Why Health Insurance Claims Get Denied (And How to Avoid Them Entirely)
By Jonathan M. Clark
You did everything right. You paid your premiums, scheduled with an in-network doctor, and followed all the recommendations. Maybe you even got pre-approval.
Even after all that, the insurance company denied your claim.
If this is your situation, you are not alone. 15% of claims are initially denied. (source) This means you one of millions of Americans suffering this same setback.
This article will explain why healthcare claims are denied and what to do instead.
The Top Reasons Health Insurance Claims Are Denied
1. Lack of Pre-Authorization
Your insurance plan likely requires pre-authorization for specific procedures, medications, and specialist visits. If your doctor doesn’t seek pre-authorization or it doesn’t meet the criteria, your insurance company will not cover it.
2. Out-of-Network Doctor
Your coverage will be limited or denied entirely if your doctor isn’t in the network.
3. Administrative Errors
Sometimes, a denial simply comes because a form wasn’t filled or filed correctly.
4. Medical Necessity Not Proven
Doctors are medical experts who undergo rigorous training, but insurance companies do not simply take their expert opinion. Instead, they have internal criteria to determine what is “necessary” and what isn’t. This can be an extraordinarily frustrating reasoning for denial.
5. Policy Exclusions
This is the number one reason by far. Most of these fall under elective procedures and those deemed to be cosmetic. You might also have coverage excluded if you are seeking mental health services or alternative treatments, although this situation is changing.
6. Policy Change
If your insurance company changes policies, you might be surprised to find that procedures or treatments that were once covered no longer are. And unfortunately, you might find that out by receiving an unexpected bill.
7. Missed a Deadline
If paperwork isn’t submitted within a certain timeframe, even claims that fall under coverage will be denied.
The Full Cost of Claim Denials
Before we look at how to avoid claim denials, we need to fully understand their cost. This includes and goes far beyond finances.
Surprise Bills
The most obvious issue? Surprise bills. These can ruin your financial planning, even when you thought you had everything accounted for.
Even a simple test or ER visit can run thousands of dollars. For most people, that cost would be devastating. After all, 57.4% of Americans have less than $1,000 in savings. (source) A surprise medical bill can completely wipe out the resources of most households.
Stress
Probably the biggest non-financial burden to claim denials is stress. Receiving a jargon-filled letter rejecting your claim leaves you with questions. What will happen now? Did you do something wrong? How do you fix this?
If you choose to appeal the denial, you will experience even more stress as you manage new deadlines, complicated paperwork, and the possibility of further rejection.
Delays in Care
When insurance denies your claim, you might have to entirely rethink your course of treatment. You might need to change the specialist you see, which means getting a referral from a new doctor. Or maybe you’ll have to start getting treatment in a nearby city.
All of these moves lead to delays in care. And even short delays can lead to worsening conditions and more anxiety.
Escape the Health Insurance Denial Trap
Ultimately, you can’t escape denied claims if you stay inside the insurance system. It is a for-profit system that makes money by denying as many claims as possible.
The only way out is to move to a community-based system. That’s how CrowdCare makes health coverage simple, affordable, and highly flexible.
Let’s look at each of the top reasons for a denied claim to see how CrowdCare work differently.
● Lack of Pre-Authorization: No pre-authorization is required with CrowdCare.
● Out-of-Network Doctors: CrowdCare allows you to go to any doctor or specialist. There is no network to be inside of or outside of.
● Administrative Errors: All the paperwork is done through an easy-to-use app. Simply upload a picture of your bill, and you’re done.
● Medical Necessity Not Proven: If your doctor considers it medically necessary, so does CrowdCare.
● Policy Exclusions: Treatments not included in coverage are straightforward. They include cosmetic treatments, long-term prescriptions, and fertility treatments. For the first two years of membership, you cannot include treatments for pre-existing conditions.
● Policy Change: As a community, members are always updated with policy changes. And the rare changes are simple because the policies are simple.
● Missed a Deadline: Using the app, submitting bills for approval takes a minute, removing stress and difficulty meeting deadlines.
Ditch the Insurance and Ditch the Denied Claims
Denied claims cost money and cause stress, but you don’t have to experience them.
CrowdCare offers a new way forward, one where community cost-sharing simplifies everything.