I am often asked to comment on a range of medical treatments – from new drugs to medical devices and procedures. Investors will inquire about a new treatment or procedure to gauge the likelihood of a product’s success, or to understand if there is a market for a particular treatment. But recently, and with greater frequency, I have been getting calls from individuals detailing obstacles they face to receiving medical treatment. Many of these calls concern costly and essential treatments or procedures, and with growing frequency, these callers have been denied reimbursement by their insurance companies.
Unfortunately, this is not an uncommon practice in the healthcare industry and with or without Obamacare this trend will continue. In fact, according to AARP, 200 million claims are rejected every year, and there are a range of reasons for an insurance provider to deny a claim. Based on some research, we have identified five things you can do to have an insurance claim approved, even after it has been denied.
1. Identify why your claim was denied. There are many reasons insurance companies can deny a claim. The first step is to find out why your claim was denied. Call your doctor, insurance company or hospital as soon as you receive your Statement of Benefits to find out why your claim was denied. Here are some of the common reasons for denial:
- Incomplete or inaccurate insurance information
- Lack of pre-certification or prior authorization
- Non capture of tests or procedures
- Diagnosis and procedure coding errors and omissions
- Past timely filing limits
- Insufficient medical necessity
- Co-Pay, Deductible, Patient Portion amounts
Keep in mind that many denials are recoverable given the proper tools. AARP reports about half of denials that were independently denied were appealed successfully.
You are not the first, and you will not be the last person to have a treatment claim rejected by an insurance company. As long as you’re calm and organized, you should be able to find a way to alleviate, if not resolve your situation.
2. Enlist the support of advocates. Doctors, hospitals and even health insurance companies can help to reverse your denial. Many hospitals employ social workers who assist patients in dealing with healthcare insurance companies, or obtaining Medicare and Medicaid benefits for those who qualify. These social workers operate as proxies, to qualify patients for benefits that pay for hospital bills. They are employed by the hospital to help patients capture any and all benefits that may be used to pay their bills. Often they are linked with the charity care department of the hospital, because if patients cannot acquire insurance reimbursement, they may become eligible for charity care to help pay bills. If this resource is available, you will want to introduce yourself and explain your case. You should be polite and engaging. Help them understand the validity of your claim. You will want them in your corner to direct you in submitting the correct paperwork.
(Photo credit: Wikipedia)
While you’re recruiting your forces, get your doctors onboard as well; they will need to plead your case directly to your insurance company. If your claim was denied due to incomplete or inaccurate information, your doctor may simply need to clarify or correct the claim submission. But, if your claim was denied because of insufficient medical necessity or lack of prior authorization, your doctor may need to write a letter of medical necessity. Such a letter specifies your diagnosis, recommended treatment, and the length of treatment time. Essentially, it lets your insurer know exactly how necessary this denied treatment is for your condition. Templates and examples of letters of medical necessity are available online so that you can familiarize yourself with this type of document.
3. Apply, reapply, re-reapply. It might not make sense to most of us, but insurance companies are trying to spread risk and keep as much money in their organization for as long as possible as they “adjudicate a claim.” Eventually, they have to pay up and add their payment to you, as their loss on their balance sheet. They use auditing software, often called “claim review programs” to sift through millions of submitted claims. Others have dubbed this software “denial engines” because their intent is to lower the amount of money paid to physicians and hospitals. These auditing programs work by finding technical errors in billing codes that all doctors, hospitals and clinics, among others, submit for payment. The programs use data-mining technology and can even be tuned to capture a predetermined percentage of financial return. The program’s algorithms vary by insurer, therefore the odds of denial or approval are not exact. Shown below are examples compiled by the American Medical Association, showing the difference between denial metrics of companies like Aetna AET -0.14%, CignaCI +1.82%, Humana HUM +0.93%, UnitedHealth Group UNH +0.54% and more.
Figure 1: Administrative Burden Index. The American Medical Association's National Health Insurer Report Card (NHIRC) documents the claims revenue cycle activities of the major commercial health insurers and Medicare. The NHIRC provides metrics on the timeliness, transparency and accuracy of claims processing of these payers in an effort to educate physicians and the public, and to reveal opportunities for improvement.
Regardless of these differences, there is one sure thing – the more times you re-apply, the higher your odds of approval become. If your claim was denied on a technical basis, such as a coding error or untimely filing, reapplying once will likely solve your problem. If your claim was denied on the basis of a coverage issue, such as insufficient medical necessity, you may need to reapply more than once with additional paperwork, such as a letter of medical necessity. After several re-submissions on your behalf, it becomes less advantageous for an insurer to deny your claim versus someone else’s new claim, and thus more likely for your claim to be approved. So, don’t give up.
4. File everything electronically and keep records You need to keep a digital paper trail as a reference when dealing with your insurer. Conduct as much of the correspondence between yourself, your insurer, and your doctor or social worker via e-mail. Snail mail is fine, too, as long as you keep copies and logs. Make sure to ask specific, detailed questions that will not be ambiguous to a third party reader should they look into your case. Ask questions like how your claim was filed (whether digitally or physically), and ask for copies of that filing. The more proactive you are with your due diligence, the more likely you are to get a positive result from your insurer. This is because companies, such asAutomatic Data Processing, Inc ADP +0.42% or ADP, have developed electronic-claim-filing software with the explicit goal of addressing insurance companies’ denial algorithms. According to ADP, their AdvancedMD Medical Billing Claim Inspector software “automatically runs more than 3.5 million edits on each claim for CCI, HIPAA, LCD and carrier-specific requirements before the claim is submitted.” Specific issues are identified and tools provided to quickly produce a clean claim. As a result, AdvancedMD customers’claims are accepted at a rate of 95 percent or better. Whatever filing system was used, be sure to ask for digital copies of all documents and e-mails. Remember, companies can profit from consumer ignorance, so don’t let this potentially disorderly process stop you from getting your claim approved. A well-kept electronic trail will decrease your chances of a second or third denial.
5. Become aware of the price of the treatment that you were denied. The more informed you are as a healthcare consumer, the better the system will work for you. It’s important to understand why your insurer would want to deny a particular treatment. The answer will almost definitely lie with the price of the procedure. Until recently, prices have been difficult to come by. However, several Websites that can aid in obtaining pricing information have recently come online. They include, but are certainly not limited to:
(Photo credit: Wikipedia)
Become aware of both the price of the procedure that was denied and the price your insurer will cover, allowing you to negotiate how and how much of the difference you will pay with your physician or hospital. One insurer, Aetna Inc., has had the insight to make pricing information a bit easier for their clients to obtain. Aetna Inc. has a Member Payment Estimator Tool, which provides cost estimates for more than 550 commonly used health services. If you are insured by Aetna, one step in having your claim approved is that much easier. If not, hopefully your insurer will catch up soon.
If these tactics only work partially, and you’re left with a large bill that charity care won’t cover, remember, you still have leverage. At the end of the day, physicians and hospitals would rather receive some payment than lose all of it. So be prepared to negotiate.
