Policyholders who are denied coverage for a medical service or treatment can appeal to their insurance company to reconsider their decision. Policyholders may be able to resolve the issue by submitting an internal appeal or, if needed, requesting an external review by a third party. Learn how to avoid common triggers for your claim to be denied, such as out-of-network care or lack of medical necessity.
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What Is a Claim Appeal Letter?
A claim letter appeal offers a patient the opportunity to challenge their insurance company’s decision to deny coverage. By law, anyone insured by an Affordable Care Act (ACA) plan has the right to an appeal.
The reason for a claim to be denied can range from a clerical error to a lack of prior authorization or a specialist referral. Regardless of the reason, policyholders who feel their denial of coverage was made in error can submit an appeal to their insurer to reconsider their decision. They may also pursue an external appeal through a third party pending the outcome of the internal appeal.
Common Reasons Why Insurers Deny Claims
Common reasons for an insurer to deny claims include the patient seeing an out-of-network provider. For example, a person insured by an ACA plan must seek treatment from doctors and specialists within their plan’s network to ensure their treatment will be covered. Out-of-network providers, a lack of a proper referral, and non-medically-necessary treatments can cause claims to be denied.
Lack of Prior Authorization of Referral
Insurance companies require prior authorization for some services such as inpatient or outpatient surgery, radiology, and expensive or highly specialized medications. Treatments that require but are lacking prior authorization are typically not approved or paid for by the insurer.
Referrals operate in a similar way, as per a typical insurance agreement. Many plans require a referral from a physician to see a specialist, so if a patient seeks specialized treatment without a referral or through an out-of-network practitioner, their insurer is likely to deny their claim.
Out-of-network Providers
Many insurers will deny all or part of a claim for out-of-network care. Insurance providers build relationships with certain physicians and facilities in their network, enabling them to negotiate reduced rates for medical services. Since paying an out-of-network claim means higher costs for the insurer, they often deny claims for unapproved, out-of-network care.
Policyholders may find it necessary to go outside the network for care in some instances. For example, a policyholder may send an appeal letter to an insurance company if their claim was denied for receiving emergency care, specialized treatment, or care from a doctor with whom they have an established relationship that is outside of the network.
Lack of Necessity
Insurance companies’ definition of “medical necessity” includes healthcare services and supplies that meet the universally accepted standards of medicine used to diagnose and treat injuries, illnesses, and chronic diseases. Insurers commonly deny claims for services they determine are lacking necessity, such as cosmetic surgery or experimental treatments.
Insurers may also deny a claim for certain behavioral or psychiatric care, since proving the medical necessity of this type of treatment to insurers is especially challenging. Policyholders can request documentation from their providers to attest to the necessity of their treatment to write their insurance appeals letter.
Other Common Reasons for Denial
Claims not denied for out-of-network care or lack of necessity can be rejected for other reasons, including clerical errors, expiration, or a lapse in coverage. For example, one wrong number in a billing code can lead to a claim denial. Claims not submitted within the processing window, or on a policy that is canceled for nonpayment of premiums, may also be denied.
For a suspected clerical error, sending an insurance appeal letter requires double-checking the personal information and medical codes on your insurance forms. Policyholders should ask their physician’s office for documentation of when the claim was submitted. They should also maintain monthly premium payments to ensure their policy provides active ongoing coverage.
Best Practices for Filing an Appeal
While the steps toward filing an appeal are simple and straightforward, organization and patience are still required throughout the appeal process. Policyholders should review the decision letter they received from the insurer and gather documentation of the services/treatments in question from their medical provider.
Preparing to write an appeal letter to an insurance company also warrants a review of the policy. While ACA-compliant policyholders have the right to appeal any medical claim denial, they should make sure denial of this coverage is not clearly stated in the original healthcare agreement. Best practices include the following steps.
Get to Know the Laws
Understanding your legal right to an appeal is key. Under the ACA, everyone has the right to appeal, provided they send an appeal letter to the insurance company (in writing) within 180 days of the decision letter. Your insurance company is required by law to give a reason for denying your claim and, if applicable, for denying your appeal. Insurance companies must also notify you of your right to pursue an external appeal if the internal appeal is denied.
Provide All of the Basics and Details
Including as many details as possible is necessary for the pursuit of a successful appeal. Policyholders should cite the exact language in their policy that led to their expectation of coverage. You may also ask your medical provider for letters explaining any clerical mistakes or previous instances in which you were covered for the same treatment or services that were denied this time, if applicable.
Co-author Your Letters of Medical Necessity
If your claim was denied due to a lack of medical necessity, you may co-author a letter of medical necessity with your treating physician to submit with your appeal. Insurance companies require a medical necessity letter, approved by a physician, to revisit this type of claim denial. While the policyholder may draft the letter, their treating physician must “sign off” on it.
Be Patient and Persistent
The process of submitting insurance appeal letters takes time, especially since the appeal requires some back-and-forth as it travels through the healthcare system. Insurance companies should notify policyholders of receipt of the claim (usually in writing) within 10 days. Insurers typically process claims and return a decision letter within 30 days. Policyholders not satisfied with this decision may pursue an external appeal.
Check Your Letter for Errors
Policyholders should perform a final spell check and fix any grammatical errors before sending their appeal. Submitting an error-free appeal letter not only portrays you as detail-oriented and assertive but also helps to avoid any further confusion over human error, which could be the reason for appealing the claim denial in the first place. Policyholders who submit the correct information and communicate clearly can maximize the impact of their appeal.