Why was my insurance claim denied?

The envelope that comes in the mail is labeled something like “important insurance document” or “information about your coverage.” You open the envelope to find those two dreaded words: “Claim denied.” Or sometimes five: “Notice of denial of payment.”

If they’re going to remain in business, insurance companies have to be very careful to follow the terms of your coverage. After all, if they paid every claim, they would soon go broke.

That said, Medicare, Medicare Advantage and commercial insurers do make mistakes based on incomplete or inaccurate information and other factors. As a private patient advocate, I often go to bat for my clients when claims are denied or underpaid. Appealing insurance denials is all in a day’s work for us.

There are things you can do to eliminate common reasons for denial and improve the odds of having an appeal approved. Here are the top seven reasons for insurance denials, and what you can do to avoid or address them:

1. Prior authorization was required.

In some instances, procedures like MRIs and CT scans are included on the pre-authorization list. If a procedure is going to be performed and you are unclear if prior authorization is needed, ask your doctor’s office to contact the insurance company and provide the appropriate documentation. Prior authorizations create paperwork headaches for medical practices; you can help by looking at the terms of your coverage to see if prior authorization is needed.

2. Information was missing or incorrect.

Human beings make mistakes. A claim may be denied because the person who submitted the claim misspelled your name, gave a wrong member ID number or used the incorrect diagnostic code. You won’t be able to review the claim submission, but if you do get a denial, call the doctor’s office and ask them to review the claim for errors.

3. Claim was filed too late.

Medicare claims must be filed within 12 months of when the service is provided, or the patient is on the hook for the entire bill. Your doctor’s office will see to this (they want to get paid, after all!), but if you’re responsible for filing the claim, don’t wait too long.

4. Services were not covered.

It’s likely a doctor’s office will be generally familiar with what’s covered and what’s not under Medicare or Medicare Advantage, but it’s a good idea — before a procedure is performed, if possible — to look at your benefits document to ensure it’s covered, for how much, and if you will be responsible for a co-pay or coinsurance.

5. Provider is out of network.

If you have Medicare and a Medicare supplement, you can see any provider who accepts Medicare assignment. It’s a different story with most Medicare Advantage plans and HMOs, which keep their costs in line by limiting patients to certain doctors and facilities. The list of in-network providers on your insurance company’s website may or may not be up to date. When in doubt, check with the doctor’s office itself or call your insurance provider.

6. Services were not medically necessary.

This is maddening. Why would your doctor have you undergo a procedure or take a medication that wasn’t necessary? Generally, medical necessity is defined as any reasonable service, procedure or treatment that will reduce the effects of an illness or condition, prevent the onset of a condition or aid in regaining full functional capacity. These denials may be reversed on appeal when the doctor submits evidence of medical necessity.

7. Patient was in “observation status.”

Just because you’re staying overnight in the hospital doesn’t mean you’re an inpatient. Until your doctor orders your admission, you will be considered an outpatient and in “observation status,” which may impact your insurance coverage. After 24 hours under observation, you are required to receive a Medicare Outpatient Observation Notification (or MOON) that will tell you why you’re still an outpatient. You or a representative need to speak with the doctors or the hospital’s patient advocate to ascertain whether you should be admitted or discharged. Patient advocates are often called in when this situation arises so they can discuss the patient’s condition with hospital staff and obtain the correct treatment.

I always make sure I know what is going to be covered before I undergo a procedure, the doctor’s office staff should submit everything beforehand. In the hospital, always ask your care manager if there are any non coverage issues. Patients have a right to know.

Filing an insurance appeal is an arduous, time-consuming task that may not provide you the results you want. By doing some legwork up front, you can minimize the chances of a denial.

• Teri (Dreher) Frykenberg is a board-certified patient advocate. A critical care registered nurse for 30+ years, she is founder of NShore Patient Advocates (www.NorthShoreRN.com). Her book, “How to Be a Healthcare Advocate for Yourself & Your Loved Ones,” is available on Amazon. She is offering a free phone consultation to Daily Herald readers; email her at teri@northshorern.com.