Claim denials: Sometimes following the rules is not enough
(Last updated February 10, 2003)

HMO members know the drill. Got a sore throat? See your primary care physician (PCP). Need an allergy specialist? Ask your PCP for a referral. Having a cyst surgically removed? Make sure you get your health insurer's prior approval.

You understand if you don't follow your health plan's rules, your claims won't be covered. Sometimes even when you do everything right, your claim is still denied.

For example, you get your plan's permission for surgery. Months after the operation, you get a bill in the mail and discover your X-rays were read by a radiologist who doesn't participate in your health provider's network of doctors. X-ray claim denied.

Here’s another example. Your benefits handbook says your insurer fully covers diabetic test strips. When you go to pick them up, your pharmacist charges you the full price, saying your handbook — the only one you've ever been given — must be out-of-date. Claim denied.

What you can do to help prevent claims problems

When you have a group health plan through work, you're not responsible for negotiating your own health care contract. Even so, you should educate yourself and ask your employer plenty of questions about your group health plan. Here are five steps you can take to help minimize any "claims surprises" like those outlined above.

1. Never rely on what you think is true about benefits or providers covered under your plan — even if they are stated in your most recent benefits handbook. Always double-check whether the benefits, services, or providers you need are covered under your plan before you receive treatment.

You can do this by calling your plan's customer-service department. Remember to take notes. Get the representative's name and write it down, along with the date, time, and general substance of your conversation.

If a claim problem arises and you need to file a grievance, these notes will come in handy. Most insurer's customer-service phone calls are tape recorded. Having the date and time of your call will make locating your call history with the representative much easier.

2. Should you have a problem with a claim, call the insurer and ask for an explanation. Again, remember to take detailed notes.

3. If the explanation is not consistent with your understanding of your health benefits, call or visit the person in your company responsible for benefits administration. Because of their position, they might be able to quickly resolve your problem.

4. If you have a claim problem that's unresolved, file a grievance with your health plan. If you get a denial, don't give up. In many states, the complaint eventually goes before a grievance committee that's outside the plan. There's always a chance the denial might be reversed. 

Texas Insurance Commissioner Jose Montemayor says in his state, such disputes go to an Independent Review Organization (IRO). “If a health insurer or health maintenance organization refuses to pay for a treatment it considers medically unnecessary or inappropriate, you may be able to have an Independent Review Organization review the decision,” Montemayor says. “The IRO´s decision is binding on the health care plan, which pays for the review.”

If you have a claim problem that's unresolved, file a grievance with your health plan.

You might also want to complain to the officials who regulate your health plan. If your health plan is self-funded by your employer, it is regulated by the U.S. Department of Labor. (To find the contact information for your regional office of the U.S. Department of Labor or see Know your COBRA rights.)

Otherwise, your health plan is regulated by your state’s insurance department. Your state has a complaint procedure that will trigger an investigation into your problem.

5. If you discover your providers or benefits have changed, and you have not been notified, bring it to the attention of the person in your company responsible for benefits administration. Ask if this situation is covered under the company's contract with your health plan.

Employers have a say

There are some health plan rules that might be negotiated, particularly if the employer is large enough to command real bargaining power with the insurer. Yet few employers are aware of this. Some issues that might be open for negotiation include:

  • Who are the providers in the network?
  • What happens when the network loses a provider? (If the plan loses its only orthopedic surgeon, will it compensate by paying for its members to see an out-of-network surgeon?)
  • What happens when a new member can't find a network provider who's accepting new patients?
  • How long are provider directories and benefit handbooks valid? (For example, if the plan loses 5 percent or more of its providers, does it have to reprint its provider directory and notify plan members?)

If employers don't negotiate these issues with health insurers in the beginning, there are no guidelines in place for identifying who's responsible if claims problems arise.

Pennsylvania Attorney General Mike Fisher says you should find out if the health plan you choose provides the services you need, before you sign up. “There is a lot you can do to look out for your own best interests. Before you enroll with a health plan, ask questions. Make certain that promises made by the HMO or health insurer are in writing. Do your homework,” Fisher advises.

Last updated February 10, 2003
Copyright ©

Click here to return to our homepage