Appealing Funding Denials
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When you have health care coverage, sometimes a request for a service or
procedure is denied by the insurance company. This can be quite concerning when the
service is medically necessary.
When a request is denied, Medicaid and all private third-party payers are
required to have a comprehensive way for appealing the decision. A notice of denial
should always come in the mail from the insurance provider to the family with
instructions on how to appeal. Medicaid usually has an appeal form on the back of
the denial letter. Make sure that the denial is always sent to your address, not the
provider of the service denied. While it may seem bothersome and time consuming,
filing an appeal can often be successful.
Steps to Take for Appealing a Decision
- Read the denial letter, taking note of:
- the deadline date for you to appeal
- the reason for denial of coverage (beyond the generic "uncovered benefit" statement)
- Be aware that each insurance plan has different levels of appealing a denial. Check with your insurance provider to find out what their appeal process/levels look like. (See also the sections below on First and Second Level Appeals and Independent External Reviews.)
- Check to see if your claim was denied due to a particular service being billed or coded incorrectly. If so, your physician’s support staff may be able to gather and submit the necessary information on your behalf, in order to resolve the issue without the necessity of a formal appeal.
- Check your insurer’s information about denied claims. In the coverage documents and summary of benefits, insurance companies should give all the tools needed to properly make an appeal.
- Check that the individual is covered on the policy, the diagnosis or an alternate diagnosis is covered by the policy, and that the requested item or service is not a clearly stated exclusion.
- Phone the person who signed the denial letter.
- Ask why the coverage was denied, if this is still not clear to you; ask to speak to the supervisor for clarification.
- In some cases, it may be helpful for the medical home care coordinator or clinician to call if you are unable to get clarification, or if you are experiencing tactics such as long hold times and accidental disconnections.
- Ask for specific examples of what would allow coverage for the specific service or item (e.g., use a different diagnosis, indicate impact differently, more clarification of the child's condition, a different vendor, etc.).
- Document all contacts and conversations in this process, including who was spoken to and what was said.
- Based on the information gathered, decide if an appeal has
a chance at success.
- If the reason for denial does not make sense or keeps changing, these are red flags to move forward with an appeal.
- If the requested item or service could potentially change the treatment and outcome for the individual, make sure to state that in the letter of appeal.
- Ask the primary care physician and other key individuals (therapists, home care companies) to write an appeal letter referring specifically to the insurance company's contract and definition of medical necessity (see Letters of Medical Necessity). Attach to the appeal all initial letters, the denial letter, documentation of phone contacts, and any supporting material (e.g., therapy notes).
If the item or service is denied again:
- Repeat the above process of information gathering.
- Decide if you would like to request a hearing on the matter.
- Identify resources for legal representation.
Note on Double Jeopardy:
Families with both private insurance and Medicaid may get caught in the
middle because a private payer refuses to fund an item or service and Medicaid, who
would normally fund such an item, refuses to pay because they feel the private
insurance should have paid (Medicaid is always the payer of last resort). In the
appeal letter to Medicaid the family should state that they would like Medicaid to
pay for the service but that they will allow Medicaid to continue to pursue funding
from the private payer (also known as "pay and
chase").
Depending on the state in which you live, and your specific insurance
plan, there are typically three levels of insurance appeals.
First Level Appeal or Request for Reconsideration
You and your health care provider may contact your insurance company and request reconsideration of the denial. Your physician
may also request to speak with the medical reviewer of the insurance plan as part of a “peer-to-peer review” of the decision,
with a goal to resolve the issue. The purpose of the first level appeal is to prove that your claim or request for preauthorization
meets the insurance guidelines and you are requesting reconsideration for coverage.
Second Level Appeals
Second level appeals are typically reviewed by a medical director of your insurance plan who was not involved in the claim
decision. The goal of second level appeal is to prove that the request should be accepted within the coverage guidelines.
If the medical service is experimental or investigational, there could be another level of appeals.
Independent External Reviews
Most health plans must allow you to file a request for an external review. Independent external reviews are conducted by an
independent, third-party reviewer along with a physician who is board-certified in the same specialty as the patient’s physician
that is requesting services. The independent review process is administered by either the health insurance carrier or the
Insurance Commissioner's Office, depending upon the type of health insurance. Contact your health insurance carrier to learn
who administers the independent review process for your health insurance coverage.
The request must be filed within four (4) months after you received the final insurance denial of your claim in writing, and
the health plan must allow you to request an expedited external review when the time it would take for a standard review could
jeopardize your life, health or functional ability, hospital admission or care, or an admission from the emergency room which
you have been discharged.
For a State listing of Insurance Commissioners, go to Patient Advocate Foundation (PAF).