explicitly indicate during the pre-authorization procedure that they won't pay for a specific service.


You have the right to appeal in both situations, and you might persuade your insurer to change its mind and agree to cover at least some of the cost of the required service.


The process and causes of claim denials and pre-authorization denials will be covered in this article, along with what you can do if it occurs.


Reasons for Health Insurance Denials


A health plan could decide not to pay for a medical service for countless reasons. While some causes are straightforward and relatively simple to treat, others are more challenging.


Typical justifications for denials of health insurance include:


Paperwork mistakes or confusion


For instance, your insurance lists you as John O. Public even if your healthcare provider's office submitted a claim for John Q. Public. Or perhaps the billing code used by the practitioner's office when submitting the claim needed to be corrected.


Concerns regarding the necessity of care


The insurer thinks the desired service is not strictly necessary for medical reasons. There could be two causes for this:


You don't actually require the requested service. However, you have not convinced your health insurer that you need the service. Perhaps you and your healthcare provider require more details about your need for the desired service.


Control of costs


The insurance company advises that you initially attempt an other, typically less expensive option. In this situation, if you initially try the less expensive option and it doesn't work, it's likely that the requested service will be authorized (step therapy for prescription drugs is a common example of this).


Your plan doesn't cover the service.


The requested service is not a benefit that is covered. This frequently occurs with procedures like cosmetic surgery or treatments that the FDA has yet to approve. Suppose your plan was purchased in the individual or small group market. In that case, it is also typical for services that don't comply with your state's definition of the Affordable Care Act's essential health benefits, which might include things like acupuncture or chiropractic services.


If you have a plan that is not subject to Affordable Care Act regulations (such as a short-term health plan or fixed indemnity plan) and does not have to cover services that you might otherwise expect a health plan to cover—things like prescription drugs, mental health care, maternity care, etc.—then significant gaps in covered benefits are also frequent.


Network provider concerns


You might only be covered for treatments rendered by healthcare professionals and facilities that are a part of your plan's provider network, depending on how your health plan's managed care system is set up. Therefore, you can anticipate that your insurance will reject the claim if you choose a provider outside the network.


Select a different healthcare provider in-network with your plan. The insurer might be ready to take your request into account if you need prior authorization for a service to be done by an out-of-network provider. You could also persuade the insurance carrier that your preferred supplier is qualified only to offer this service. They can make an exception and offer coverage in that situation.


Since this provider has yet to enter into a network agreement with your insurer, the provider may balance bill you for the difference between what your insurer pays and what the provider charges.


The No Surprises Act, which prohibits unexpected balance billing for emergencies or medical care delivered by an out-of-network medical practitioner at an in-network facility, went into effect in January 2022. However, balance billing is still permitted if you deliberately seek treatment from an out-of-network practitioner.


Absence of details


Perhaps the claim or pre-authorization request did not include enough information. For instance, even though you asked for an MRI of your foot, the medical facility did not send any information about the nature of the problem.


You disregarded the guidelines of your health plan


Consider the scenario when your health plan mandates pre-authorization for a specific non-emergency test. You undergo the test without your insurer's prior authorization. Even if you truly needed the test, your insurance has the ability to refuse payment because you didn't adhere to the health plan's guidelines.


Your best bet is to get in touch with your insurer before arranging medical treatment in any non-emergency case to ensure you abide by whatever guidelines they have regarding provider networks, prior authorization, step therapy, etc.


How to Respond to a Denial


Receiving a denial—whether it's for a pre-authorization request or a claim for a service you've already received—from your health plan is annoying. A denial does not imply that you are forbidden from receiving that specific healthcare service. Instead, it indicates that either your insurance company will not cover the cost of the service or that you must appeal the decision in order to get maybe the cost reimbursed if your appeal is successful.


You'll probably be able to receive the medical care right away if you're willing to pay for the treatment out-of-pocket.


You could look into the reason for the denial to see if you can get it overturned if you cannot pay out-of-pocket or if you prefer not to. This procedure, known as appealing a denial, can be used in reaction to the rejection of a post-service claim or a previous authorization.


Pay close attention to your health plan's appeals procedure. When conducting business over the phone, keep thorough records of every action you took, when you took it, and with whom. The majority of the time, the office of your healthcare practitioner will be heavily involved in the appeals procedure as well and will take care of the bulk of the paperwork that must be submitted to the insurance.


You may ask for an outside review of the denial if you are unable to settle the problem internally within your health plan. This indicates that a government agency or other impartial third party will examine the denial of your claim (there is no guaranteed access to an external review if your health plan is grandfathered, but the plan may still offer this voluntarily).


Summary


Claim and previous authorization denials can occur for a variety of reasons. Others are the result of mistakes, some are the result of coverage problems, and some are the result of failing to follow the steps specified by the health plan, like step treatment or pre-authorization.


If a health plan denies a claim or a prior authorization request, the decision may be overturned if the health plan receives new information or if an effective appeal is made.


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