You have just had a major medical procedure done — surgery or an expensive test. Now an envelope from your health insurance company arrives in the mail.
Are you confident that the bill was paid? Or do you worry that the insurance company will find some reason not to pay the bill?
According to the Managed Care Information Center, 18 percent of health claims are routinely denied by managed care plans.
Of those denials, 50 percent are not followed up on by patients.
The most common reasons for denial are:
- The service provider is out of network.
- A pre-authorization is missing or incomplete.
- The benefits cap or limit has been reached.
- The insurance company claims that it has “secondary responsibility.”
- The procedure is deemed “not medically necessary.”
- The procedure or drug is deemed “experimental” or “investigational.”
So when you get a medical statement or bill, open the envelope and look at the contents carefully.
If you see “charges not covered” and a dollar figure — possibly a large one — you will probably also see the same figure under “patient responsibility.” Look for a number or code and then look for the explanation of the code. There you will find the reason for the denial.
The best way to deal with a claims denial is to avoid it.
New Jersey and New York, as well as U.S. law, require health plans to furnish a “summary plan description.”
In this document the plan must give a clear description of what the benefits are under the plan, what the benefit maximums are, and what the limitations or exclusions are.
It must inform you of any pre-procedure authorization requirements and how to obtain them, and what your financial responsibilities are, such as, premium payments, co-payments (fixed amounts), co-insurance (proportional amounts), and deductibles.
There must also be a directory of in-network service providers if the plan requires that all service providers be in its approved network, and the network must be “adequate.”
Read the plan description carefully. Review it often. If you do not understand something, call the insurance company and ask your questions.
If you are very familiar with your plan you can probably avoid most claims denials.
Make sure all of the health care services you are using are covered, according to the plan’s rules.
If your claim is denied because the company asserts “secondary responsibility,” know that this is the standard way companies try to avoid paying claims they think some other company should pay.
You or your plan’s administrator may need to fill out a “coordination of benefits” form.
If your family is covered by more than one insurance company, the primary coverage is usually provided by the company insuring the person whose birthday falls first in the calendar year.
If your claim is denied because a pre-authorization was incomplete or missing, make sure your doctor entered the right codes for diagnoses and procedures, and that the pre-authorization was sent to the right place.
Keep all of your paperwork and keep a log of all of your related telephone conversations.
If you need to appeal further, start with either the plan’s administrator, the ombudsman or your employer’s Human Resources Department. (The Local 802 Health Benefits Department can be reached at 212-245-4802.)
Continue to keep the paperwork and the log.
In New York state, all commercially sold plans are required to have a grievance procedure for claims denied for non-medical reasons.
You have the right to designate a representative for the grievance procedure.
If you are fighting a denial that was issued because a procedure or drug was deemed not medically necessary, ask your doctor to contact the medical director of the plan or to write a letter stating the medical necessity of the service.
In New York this is called a Utilization Review Procedure.
That phrase may come in handy during your conversations with your insurance company.
If you are unable to resolve the dispute to your satisfaction, you can submit a complaint to the Consumer Services Bureau and consider obtaining legal counsel.
If your policy was sold in New Jersey, and your claim was denied for a non-medical reason and has not been resolved to your satisfaction, contact the New Jersey Department of Banking and Insurance, Division of Enforcement and Consumer Protection. It has an ombudsman who can be reached at email@example.com.
(Interestingly, insurance companies in New Jersey are not permitted to delay payment while waiting for a coordination of benefits unless there is “good cause.”)
If your claim is denied for medical reasons you can request a hearing by a panel of doctors and health care professionals.
If you are still dissatisfied with the outcome you can file an appeal with the New Jersey Department of Health and Senior Services within 60 days of the denial. The case will be reviewed by independent experts contracted through the Independent Health Care Appeals Program (IHCAP). Decisions rendered by this panel are binding on all New Jersey-governed health plans.
Local 802’s health plan is a self-insured Taft-Hartley plan. Taft-Hartley plans are funded by one or more employers, collectively bargained with each employer, and managed jointly by a board of employer and employee trustees.
Self-insured plans pay claims directly out of the plan’s assets rather than paying a premium to a health insurance company.
Neither is regulated by state law; instead they are subject to the Employment Retirement Income Security Act (ERISA), a federal law dating back to 1974.
You can find out if your plan is subject to ERISA by contacting your plan’s administrator.
If your ERISA-governed plan has denied your claim for any reason, once you have made an initial appeal to either the administrator, the ombudsman or the Human Resources department, you must be informed by them how to file for a “full and fair” review.
You should get the result within 60 days.
If you are notified within 60 days that it will take longer, the answer should then come within 120 days.
If you have not received the result within 120 days, assume the claim has been denied, and, depending on the size of the claim, consider obtaining legal counsel.
You may also contact the U.S. Department of Labor Employee Benefits and Security Administration.
Some Taft-Hartley plans provide for binding arbitration for denied claims in their collective bargaining agreements.
All state- and ERISA-regulated plans include access to an emergency room without pre-authorization and are subject to certain federal laws.
One is the Consolidated Omnibus Reconciliation Act (COBRA).
This allows a beneficiary to continue to receive benefits that have been terminated because of loss of employment or other reasons for 18 to 36 months, although he or she may be required to bear some or all of the cost of the premium.
The Health Insurance Portability and Accountability Act (HIPAA) requires insurers to sell group polices without screening members of the group for pre-existing conditions and also requires the companies to renew the policies unless the insurer quits that particular market for five or more years.
The Women’s Health and Cancer Rights Act (WHCRA) requires that group health plans which cover mastectomies also cover post-surgery procedures including reconstructive surgery and treatment for complications.
Other federal health protections can be found by going to the Department of Labor Web site (www.dol.gov) and browsing the topics on the left side of the page.
A claims denial can make you feel powerless but you do not have to give in to it.
According to a 1999 Kaiser Family Foundation survey, 42 percent of doctors said that their most recent denial was resolved in the patient’s favor.
Knowledge is power.
The system is not set up to be user-friendly, but if you know your plan’s provisions backwards and forwards and are aware of your legal protections, you have a good chance of prevailing.