What to Do When a Health Insurance Claim Is Denied

Getting a claim denial letter is frustrating, but it's not uncommon and it's rarely the final word. A significant percentage of denied claims are overturned on appeal. The key is knowing why your claim was denied and responding methodically.

Common Reasons Claims Are Denied

• Prior authorization not obtained. Many procedures, medications, and specialist visits require advance approval from your insurer. If the provider didn't get it, the claim may be denied even if the service is covered.
• Out-of-network provider. You were seen by a provider not in your plan's network, and your plan doesn't cover out-of-network care (or does so at a much higher rate).
• Service deemed not medically necessary. Your insurer reviewed the claim and determined it didn't meet their medical necessity criteria.
• Coding errors. The provider submitted the claim with an incorrect diagnosis or procedure code. This is a billing error, not a coverage decision.
• Duplicate claim. The same claim was submitted twice, and the second submission was rejected.
• Benefit limits reached. You've exceeded your plan's coverage limits for a particular service (e.g., physical therapy visits).
• Enrollment or eligibility issues. A coverage lapse, incorrect member ID, or other administrative error caused the claim to be rejected.

Step 1: Read the Denial Letter Carefully

Your denial letter (or EOB showing a denial) must include a specific reason code and explanation. Federal law requires insurers to explain denials in plain language and to describe the appeals process. Find the reason code and write it down—you'll reference it throughout the appeals process.

Step 2: Call Your Insurer

Before filing a formal appeal, call your insurer's member services line. Sometimes a denial is the result of a simple error—missing information, a code discrepancy, or an administrative oversight—that can be corrected over the phone without a formal appeal. Ask the representative:

• What specific reason code led to this denial?
• What documentation would be needed to reconsider the claim?
• Can a simple correction or resubmission resolve this?

Step 3: File an Internal Appeal

If the phone call doesn't resolve it, file a formal internal appeal. You have at least 180 days from the date of the denial to file. The process varies by insurer, but typically involves:

1. A written appeal letter explaining why you believe the claim should be covered
2. Supporting documentation: your doctor's letter of medical necessity, relevant medical records, peer-reviewed literature for experimental treatments
3. A copy of the denial letter and your EOB

Send your appeal by certified mail and keep copies of everything.

Step 4: External Independent Review

If your internal appeal is denied, you have the right to an external review by an independent organization. The external reviewer is not your insurer and is not bound by your insurer's determination. For ACA-compliant plans, the external review decision is final and binding on the insurer.

In Florida, the Office of Insurance Regulation can assist you in requesting an external review if your insurer is state-regulated. For self-funded employer plans, the U.S. Department of Labor handles oversight.

Get Your Doctor Involved

For medical necessity denials, your doctor's advocacy is often the most powerful tool you have. Ask your physician to write a detailed letter explaining why the service was medically necessary for your specific condition—not just generally appropriate. Many insurers' medical directors respond positively to peer-to-peer conversations between your physician and their reviewing doctor.