Appealing Funding Denials
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Getting Coverage for Medical Necessities
When you have health care coverage, sometimes a request for a services,
procedures, or equipment needs to be justified as medically necessary (please see
our Writing Letters of Medical Necessity page for information about and examples of how to appropriately show the medical
or expert justification). However, sometimes these requests may be denied by the
insurance company. This can be quite concerning when the service is medically
necessary.
Planning Ahead
While denials sometimes may not be avoided, here are some proactive
steps when working with health care providers and your insurance company to help
ensure medical needs are covered:
- Understand your insurance plan. If you do not have a Summary of Benefits and Coverage, call your insurance company and ask them to send you one.
- When providers suggest a service or treatment, ask them to help you make sure it will be covered by your insurance; if not, can a special request be made?
- Get preauthorization. Insurance companies may require that your provider submit a request for preauthorization explaining the need for a medical procedure. Many tests, procedures, and medications require preauthorization (before the service) to determine medical eligibility.
- Ask in advance whether a test or treatment requires preauthorization and whether your planned hospital stay has been approved. Know whether your plan requires referrals for services such as seeing a specialist.
- Make sure that the diagnostic or procedure code is listed and is correct. Processing software will reject codes that are incorrect, incomplete, not covered, or not relevant to each other (e.g., when the diagnostic code does not support the action of the procedure code)
- Sometimes a treatment or procedure requires other less invasive measures to be tried first. Discuss this with your provider to see if there is a “pre-checklist” for treatment.
Appealing a Denial
When a request is denied, Medicaid and all private third-party payers are
required to have a comprehensive way to appeal the decision. A notice of denial
should always come in the mail from the insurance provider to the family/person with
instructions on how to appeal. Medicaid usually has an appeal form on the back of
the denial letter they send. Make sure that the denial is always sent to your
address, not the provider of the service denied.
Steps to Take for Appealing a Decision
While it may seem bothersome and time consuming, filing an appeal can
often be successful. Following the steps below may make the process
easier:
- 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.
- Call 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 cannot reach customer assistance.
- Ask for specific examples of what would allow coverage for the specific service or item (e.g., clarifying child’s diagnosis, indicate impact on daily life, using a different vendor, etc.).
- Document all contacts and conversations in this process, including who was spoken to, the date, and what was said.
- Based on the information you gathered, decide if an
appeal has a chance at success.
- If the reason for denial does not make sense or keeps changing when you speak with your insurance company, 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 Writing Letters of Medical Necessity). Attach all letters, the denial letter, documentation of phone contacts, and any supporting material (e.g., therapy notes) to the appeal. Make copies for yourself to keep.
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).
Checking the National Association of Insurance Commissioners website can also help
you find your state Insurance commissioner.