Should you appeal your insurance denial?


Carla’s* mother had been hospitalized for a week for a hip replacement, and discharged to a skilled nursing facility for rehab. Three weeks after her admission, she received a notice that her mother’s Medicare plan was denying payment for her care because she wasn’t participating in therapy. 

Dave* had foot surgery that required the implantation of a new type of manufactured material. The surgery had been pre-approved, but his insurance denied payment for the manufactured material.

Elena’s* ovarian cancer had advanced, and her oncologist felt that the next medication she should try, which in his experience had shown some good results, was only FDA approved for breast cancer, not for ovarian cancer. Her insurance denied coverage for the use of this medication.

It is one of the most frustrating experiences when you’re following or trying to follow your doctor’s recommendations only to find that the health insurance that you most likely pay dearly for won’t provide payment for that care.


Should you appeal?


It’s a common assumption that if you have health insurance you’re “covered” for any care that is available and ordered by a licensed physician.


The problem is that the word “covered” means something different to the insurance company than it often does to the patient.


To decide if appealing is worth the time and effort, it’s important to have a general understanding of how all insurance works.  This is a grossly over simplified version, but you’ll get the idea: customers pay a set monthly amount into a big kitty. That kitty has to be able to cover all the expenses or claims that are expected over a year for the number of people paying in.


The insurer looks at past expenses to determine all the possible things that could result in payments to determine what they have to have in the big kitty. Then they divide it by the number of policy holders and this is what generates your monthly premium. In order to do this (and not run out of money) there have to be limits on what they will pay for, or “cover” (and by implication, what they won’t.) If they had to pay for everything possible there wouldn’t be any way to calculate a fixed monthly payment for everyone paying into the kitty.


Homeowners’ insurance, auto insurance, life insurance, and health insurance generally work exactly the same way.  Policy holders (employers, individuals, and Medicare recipients) pay into the kitty, and the policy pays out for services that are “covered” by the policy.


So when coverage for something related to your healthcare is denied, should you appeal?


The first thing to consider is this: Denial of coverage doesn’t mean that care is being denied. It means payment for care is being denied. No insurance company can deny you care, but if it’s not covered, you have the option to pay for it out of your pocket. However given the cost of healthcare, for most of us the reality is the options for self-payment may be limited, so a denial often feels, and essentially means that we’ve been denied access to care.


First, sometimes there are options that can help cover payment that may be faster, and less stressful and time consuming than appealing to the insurer to reverse their denial.


Second, every policy comes with a big document sometimes called a Summary Plan Description or a Certificate of Coverage. This is the legal contract for your policy. It lists everything that was factored into the kitty for your policy for what services are covered and how payments will be calculated. But as you might suspect, there are often gray areas. So reviewing this document carefully against a denial letter is critical to deciding whether there might be good reasons to appeal.


Oftentimes denials are made around certain medical policies, which wouldn’t normally be reviewed by patients. These can be accessed on the insurer’s provider pages and can be tricky to find. They list the clinical information and studies used to make their decision. Understanding this information is also critical for appeals that challenge the existing medical policy or a denial because something wasn’t “medically necessary.”


Is it worth it to appeal? It can be. Tune into our next issue for Part 2 “How to Mount a Successful Appeal.”

*Names and some details changes to protect confidentiality.

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