For policyholders located in Texas and across the nation, it is not uncommon to have your health insurance claim denied or delayed. According to a study by Medical Billing Advocates of America, 1 in 7 health insurance claims are denied. In other words, an obscene number of claims are denied each and every year. We help health plan recipients fight wrongfully denied claims. For many clients, we handle these legal actions on a contingency basis in which we do not collect a fee unless we recover money for you.
One of the most common reasons for medical denials is lack medical necessity. This means that your health insurer does not believe you need the treatment recommended by your doctor. Medical necessity disputes tend to be more contentious because an insurance adjuster who has never treated you has concluded that your medical condition is not all that serious. Policyholders stuck in this situation are often left stressed out and worried about the financial implications of being stuck with either deteriorating health or unpayable medical bills.
Many denials are sadly the result of a general policy employed by health insurance companies to “weed out” certain types of claims. Insurance companies create guidelines aimed at denying certain types of claims. These same insurance companies do not hire enough staff to properly adjust and evaluate claims in a responsible manner. The reality is health insurance is a big business in which profits are increased when legitimate claims are denied.
If you are experiencing a denied health insurance claim, do not despair. You have the right to appeal the denial and to sue your insurance company for damages caused by the denial. A good first step is to speak with an experienced health insurance attorney to understanding your options.
Understanding the Claim Process
Most health insurance claims are not made by you directly. When you first present to your provider for treatment or evaluation, you sign a document giving your medical provider the right to present your claim to your insurance company. Why? Because your medical provider has employees who are trained to handle claim processing and payment with the insurance companies. These employees also handle other important tasks such as preauthorization requests.
If the insurance company accepts your claim and pays the provider, you will receive an Explanation of Benefits (EOB)that summarizes the treatment and the amounts paid by the carrier. If the treatment is denied, you should receive an EOB or a letter stating that your claim has been denied and/or that treatment has not been authorized.
Medical Necessity
Your health insurance plan includes language that states your health insurer will provide coverage for treatments that are medically necessary. While there is no industry-wide agreement on what is meant by medical necessity, it is generally understood to be a service that a physician, exercising prudent judgment, would provide to a patient. Unfortunately, the fact that your physician believed a treatment is needed is not sufficient for an insurance company that must approve or deny your claim. What we see increasingly are insurance companies rejecting reasonable care and attempting to micromanage your care.
All health insurance companies review claims through a “utilization review” process. This is the process of reviewing claims to determine if recommended treatment is medically necessary. The utilization review process can take place before, during, or after your treatment, depending on when you presented for treatment. The insurance company employees review multiple aspects of a health insurance claim or preauthorization request to determine what, if anything, will be paid. For example,
Health insurance companies develop policies to determine if or when a certain treatment will be covered. Insurance companies use inhouse physicians to create guidelines for when certain treatments should be covered or if they should be excluded altogether. Importantly, these policies do not determine the treatments the insurance company is legally obligated to pay under the health plan. Rather, they are simply guidelines that an insurance company has developed to provide a reason why it will initially accept or deny a claim.
It should be of no surprise that many of the policies created by insurance companies to determine medical necessity often run counter to the medical standards and best practices employed by physicians. It is also not surprising that health insurer policies tend to restrain care, cut costs, and increase the insurance company’s profits. Even more infuriating for both patients and providers is the fact that insurance companies insist that patients and providers following the medical guidance of some faceless insurance adjuster
Ultimately, the test for medical necessity is based on peer-reviewed guidelines and a physician’s professional judgment. The fact that an insurance company creates a self-serving “policy” to second guess a doctor’s professional opinion is not the final word on the care you are entitled to.
Examples of Medical Necessity Denials
The medical policies developed by a health insurance company create a roadmap for determining when and how to deny a claim on the grounds that a treatment was not medically necessary. When you receive a denial letter, you will notice that it provides information about the claim or authorization request that was made. It should also include a generalized reason for the denial. Common reasons why an insurance company will claim the treatment is not necessary include:
- The patient’s symptoms do not meet the requirements for admission: Many insurance companies will agree to cover a portion of your treatment but deny the remainder. One example is when you are admitted to a facility for treatment. Insurance companies like to second guess the admission asserting that your provider should have received treatment in an outpatient setting.
- The patient should have been discharged sooner: Insurance companies sometimes will scrutinize the length of time you were admitted to a facility or how long you were under a certain course of care. This is an example of the ultimately Monday Morning Quarterbacking only seen by insurance companies.
- A less aggressive form of treatment should have been attempted first: Insurer medical policies are predictably focused on cost savings. For many conditions, there are a range of potential treatments ranging from conservative management to more aggressive intervention. Most often, your doctor has considered your diagnosis and medical history before recommended a certain course of treatment. These recommendations typically fall in line with best practices accepted in the medical industry. Despite this, an insurance company will often refuse to authorize care unless a provider agrees to implement its care plans.
- The treatment has limited benefit in light of the cost: Here, the medical provider views the treatment as being largely ineffective while also being expensive.
- Tests Are Medically Unnecessary: Often physicians recommend tests to evaluate or diagnose a patient. Sometimes, a health insurer will view a test as being medically unnecessary even though best practices may dictate the test.
- Cheaper prescriptions or medical equipment should be used: Insurance companies are always looking for cheaper alternatives especially when a patient’s requires significant treatment.
In addition, insurers often create arbitrary policies aimed at denying claims with no consideration to medical necessity. For example, it is not uncommon for a claim to be denied if the patient did not receive a referral to see a specialist. Likewise, some insurers have policies that flatly reject claims with what the insurance company deems to be an improper billing code.
Reasons Why Your Denied Claim May Be Overturned
When a claim is denied for lack of medical necessity, it is important to understand why your physician recommended the treatment. Sometimes, a denial can be overturned once an explanation has been given to the insurance company. It is not uncommon for a reviewer to simply overlook important details about your medical condition or simply misunderstand why the treatment was recommended.
Sometimes medical providers do not provide the insurance company with sufficient documentation to make a decision about the claim. When this is the case, your provider may supplement the records so the denial can be reversed. Similarly, the provider may have provided inaccurate information about you including your personal information, insurance information, or billing codes needed for the carrier to decide on the claim.
As previously discussed, a large number of claims are denied due to medical policies implemented by the health insurer. Sometimes your physician may be able to advocate on your behalf to persuade the insurer to accept coverage.
Appealing a Medical Necessity Denial
In some ways, it is better to have a medical necessity denial than have the insurance company deny your claim for lack of coverage. Although a large percentage of health insurance claims are initially denied, many are overturned through an administrative appeal.
For private or group health plans, you are entitled to appeal a denied claim. For insurance policies issued through your employment, you are legally required to exhaust administrative appeals prior to filing a lawsuit against the insurance company.
If a clam is not authorized, your physician may escalate the matter by requesting a peer-to-peer review in which the denial is discussed with a doctor hired by the insurance company. The purpose of peer-to-peer review is for the treating physician to explain why the treatment is necessary and within accepted treatment guidelines. Sometimes a peer-to-peer review can provide the information needed for your claim to be accepted.
If your claim has been denied, you should familiarize yourself with the requirements to formally appeal the denial. Here are a few tips for handling an appeal and understanding the appeal process:
- Timeline: The timeline to file the appeal is normally included in the denial letter. Normally, you need to appeal the claim within 60 days of the denial if you have received the treatment and 30 days if you have not.
- Review: Under as best as possible why your claim was denied so you can respond to the denial directly.
- Understand Your Coverage: Review your health plan so you can understand if there are any potential coverage exclusions that would apply to your claim.
- Request the Claim File: The insurance company’s claim file often includes a lot of information and statement that can be used to support your appeal and successfully attack the insurance company’s denial.
- Physician Statement: A statement from your physician should also be included in your appeal packet.
- Complete Medical Records: If you have received the treatment, or have a history of similar treatments, include as many supportive records as possible in your appeal.
- Write Your Appeal: Be sure your written appeal thoroughly describes your medical condition and the reason why the treatment was recommended. Refer to any records or exhibits that help establish coverage in your favor.
Other Types of Health Denials
While many of our clients have dealt with medical necessity issues, health insurers deny claims for several other reasons, including:
- Failure to Obtain Preauthorization.
- Lapse in Coverage.
- Exceeded Coverage Limits.
- Treatment is Excluded from the Plan.
When To Hire A Texas Attorney For Your Health Insurance Claim Denial
If your health insurance claim has been denied, an experienced insurance attorney can be a valuable resource. An attorney can present your administrative appeal and also bring a case in court on your behalf.
What Type of Damages Can You Recover
There are significant differences between the damages you can recover if you suing over an individual or group plan. Group plans provided through your employment are typically governed by a federal statute called the Employee Retirement Income Security Act or ERISA. These plans preempt state laws governing insurance company conduct. Since ERISA was passed, courts have limited the damages you can recover to the value of the medical benefits that have been denied as well as attorney’s fees and costs. ERISA also mandates certain appeal requirements that you should be aware of. For instance, if you are to sue for an ERISA-based health denial, you must include all evidence you intend to use in your lawsuit at the administrative appeal. Failure to establish a significant record at the appeal level can harm your court case.
If you have an individual plan or policy, ERISA does not apply to your claim. Instead, you can sue the insurance company for breach of the duty of good faith as well as for deceptive trade practices. For individual plans, the scope of damages is much more expansive. In addition to recovering the health insurance benefits that were wrongfully denied, you can recover statutory penalties, attorney’s fees, and other general damages that may be awarded at trial.
The Texas Insurance Code and Deceptive Trade Practice Act permits a policyholder to recover treble damages equal to three times the outstanding amount owed to the policyholder as a penalty. In addition, you may be entitled to recover attorney’s fees for having to hire an attorney.
Is My Case Large Enough to Bring in Court
While all health insurance denials cost policyholders money and cause unnecessary stress, many people question whether fighting their claim is worth the time. Some denials involve sums of money that may not seem worthy the stress of fighting a claim. At a minimum, it is important to exercise your right to appeal a wrongfully denied claim. Many claims are overturned on appeal. If the appeal is not granted, you may then decide to bring legal action.
Filing Your Case as a Class Action
If your claim was denied because your health insurer has implemented a policy denying the treatments recommended by your doctor, your case may qualify as a class action. This is because insurance company medical policies often impact many people with similar medical conditions seeking payment for treatment recommended by their doctors. The class action process can be more economical and provide access to the courts for more people. Sometimes the prospect of litigating a class action lawsuit forces insurance companies to promptly pay claims and change medical policies that cause harm to its customers.
Contact A Texas Health Insurance Attorney
If you are dealing with a medical claim denial, there is a good chance the denial was improper. It is important to understand your legal options. Strict timelines apply for appealing your denial and filing a lawsuit. Please contact us at (866) 970-0977 to schedule a free non-comital consultation with an attorney.
