What to do if your medical claim is denied

The health insurance company denies a claim. It happens far too often and the message is delivered right after you receive your surprise medical bill. The surprise medical bill gets placed on the dining room table to wait for the next surprise medical bill the following month so it has some company. Now what?

A denied medical claim means that the health insurance company has decided to not to pay for your medical care. The insurance company sends out an Explanation of Benefits (EOB). This EOB should inform you why your claim was denied.

Reasons for claim denial include “not a covered service”, meaning your health plan simply won’t pay for the type of care, “not a necessary service” or “experimental.” Sometimes the insurance company states it needs medical documentation from your physician to determine eligibility of payment for service.

Your health insurance claim may be denied because the billing and diagnosis codes do not match, your service may not be deemed necessary, or it simply may not be covered.

If your claim has been denied, here are some actions you can take as a health care consumer:

First, do not make a payment to the hospital or other type of medical provider until after you have received and reviewed both the medical bill from the hospital and the health insurance company EOB. A review of your hospital medical bill could reveal billing for care that was not provided, and therefore should not be paid.

Second, call the medical billing department of your doctor who ordered the service. to let them know that your claim was denied. Ask the office if they can resubmit your claim with either different diagnosis codes (termed ICD-10) or different billing codes (termed CPT codes). Sometimes, especially now that there are tens of thousands of diagnosis codes for billing, the wrong diagnosis code not matching to the billing code can cause your denial on a software platform. There are often more than three different diagnosis codes that would be medically accurate but only one of three of them might be a match for the insurance company to make a payment in its billing and payment system.

Third, call the medical provider, whether it is a hospital or a surgery center, etc, and don't let them know about your current situation. Just ask what the cash price for your service would be. Tell them you have a high deductible plan or no health insurance. Once you get the cash price answer, you have your target price for negotiation.

Fourth, call your insurance company and ask what you would have to pay for a low back MRI if your claim was covered. You should do this because it helps you know what the fair price is when the hospital or other medical provider collection company seeks payment. This negotiated discount insurance price will be less than the charge retail rate and more than the cash price.

Consider the example of a low back MRI. A hospital charges $2,505 for a low back MRI. The insurance company pays $1,050 for the low back MRI as payment in full. You call and ask for a cash price and find it is $700. So it should be your goal to pay $700 at best and a maximum of $1,050. Surely, you can't be expected to pay more than an insurance company. Your pockets are not that deep. Never agree to pay the charge price of $2,505.

In summary, when a claim is denied, the following steps should be taken:

1. Compare your medical bill to you insurance explanation of benefits (EOB). Make sure the same care item is listed on each piece of paper so that you were not wrongfully billed and denied for care that did not occur.

2. If the medical bill and EOB match, ask your doctor's billing staff if there is any way they could re-submit the bill with a different diagnosis code that would help get your medical care covered.

3. Call the medical provider billing department and ask for their cash price for the medical care item received. This is now your target payment. You can even ask to make bill payments over several months or a year.

4. Call your insurance company and ask what you would have to pay for that care item if you did not yet meet your deductible and had to pay out-of-pocket for the medical care item if it was to be a covered service. Never pay more than this amount to settle the claim.

5. Never pay the charge amount, aka retail rate.

6. Take your time. If you call the billing department of a medical provider and get placed on hold for too long, hang up. Wait months and they will eventually call you when they want your money. That's when they leave the name and phone number of a real person and you get your direct line to get your cash price negotiation done in minutes without listening to bad phone music.

Always ask for the first and last name and title of the person you are speaking to in order to promote accountability and a desired level of customer service. Be nice. You get more bees with honey than with vinegar. Good luck! You can do it. Knowledge is power and you are now powerful.