What Is Denial
A denial is your insurance company's refusal to pay for a medical service, procedure, or medication. The insurer communicates this decision on an Explanation of Benefits (EOB) document, which outlines the specific reason. Common denial reasons include lack of prior authorization, the service being deemed not medically necessary, the service falling outside your coverage plan, or the provider being out-of-network.
Types of Denials
- Lack of Prior Authorization: Your doctor didn't obtain written approval from the insurer before the procedure. This accounts for roughly 20-30% of all claim denials in the U.S. healthcare system. Many insurers require prior authorization for surgeries, imaging studies, specialty referrals, and certain medications before services are rendered.
- Medical Necessity Denial: The insurer claims the service doesn't meet clinical standards for treating your condition. This is subjective and often contestable, especially if your doctor can cite peer-reviewed evidence supporting the treatment.
- Coverage Exclusion: The service, drug, or procedure is explicitly listed as not covered under your plan's terms. Cosmetic procedures, experimental treatments, and routine dental work often fall here, though coverage varies by plan.
- Billing or Coding Error: The provider submitted the claim with an incorrect diagnosis code, procedure code, or patient information. These denials are frequently overturned on appeal.
- Duplicate Claim: Your insurer received multiple claims for the same service from the provider.
What You'll Receive
After a denial, your EOB will specify the reason and often include a notice of your right to appeal. This notice, sometimes called a Denial of Benefits Notice or Summary Notice, must comply with state insurance regulations. Most states require insurers to provide clear, plain-language explanations of why the claim was denied and outline your appeal rights within 30 days of the denial decision.
Keep your EOB and any related documentation. You'll need these to file an Internal Appeal with the insurance company or, if the insurer denies your internal appeal, an external appeal through your state's independent review process.
Internal Appeals vs. External Appeals
- Internal Appeal: You submit a written request directly to your insurance company asking them to reconsider the denial. You can include new clinical evidence, your doctor's letter of medical necessity, peer-reviewed studies, or explanations of coding errors. Most insurers must respond to internal appeals within 30 days (or up to 72 hours for urgent appeals). Approximately 40-50% of internal appeals succeed, so they're worth pursuing.
- External Appeal: If your insurer denies your internal appeal, you have the right to an independent review by a third-party organization. This is available under the Affordable Care Act for all health plans. An external reviewer examines your case without financial ties to the insurer. Most states process external appeals within 30-45 days, and success rates range from 30-60% depending on the denial reason.
Your Rights
Federal law and state insurance regulations protect you. You have the right to receive written notice of any denial, the specific reason for the denial, information about how to appeal, and contact information for filing a complaint with your state insurance commissioner. You also have the right to appeal at no cost to you. Do not pay out-of-pocket for a denied service before exhausting your appeal options, as insurers sometimes retroactively cover claims after a successful appeal.
Common Questions
- If I received a denial, do I have to pay the bill immediately? No. Contact your provider's billing department and explain that the claim is under appeal. Reputable providers will not send accounts to collections while a valid appeal is pending. Ask the provider to hold the balance until your appeal is resolved.
- What should I include in my appeal letter? Write a clear, concise letter addressing the specific denial reason on your EOB. If the denial was for lack of medical necessity, include your doctor's statement explaining why the service was medically appropriate for your condition. Attach any supporting clinical evidence, peer-reviewed journal articles, or prior treatment records that demonstrate the service's medical value.
- How long do I have to file an appeal? Federal rules generally give you 180 days from the date of the denial to file an internal appeal, though some state regulations allow longer. File as soon as possible to meet potential deadlines for external appeals. Check your EOB or your plan documents for specific timelines.