Understanding health insurance can be complicated; unfortunately, many policyholders face denied claims when they need coverage the most. Claim denials in the healthcare sector are increasing, with approximately 60% of medical group leaders indicating denial rates rose in 2024 compared to the same time in 2023. This trend of higher denial rates early in the calendar year is not uncommon, often attributed to implementing new coding guidelines that take effect in January.
Moreover, among insurers submitting complete 2023 claims data to Covered California, the in-network denial rate was 21%. Awareness of the common pitfalls can help you navigate the process more effectively and ensure you receive the benefits you’re entitled to. The California Health Insurance Lawyers at Kantor & Kantor LLP share ten of the most frequent reasons health insurance claims are denied, along with tips on avoiding these issues.
1. Lack of Medical Necessity
One of the primary reasons claims are denied is that insurers determine that the treatment or service was not medically necessary. Health insurance providers typically require documentation from healthcare providers to justify the reason for a particular procedure, test, or treatment.
Always ensure that your healthcare provider documents the medical necessity clearly in their notes and provides thorough information in your claims.
2. Coverage Deficiency
A frequent cause of claim denials in healthcare is insufficient patient coverage, which occurs when a patient’s health plan does not include coverage for a specific service. This situation can stem from various factors, such as limitations or exclusions outlined in the insurance policy regarding particular procedures or treatments.
Be sure your provider conducts a comprehensive insurance verification before delivering services.
3. Incorrect or Incomplete Information
Mistakes on insurance claim forms, such as misspellings of names, incorrect policy numbers, or missing codes, can lead to denials. Insurance companies rely heavily on accurate information.
Double-check all information provided on the claim forms before submission. Keep copies of everything for your records.
4. Pre-Existing Conditions
While the Affordable Care Act has prohibited denying claims based on pre-existing conditions, some policies may still impose waiting periods or specific exclusions related to pre-existing conditions. If treatment is sought during this waiting period, claims can be denied.
Review your policy carefully to understand what is considered a pre-existing condition and any waiting periods that may apply.
5. Out-of-Network Providers
Using healthcare providers outside of your insurance network can lead to denied claims, especially if your plan requires members to use network providers for maximum benefits. Out-of-network services might not be covered or may involve higher out-of-pocket costs.
Always verify whether your healthcare provider is in-network and consider switching to an in-network provider if necessary.
6. Failure to Obtain Prior Authorization
Certain procedures, tests, or medications require prior authorization from your insurance provider before they are conducted or prescribed. Failing to obtain this authorization can result in a denial.
Check with your insurer or healthcare provider to determine whether prior authorization is necessary before proceeding with a treatment plan.
7. Policy Exclusions
Every health insurance policy has specific exclusions, including certain treatments, procedures, or conditions. Claims for these excluded items won’t be covered and will be denied.
Familiarize yourself with your policy’s terms and conditions, paying close attention to any exclusions noted in the documentation.
8. Exceeding Coverage Limit
Exceeding the coverage limit means surpassing the maximum benefit set by an insurance plan for a specific service or treatment. For instance, if a health insurance plan allows coverage for up to 20 physical therapy sessions per year, any sessions beyond that number would exceed the coverage limit.
Thoroughly review and understand the coverage limits specified in your insurance plans with your healthcare provider before scheduling any procedures or treatments.
9. Timely Filing
Insurance companies have strict deadlines for submitting claims. The claim may be denied if you miss these deadlines, regardless of its validity.
Be aware of the filing deadlines outlined in your policy and submit claims immediately after receiving services.
10. Billing Errors
Occasionally, a claim may be denied due to administrative errors in billing, including duplicate billing or incorrect codes used when processing the claim.
Review the Explanation of Benefits (EOB) carefully and compare it with your bills to identify any discrepancies.
Help with Denied Health Insurance Claims in CA
Facing a denied health insurance claim can be overwhelming, but understanding the common reasons can help you better prepare and navigate the claims process. Unfortunately, consumers rarely appeal denied claims and do not get the care they need. If you experience a denial, carefully review the reasons provided and consider contacting your insurer to appeal the decision. Don’t hesitate to consult an insurance attorney if your claim was unjustly denied. They can provide guidance and help you explore your options for receiving the benefits you deserve.
For more personalized assistance with your health insurance claim issues, contact an experienced attorney at Kantor & Kantor LLP. We are here to help you understand your rights and advocate for your needs.
