What Is a Denial in Medical Billing and What to Do?

A denial in medical billing occurs when a health insurance company refuses to pay for a medical service or treatment already provided to a patient. This means the insurer will not cover the cost, potentially leaving the patient responsible for the entire bill. Understanding the reasons behind such denials is important for navigating healthcare finance.

Understanding Common Denial Reasons

Medical claims can be denied for various reasons, often stemming from administrative issues or coverage interpretation. One frequent cause is the insurer determining the service lacked medical necessity. This means the health insurance provider believes the treatment was not required for the patient’s condition, even if a doctor prescribed it. Insurers may have their own criteria for medical necessity, which can sometimes differ from a physician’s judgment.

Eligibility issues also commonly lead to denials. This happens when a patient’s coverage was inactive, terminated, or they were not covered for the specific service on the date received. Changes in employment or insurance plan status can cause these discrepancies. Claims might also be denied if a required pre-authorization or referral was not obtained before the patient received care. Many plans require pre-approval for certain services, and failing to secure this can result in a denial.

Administrative errors, such as incorrect or missing information on the claim form, are a common reason for denials. These can include wrong patient identification numbers, incorrect policy numbers, transposed digits, or missing demographic details. Minor discrepancies can cause a claim denial. Coding errors are another factor, where incorrect CPT (Current Procedural Terminology) or ICD-10 (International Classification of Diseases, 10th Revision) codes are used, or the codes do not accurately match the diagnosis or services provided. These coding mistakes can indicate a lack of medical necessity or misrepresent the services rendered.

Sometimes, a service is not covered under the patient’s specific insurance policy. This means the service is an exclusion within the patient’s plan. Lastly, claims submitted after the insurer’s specified deadline, known as timely filing limits, are often denied. Insurers set strict timeframes within which claims must be submitted after the date of service.

Information Needed to Address a Denied Claim

Addressing a denied claim requires gathering specific documents and details. Obtain the denial notice from the insurer. This notice provides the reason for the denial, the claim number, and often includes instructions for appealing the decision and contact information. Understanding the precise denial reason is the starting point for any action.

Access the Explanation of Benefits (EOB) from your insurance provider. The EOB is a statement detailing how your insurance processed the claim, outlining what was covered, what was not, and why. While not a bill, the EOB often mirrors or supplements the denial notice regarding the specific reason for denial and clarifies your financial responsibility. It typically includes patient details, service descriptions, billed amounts, and how much the insurer paid.

Have the original claim details readily available. This includes the medical bill or claim form submitted by the healthcare provider, which contains crucial information such as service dates, procedure codes, and charges. Ensure you have accurate patient and policy information, including your full name, date of birth, insurance policy number, and group number, as these are frequently checked against insurer records.

For denials based on medical necessity or similar clinical reasons, relevant medical records or physician’s notes can be essential. These records document the patient’s condition, diagnosis, treatment plan, and the rationale for the services provided. These documents can be found via mail from the insurer, online patient portals, or by requesting them from your healthcare provider’s billing or medical records department.

Steps to Resolve a Denied Claim

Once all necessary information has been gathered, a systematic approach can help resolve a denied medical claim. Review both the denial notice and the Explanation of Benefits (EOB). These documents are essential for understanding the specific reason for the denial and any instructions provided for an appeal. Pay close attention to the denial codes or explanations, as these pinpoint the exact issue.

Next, contact the healthcare provider’s billing department. Provide them with the claim number and the denial reason. Ask them to verify the accuracy of the original claim submission, including patient information, procedure codes, and diagnoses. If an administrative error is identified, they can often correct it and resubmit the claim, which may resolve the issue without further action from you.

Simultaneously, or if the provider cannot resolve the issue, contact your insurance company directly using the phone number found on your denial notice or insurance ID card. Reference the claim number and the denial reason, and request a detailed explanation of why the claim was denied. Inquire about their internal appeal process, including any specific forms required and submission deadlines.

Initiate an internal appeal by formally requesting the insurance company reconsider its decision. This typically involves submitting a written appeal, often using a specific form provided by the insurer, along with supporting documentation such as medical records or letters from your doctor justifying the medical necessity of the service. Clearly state why you believe the claim should be covered, referencing your policy documents and any clinical evidence. Ensure you adhere strictly to all deadlines, as late submissions can result in the appeal being denied.

If the internal appeal is unsuccessful and the insurance company upholds its denial, you may have the right to request an independent external review. This process involves an impartial third party reviewing the denied claim. External reviews are often binding, meaning the insurer must accept the independent reviewer’s decision.