Do you have recently denied medical claims leaving you with an unexpected large medical bill? You’re not alone. KFF, a public charity designed to be an independent source of information on health care issues, published a study in September 2023 that reports that 18% of Americans said they had an denied medical claim in the previous year. According to the American Health Information Management Association (AHIMA), denial rates are on the rise.
As a result, many who are insured experience significant delays in receiving care or don’t receive the care at all. Others incur unexpectedly high medical bills. According to KFF, 89% of those with denied claims don’t appeal because the billing system is confusing and they don’t know their rights.
Today, we’ll discuss why medical claims are denied and what you can do.
Why are Medical Claims Denied?
There are several reasons for denied medical claims, and these simple errors might cause you thousands of dollars.
Input Errors
According to the Journal of AHIMA claims are often denied because of input errors. If a claim is missing key pieces of information like your social security number or an incorrect plan code, the claim can be automatically denied. With the increasing use of AI to process claims, errors will increasingly be denied because of these minor input errors.
Lack of Communication
Small doctors’ offices are increasingly being bought by large hospital systems with centralized billing departments. These billing departments are becoming more removed from the doctor’s office that provides your service. As a result, there’s less communication between the billing department, which submits the claims, and your doctor’s office, which provides the service. Lack of communication about procedures increases the error rate of coding. This happened to me in 2023. I was billed thousands of dollars for my daughter’s medical care that should have cost hundreds of dollars. I’ll discuss that more down below.
Lack of Coordination
To complicate matters further, when there are coding issues, the insurance company cannot assist the doctor’s billing department in choosing the proper code. If the insurance company denies the claim, the billing deparment can resubmit with a different code. But, it’s sometimes like throwing darts at a board blindfolded. And the billing department is not incentivized to correct a wrong code because they can actually make more money if they bill you directly for a procedure that’s not covered.
What You Should Do If Your Medical Claim is Denied
There are several things you can do to ensure you are not charged incorrectly with medical bills.
Obtain Prior Authorization
Before obtaining a costly medical procedure, ask your health care provider to obtain prior authorization from the insurance company. Before you receive the procedure, the insurance company will determine if it is covered and what it will cost you. This allows you to fully understand your benefit. It also gives you more assurance that if the claim is denied after your procedure, you can prove it was erroneously billed.
Monitor Communications
How often do you receive a statement from the health insurance company that you don’t fully review? It’s important that you review statements from the insurance company to determine how much your medical provider billed, what the insurance company allowed, and what you’re responsible for. Make sure all three are correct. Match that amount with the bill you receive from your health care provider’s office. About 43% of adults say that they’ve received medical or dental bills they believe contain errors and 66% of them say that the error was being billed for something insurance should have covered. If there’s an error, talk to the insurance company and your medical provider. Bridge the communication gap.
Know Your Rights
If you’ve tried talking with both parties and you still disagree with your insurance company’s assessment, learn your rights. In 2010, the Federal Government established Consumer Assistance Programs to help advocate for those with medical bill disputes. Each state runs its own program, and most states have active assistance programs. Contact your state’s assistance program to learn your rights and seek assistance.
Denied Medical Claims Can Be Reversed
In the fall of 2023, my health insurance company denied a claim of a few thousand dollars for my daughter’s care. She had been seen by a physical therapy office that had been bought by a large hospital group. We got prior authorization before receiving care. But, when our insurance statement arrived, all of her sessions had been denied leaving us with thousands of dollars in bills. I asked the insurance company twice to have the billing department of the hospital group review the coding they had submitted.
The first time, the billing department failed to do the review, so I called the insurance company again. They got on the phone with me and the billing department and insisted that the claim be resubmitted. The second time, the billing department said their review revealed the coding had been correct. I then called the doctor’s office directly and worked with them to have the billing department correct the codes. This whole process took several hours of my time over a period of several months. However, they found a better code and reduced the bill to a few hundred dollars. Persistence is key.
It’s hard enough when you or a loved one has recently had a major illness or injury. Having to deal with large erroneous bills is not fair. But, it’s important to review all of the statements that come in the mail and make sure that your claims are properly accepted. Identifying a simple error or a miscommunication could save you thousands of dollars.