Insurance companies deny paying benefits for a variety of reasons that are sometimes misleading, often incorrect and occasionally done in bad faith. You usually learn that your insurance claim has been denied by a form called an Explanation of Benefits (EOB). The EOB will usually contain an itemization of covered and noncovered charges as well as a set of corresponding codes that refer you to a guide either on the bottom or the back of the form. These so-called explanations are difficult to interpret, even by those in the field, and should not necessarily be taken at face value or as the final word.
Although insurance companies are required to provide meaningful and understandable information on claim denials by law, often the first time you learn that your claim has not been paid is when the hospital contacts you to pay the entire bill. In that case it is always important to find out exactly what the hospital has been told as the reason the insurance will not pay the claim. As a personal injury attorney, St. Pete FL car accident lawyer Frank Marsalisi deals with insurance denials all the time and is well versed on the types of denials that insurance companies hand out. Here he has written a list of the types of insurance denials you could see in the future, in order for the readers to be prepared in the event that their claim in denied.
Don’t overlook the possibility that a simple error took place, i.e., inappropriate medical code assigned to your case, dates of coverage don’t match the dates of service, misstated service, accounting errors, etc.
The following seem to be the most common reasons claims are denied and they can often be challenged:
- Not medically necessary
- Preexisting conditions
- Noncovered benefit
- Termination of coverage
- Failure to obtain preauthorization
- Out of network provider
- Could have been provided at a lesser level of care
Not Medically Necessary
This reason is often given by insurance companies even though the person that supposedly reviewed your claim has never seen the patient and quite often is not a licensed physician or other medical practitioner. Variations on this theme include “treatment could have been provided in a less restrictive setting” or “treatment could have been performed at a lesser level of care.” All these really say is that a third party reviewer (not to be confused necessarily with “independent”) in some distant office, usually always being compensated by the insurance company, has determined that the treating physician was somehow incorrect in his treatment course. The proper response to such a denial is to write an appeal letter outlining the reasons this treatment was medically necessary stressing the fact that this decision was made by a doctor personally familiar with the patient and based on the individual circumstances of your case. If unsuccessful you may wish to seek legal action.
This frequently used explanation to deny a claim is often incorrect when compared to the actual language of the preexisting clause of the policy. These clauses vary dramatically from policy to policy, sometimes going back six to twelve months while others apply lifetime. Another distinction is that some policies require that the condition actually be diagnosed and treated in order to trigger the clause, while others simply require the existence of symptoms that would cause a “reasonable” person to seek treatment. Legal analysis of your policy language in light of the facts of your particular case may be required in order to determine if the preexisting clause is applicable. In any event, an insurance company may have the right to rescind a policy, before or after a claim arises, if the applicant/insured failed to disclose material facts relating to the risk of which she or she had knowledge. (Ins. Code Sections 331, 338, 359.) An applicant is only required to answer questions to the best of his/her knowledge. How do you know what is important? Answer this: if the company had been aware of the circumstances, would they have issued the policy?
Insurance policies all contain a list and description of items that are covered as well as a list of those that are excluded. The definitions used in the actual policy language are often so vague to be of no practical use. Many courts have held that overly broad and vague descriptions of policy exclusions cannot be used to deny claims. Legal involvement may be needed in evaluating the legal impact of the medical terms your company uses compared to your actual situation
Termination Of Coverage
We often see this explanation in the context of extended hospitalizations for treatment of mental conditions and substance abuse. Frequently an employer will learn that an employee had previously sought treatment for such a condition or supposedly related and attempt to retroactively terminate their coverage. This would have to be based upon a falsification of the initial application. Here the carrier must show that they detrimentally relied upon an incorrect application response and would not have issued coverage or would have made it a preexisting exclusion. When coverage is terminated back to its inception many time all premiums paid must be refunded. Oftentimes carriers try to relate employment back to the last day the person was physically present at work. This is sometimes done without the knowledge of the employee and when the hospital telephones the insurance company to verify coverage, it is told that the person is covered. Depending on the federal circuit, the hospital would have a right to enforce coverage according to the benefits it relied upon during the admissions process. The location of the hospital, the employer, the employee and the insurance company are all relevant in determining which federal circuit or circuits would apply in such a circumstance and if this has happened to you, legal intervention may enforce payment of the claim.
Failure To Obtain Preauthorization
These days many insurance companies require either the individual or the hospital to call an 800 number on the insurance card in order to obtain prior authorization of a particular treatment. Occasionally, this cannot be done due to an emergency situation, which can be a subjective term. A potential problem is communication difficulties between your doctor and the insurance company’s representative. Treatment cannot always be delayed while waiting for busy medical professionals to reach each other on the telephone. Usually there is no reason why a claim for a particular treatment cannot be evaluated after the fact to determine its medical appropriateness and eligibility for coverage.
Even when claims are paid, penalties are often applied when preauthorization was not obtained. If the failure to obtain precertification was due to either a medical emergency or other problems that are not the fault of you or your doctor, these penalties can usually be waived. When requesting a retrospective review of a claim it is always important to explain the circumstances surrounding it, taking care to point out information that might not be evident by simply reading the claim forms and medical record.
Out Of Network Provider
This is usually encountered in situations involving a medical emergency or when the appropriate type of specialist or specialized treatment cannot be provided in a particular locale. The policy itself may have definitions that come into play in determining what is a medical emergency and what is required when the type of treatment you are seeking is not available in a particular location. When the practicality of a situation prevents you from seeking treatment from a provider on your plan’s list it must be pointed out to your insurance company. Again, penalties and reduced coverage to the provider should be fought when they are inappropriate, and often the policy’s own language can be used against the insurance company if it is too vague to understand or if they have failed to adhere to their own contract.
Could Have Been Provided At A Lesser Level Of Care
Normally associated with mental health providers. Normally all charges are paid as contracted except for the facility. The psychiatrist is paid but the hospital is not. Nor is the hospital paid for therapies or medications that would have been utilized even at a lower level of care. This is often a “catch all” denial where the insurer is not comfortable with denying it for medical necessity reasons which could easily be overturned.