Can Insurance Deny a Claim After Approval?

Navigating insurance claims can be challenging, as initial approval doesn’t always guarantee final payment. Claims can be denied even after preliminary confirmation or estimation of coverage, due to factors discovered or reviewed later in the process.

Understanding Insurance Claim Approvals

The term “approval” in insurance claims refers to different stages, each with distinct implications. Pre-authorization, or pre-certification, confirms a proposed medical service is medically necessary before performance. While confirming medical necessity, it does not guarantee policy coverage or full cost payment.

An estimation of benefits projects what the insurer might pay based on available information. Provided before services, these estimates are not a guarantee of payment. They are calculated based on current policy information and may not account for all factors emerging during or after the service, such as other claims processed or specific policy limitations.

Conditional approvals occur when an insurer agrees to cover a service or item pending certain conditions or additional documentation. For example, durable medical equipment approval might be conditional on a physician’s detailed prescription and proof of medical necessity. These preliminary approvals are subject to further review against complete policy terms and relevant information.

An initial review or “approval” might simply mean the claim passed an initial screening for completeness and basic eligibility. This confirms the claim form is correct and the policy was active. However, a deeper, comprehensive review against all policy provisions, medical records, or other relevant facts typically occurs later, which can lead to different outcomes.

Reasons for Subsequent Claim Denials

Several factors can lead to a claim denial even after initial approval. A primary reason is the discovery of new information not available during the initial review. This includes undisclosed pre-existing conditions or misrepresentation of facts by the policyholder or provider. If the insurer determines material information was withheld or misrepresented, the initial approval can be rescinded.

Policy exclusions are another frequent cause for subsequent denials. An initial approval might confirm medical necessity, but a detailed review may reveal the service or event falls under a specific exclusion clause. For example, certain experimental treatments, cosmetic procedures, or high-risk activities might be explicitly excluded from coverage. The full policy terms dictate what is ultimately covered.

Claims can also be denied if policy limits or frequency limits are exceeded. An initial approval might be granted for a service, but further claims will be denied if the policyholder has reached their maximum benefit amount for a specific service type or policy year. Some policies have frequency limits on certain services, such as a maximum number of therapy sessions per year, and claims beyond this limit will not be paid.

A lack of medical necessity, despite initial pre-authorization, can also result in a denial. While pre-authorization confirms a procedure is generally considered medically necessary, a detailed post-service review of medical records might conclude the service was not medically necessary for that individual. This can happen if documentation provided after the service does not sufficiently support the treatment’s necessity.

Administrative errors or coding issues are common operational reasons for denials. These include incorrect medical coding, missing documentation, or errors in patient identification numbers. Even after initial approval, a thorough review often uncovers these discrepancies, leading to a denial until corrected. Such errors require resubmission with accurate information.

If fraudulent activity by the policyholder or a provider is detected, prior approvals will be immediately revoked, and the claim denied. This includes submitting false information, billing for services not rendered, or engaging in schemes to defraud the insurer. Insurers have robust systems to detect and investigate potential fraud, which can override preliminary approvals.

Failure to follow proper procedures outlined in the policy can also lead to a denial. This includes not obtaining required referrals before seeing a specialist, or using out-of-network providers without prior authorization. Adhering to the policy’s procedural requirements is as important as the medical necessity of the service.

Responding to a Denied Claim

When an insurance claim is denied after initial approval, first thoroughly review the denial letter. This letter is legally required to provide a specific reason for the denial and outline appeal steps, including deadlines. Understanding the exact reason is fundamental to formulating an effective appeal.

After reviewing the denial letter, gather all relevant documentation to build a strong case. This includes your insurance policy, medical records for the denied service, initial approval letters or pre-authorizations, and records of all communications with the insurer. Complete records help substantiate your position and support your appeal.

The next step typically involves initiating an internal appeal directly with the insurance company. This requires submitting a written appeal letter stating your disagreement with the denial, explaining why the claim should be paid, and including all supporting documentation. Most insurers have a structured appeal process, often with multiple levels of review, and are required to respond within a specific timeframe.

If the internal appeal process does not resolve the issue, you may seek an external review. This involves an independent third party, such as a state regulatory body or an independent review organization, examining your claim and the insurer’s decision. This external review provides an impartial assessment and typically requires the insurer to abide by the independent reviewer’s decision.

Contacting your state’s department of insurance or equivalent regulatory agency can be beneficial. These departments oversee insurance companies and protect consumers. They provide guidance on your rights, investigate complaints, and can mediate disputes. They are a valuable resource for understanding state-specific regulations and consumer protections.

Throughout the process, maintaining detailed records of all communications, documents, and individuals spoken with is paramount. This meticulous record-keeping ensures a comprehensive log of your efforts and allows you to refer back to specific interactions or information. Keeping an organized file helps streamline the appeal process and provides crucial evidence if further action becomes necessary.