According to the Department of Labor, one out of every 7 claims made under employer health plans is denied. There’s nothing quite like the sinking feeling you get when your health insurance claim is denied, potentially leaving you stuck with a huge medical bill you can’t afford. Fortunately, your insurance company will send an explanation of benefits (EOB) that explains what is paid and why some or all of your claim is denied. You also have the right to appeal a denied claim if you think your plan should cover the medical expense.
The following are some of the most common reasons your health insurance company may deny your claim.
#1. Medical billing errors
Think billing mistakes are uncommon? According to the American Medical Association, 9.5% health claims processed by private health insurers have errors on average. When you visit a doctor or healthcare provider, your insurance will be billed. If the wrong billing code is used to bill insurance, it can lead to denied claims for any number of reasons.
The most common medical billing errors include:
- Diagnosis and treatment code mismatch. This mismatch can be a problem when an upcode happens as the health insurance company will reject it and you will be responsible for the additional costs.
- Duplicate billing. This happens when you’re billed for the same service more than once.
- Unbundling. In many cases, services can’t be billed to health insurance as separate services. It’s possible for a series of medical services to fall under a single billing code. If the medical provider bills them as separate services instead of a single service, it’s called unbundling. This can make your bill much higher and cause a denied claim.
- Incorrect information. Typos and misspellings in the account number, birth date, address, or other information can lead to a range of problems. If the medical billing department types the wrong insurance ID, the claim will be rejected.
- Upcoding. This happens when you are billed for services you didn’t receive or services more extensive than those you received. This can be an accident or it can happen if the diagnosis and treatment codes don’t match.
If you aren’t sure if a billing error is to blame, you can look up the five-digit CPT code on your Explanation of Benefits statement.
#2. The bill was sent to the wrong insurance
It’s more common than you may think: you see a provider with outdated insurance information in their file for you and your bill gets sent to the wrong health insurance company. Even more common is people who have two policies, such as coverage through their employer and their spouse’s employer. In this case, it can be easier for your medical bill to get sent to the wrong insurance company and denied.
#3. You went to an out-of-network provider
It’s important to make sure you check with your health insurance to be sure the doctor you want to see is in the plan’s provider network. It’s common for claims to be denied for using an out-of-network provider if you are with an exclusive provider organization or health maintenance organization insurance company.
Why does it matter if your provider is out-of-network? Because portion of your medical bill is only part of the equation. While hospitals and care providers have master lists of charges by service, insurance companies don’t pay listed prices. Instead, every insurance company negotiates for lower prices with every doctor, hospital, and medical professional on its plan. If you go out of the EPO or HMO network, you’re being cared for by a provider who has not agreed to the insurance company’s payment terms.
If you get non-emergency or elective care from an out-of-network provider, your health insurance company can deny the claim or require you to pay a larger share of the cost.
#4. You needed a pre-authorization or referral
Insurance companies typically require pre-authorization or referral that the doctor requests on your behalf for a range of services, including MRIs, sleep studies, surgical procedures, inpatient hospital care, gastrointestinal tests, and more. Make sure you’re familiar with the pre-authorization process with your insurance company as your claim can be denied if the service required pre-approval from the insurance company.
#5. The service wasn’t covered by your plan
Of course, a claim can also be denied because the service or procedure wasn’t covered by your insurance policy. You will need to read your policy carefully as insurance companies can make mistakes, but many policies exclude services like dental care and infertility treatment.