Understanding Insurance Claim Denials: A Step-by-Step Guide for Patients

One of the most frustrating situations is when you are sick and you think that your insurance can finally be put to use so you go to your family practice physician only to receive a bill a few days later for hundreds of dollars. A million thoughts are going through your head? Why was I charged? What’s going on? I have insurance, why didn’t it cover the visit? How am I supposed to pay for all of that? 

But before you freak out, breathe because I have your back. Today, we are going to go over all the possible reasons your visit might have “been denied” and what you can do to possibly deal with the situation at hand. 

Step 1: CALL THE CLINICIAN OFFICE

I know this step is debatable but I feel like it always helps to first verify that the bill exists. A lot of the time you might just be looking at the EOB, aka the Explanation of Benefits. 

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Aside: 

An Explanation of Benefits is your insurance’s way of saying this is what we covered from your visit and this is which benefits applied where. Basically, it is them saying that they are doing their job. The EOB lists the total cost of your care, the provider charges, the allowed charges, and the paid by insurer: 

• Provider charges: The amount the provider billed for the visit

• Allowed charges: The amount after the insurance made adjustments according to your allowed amount (This is the amount the insurance designates as being allowed to actually be billed so that, if you see an in-network provider, you will never pay the full provider charge)

• Paid by insurer: This is the amount the insurance will pay and the rest is up to you 

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An EOB is NOT a bill. It looks like a bill and when patients see a bill number with a dollar sign next to it, they start freaking out. But then, if you call the provider’s office, they can often tell you if it is just an EOB or if it is an actual balance. 

If it is a real balance, sometimes the provider’s office also explains it better than the insurance. I know a lot of people who think the insurance denied the claim when, in reality, the bill exists because they haven’t met their deductible yet. 

If the bill is real, then that means we have to figure out why. We can ask the physician’s office to see what they know but it is always important to do our own research and, more often than not, they will tell us to call our insurance. So let’s delve into the possible reasons for a denial: 

1. Provider is Out of network

A lot of the time, insurances will send a huge balance back as patient responsibility if the provider that they saw was out of network. 

Most people, however, are confused by what we mean when we say in vs out of network so let’s take a moment to review what that means: 

Insurances are very selective about who they want to include as in-network. Insurance companies contract with certain providers, making them "in-network." When you see one of these providers, your visit is covered under your in-network benefits, and the money you pay typically counts toward your out-of-pocket maximum. Reaching your out-of-pocket maximum is important because, once you do, your insurance will generally cover 100% of your covered in-network services for the rest of your plan year. 

If a provider is out of network, your insurance will typically not cover the visit unless your plan includes out-of-network benefits. In most cases, this means you'll be responsible for the bill, and any money you pay generally will not count toward your in-network out-of-pocket maximum. The biggest difference between an in-network and out-of-network provider is that in-network providers have agreed to your insurance company's negotiated rates. This means they must write off the difference between their original charge and the allowed amount, so you never pay more than the allowed amount (plus your deductible, copay, or coinsurance). Out-of-network providers don't have that agreement, so they may bill you for the remaining balance that your insurance doesn't pay. This is called balance billing. Here is an example: 

Imagine your provider charges $500 for an office visit.

Scenario 1: Your Provider is In-Network

Your insurance company has a contract with the provider and has negotiated an allowed amount of $300 for that visit.

• Provider charges: $500

• Insurance allowed amount: $300

• $200 is written off as a contractual adjustment because the provider agreed to accept the negotiated rate.

• You are only responsible for your deductible, copay, or coinsurance based on the $300 allowed amount—not the original $500 charge.

  
  

Scenario 2: Your Provider is Out-of-Network

The provider still charges $500, and your insurance still determines that the allowed amount is $300 based on out of network benefits. However, because the provider does not have a contract with your insurance company, they are generally not required to write off the remaining $200.

As a result:

• Provider charges: $500

• Insurance allowed amount: $300

• Insurance pays according to your out-of-network benefits (or may pay nothing if your plan doesn't include out-of-network coverage).

• The provider will bill you the remaining $200 (if you have no out-of-network benefits). This is called balance billing.

  
  

Bottom line: In-network providers agree to accept your insurance company's negotiated rates, while out-of-network providers generally are not bound by those contracts and may charge you the difference unless prohibited by federal or state law.

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So providers generally try to be on as many insurances as possible and patients should ALWAYS check to ensure the provider is in-network at the location of the practice. I always recommend for patients to take the provider's name, NPI (national provider identification number), Tax ID, and the location of the practice to confirm network status. Once the status is confirmed,  always document the reference number and the name of the representative you speak to. I also recommend calling your insurance every year to confirm network status even if you are seeing the same provider solely because insurance companies can decide to take the provider off the list at the start of the new year so it is better to be safe than sorry.

That said, what if you were denied because the provider is out of network? Here are a few things you can do: 

• First, contact your provider and ask if they confirmed whether or not your were in-network, if they did and they have a reference number for the call or the check, they can argue to get that one visit covered (IT WILL NOT COVER FUTURE visits) so that you can be cleared for that one visit. This is why we CYA because insurances can make mistakes so we need to hold it against them (this will only work some of the times because insurances can use “we informed you that this wasn’t a verification of coverage on that same phone call” so just be aware of that)

• If that doesn’t work, ask the office if there is a way to get the bill adjusted. Is there a way to pay the self pay rate (as the self pay rate without insurance is often cheaper than running the bill through the insurance and getting balance billed) rather than the full balance from the insurance. Some offices will do this so just politely ask. It never hurts to try. 

• Know Your Rights Under the No Surprises Act: If you received emergency care or were treated at an in-network hospital or surgery center, but unknowingly received care from an out-of-network provider (such as an anesthesiologist, radiologist, pathologist, or assistant surgeon), you may have protections under the No Surprises Act. In many situations, this law limits the amount you can be billed beyond your normal in-network cost-sharing. If you receive an unexpected bill in one of these situations, contact both your insurance company and the provider's billing office to determine whether the protections of the No Surprises Act apply to your claim.

• Finally, if those two options don’t work, it might be time to discuss payment plans but most offices will work with you to find a happy medium so that the office can get paid and the patient will be left financially stable. 

2. You need a Prior Auth 

Sometimes, claims will be denied because you need prior authorization. These denials are primarily service based meaning they will be from any imaging, labs, procedures, medications, etc… Typically, imaging facilities and the like are pretty good at looking to make sure the insurance approves the service before offering it to the patient. So it works like this: 

The provider sends in a script or an order of some sort. As soon as the facility sees the order, they are supposed to gather all of your past medical history and submit what is called a prior authorization to the insurance. A Prior Auth is basically just a request to get a service covered by insurance. 

For imaging or labwork, the imaging/lab facility will be the one to submit the prior auth. They might request for the ordering provider to send notes but ultimately, since all billing for this service is through them, the facility is the one that does the prior auth and submits the claim. For medications, the ordering provider is actually the one that submits the prior authorizations.

If you are denied for the prior auth, your provider might need to do a peer to peer to get it covered. It is a hassle but the ladder goes: prior auth, appeal, peer to peer, and if even the peer to peer is denied, then it is time to discuss alternatives. Keep in mind that an approved prior authorization is not a guarantee of payment. Your insurance company will still review your eligibility, benefits, deductible, and network status after the claim is submitted.

3. Referral is required

A lot of insurances, specifically HMOs, EPOs and such, require there to be a valid referral on file when patients are seeing a specialist. So if the reason your claim got denied is that they don’t have a referral, go to your PCP (you might need to schedule an appointment) and ask for your physician to put in a referral for the specialist and back date it to when you were seen at the specialist. Then ask the specialist to resubmit the claim. You should be good but if anything, talk to your specialist to see what else can be done. 

4. Deductible Has Not Been Met

Not all bills are from a denial. A lot of the time, bills come because the patient hasn’t completely met their deductible. Remember, the deductible is the amount you have to pay before your insurance kicks in. What’s nice is that when you are seen by an in-network provider, the insurance will eliminate fees from the bill per your allowed amount and then bill you the rest compared to if you are out of network, then you will get balance billed (billed the entire balance).

Ex: 

Office visit costs $250

Insurance allowed amount: $170

Deductible remaining: $400

Insurance pays: $0

Patient pays: $170

Your insurance didn't deny the claim. They processed it exactly as your plan states. Because you hadn't met your deductible, the responsibility was yours. Keep in mind that this varies from insurance to insurance and not every plan has a deductible so just know your plan and your benefits! 

5. Service is not covered under the plan

Sometimes, insurance will only cover certain services. For example, for most commercial insurances, they only cover an annual physical if it is exactly or more than a year from your last one otherwise, they will deny the claim. Other insurances simply don’t cover specific specialties. A common one that I see insurances not cover is behavioral health so this is a benefit that you should be looking for when applying for insurance if you need it (like a phq at your PCP’s office might be denied and you would have to pay out of pocket for the service so definitely know your benefits). 

6. Coverage has terminated

A huge reason for denial is that your insurance was terminated at the time of your appointment. This is why it is very important, before every appointment, to check that you are eligible for your insurance and document it because if insurance denies saying that your insurance termed you have proof that they said differently (whether this be a quick phone call or a check through the insurances website)

If you discover that your coverage was terminated, don't panic. Here are a few steps you can take:

1. Contact your insurance company. Ask why your coverage ended and whether the termination date is correct. In some cases, coverage may have been terminated in error or can be reinstated.

2. Verify your eligibility. If you recently enrolled in a new plan, confirm that your new insurance was active on the date of service. If so, provide the updated insurance information to your provider's office so they can bill the correct insurance company.

3. Speak with your provider's billing office. If you truly did not have active insurance, ask whether they offer a self-pay discount, financial assistance, or an interest-free payment plan. Many offices are willing to work with patients experiencing an unexpected lapse in coverage.

7. Incorrect patient information

This is probably one of the most common issues I see. Oftentimes, the office or the insurance could have the wrong spelling of the name or date of birth or address so make sure, if the claim was denied, to check that all of your information on BOTH ends is valid. Additionally, sometimes insurances think that patients have a secondary and will deny the claim for this reason (because they want the claim to be picked up by the secondary). So what you do here is you call your insurance and do what is called a Coordination of Benefits (COB) and you basically just update your information and tell them that they are your only insurance. If you truly do have another insurance, then you need to call your provider and let them know so that they can enter the information and bill accordingly. Luckily, this is one of the easiest problems to fix. 

8. Coding or Billing errors

Sometimes a claim is denied because of a billing or coding error rather than because the service wasn't covered. Fortunately, many of these mistakes can be corrected.

Common errors include:

• Incorrect patient information, such as a misspelled name, incorrect date of birth, or wrong insurance ID number.

• Incorrect diagnosis or procedure codes, where the diagnosis doesn't support the service billed or the wrong procedure code was submitted.

• Missing billing modifiers, which may cause the insurance company to incorrectly bundle or deny a service. A billing modifier is usually two characters that is added to what is called a CPT or procedure code to provide additional information about the procedure (it basically gives the insurance context as to why a procedure or service was given to the patient). If a modifier is missing, the insurance may deem the service as not medically necessary and therefore deny the service. 

• Duplicate claims, when the same claim is submitted more than once.

• Timely filing issues. This is SUPER important. When there is a claim needing to be resubmitted, you are limited to a certain time frame to resubmit the claim otherwise you are responsible for the bill? What does this mean for you? If you have a bill, DO NOT put off addressing it. Get it figured out and taken care of because if there is an error and you fix it, you can only resubmit the claim 30 or 60 days after the claim was originally denied (this time frame varies from insurance to insurance).

  
  

If you think your claim was denied because of a billing or coding error, contact your provider's billing office and have your Explanation of Benefits (EOB) available. Compare the EOB with your bill and ask the office to review the claim for possible errors. If a mistake is found, the provider can often submit a corrected claim or file an appeal with additional documentation. It is not your job to figure out the mistake, your job is to notice something is wrong and notify your provider and your insurance so that you can receive the most access to your health. If you still have questions about your bill, contact your insurance company for an explanation of the denial and the next steps.

9. Duplicate Claim

Sometimes, your insurance will receive a duplicate claim. This often isn’t intentional. The most likely reason is that the provider accidentally submitted the same claim twice or if they resubmitted a claim because it didn’t look like it originally went through (even though it did). Other times it could because the claim wasn’t marked correctly and, instead of the provider submitting a corrected claim, the provider sends in a brand new claim and the insurance marks it as duplication 

So what do you do about this? With this denial, it usually means that you don’t owe the bill. This is actually an issue that you can tell the providers office about and they can resolve by reviewing the claim status and submitting the proper claim.

10. Experimental or investigation treatment

Some insurance companies may deny coverage for treatments, procedures, or medications they consider experimental or investigational. This doesn't necessarily mean the treatment is unsafe or ineffective—it means the insurance company has determined that there is not yet enough evidence, according to its coverage policy, to cover it for your specific condition. If your provider believes the treatment is medically necessary, they may be able to submit additional documentation or file an appeal on your behalf so that it can be covered. 

11. Patient needs to make their Primary Care their PCP

And finally, this is probably the most common issue I see when claims are denied at a PCP office. When you see a family practice physician with a specific insurance (like HMO or EPO), you need to make that physician your PCP on file otherwise all of those claims will be denied. And if you don’t make them your PCP and the claim is denied, you have to make them your PCP and backdate to the date of the appointment within the time frame defined by timely filing otherwise the bill is your responsibility. This is the easiest problem to fix so please, if this is the issue, call your insurance right away and make your primary care, your PCP on file. 

Just a few notes before letting you go. Receiving a medical bill can feel overwhelming, but remember that a denied claim isn't always the final answer. Many denials can be corrected with the right information, timely follow-up, and open communication between you, your provider, and your insurance company. Don't ignore your bill, but don't assume you have to pay it immediately either. Ask questions, keep records, advocate for yourself, and stay kind to your provider and your insurance representatives. You are your own best healthcare advocate. 

Patient Education Notice: Insurance coverage and benefits vary by plan. This article is intended for educational purposes only and should not replace guidance from your healthcare provider or insurance company. If you have questions about a specific claim, contact your provider's billing office and your insurance company for assistance. 

Sources: 

Centers for Medicare & Medicaid Services. (n.d.). Action plan: Bill with an out-of-network provider. U.S. Department of Health and Human Services. https://www.cms.gov/medical-bill-rights/help/plan/insurance-provider-out-of-network

Centers for Medicare & Medicaid Services. (n.d.). Billing and coding: Repeat or duplicate services on the same day (Article No. A53482). U.S. Department of Health and Human Services. https://www.cms.gov/medicare-coverage-database/view/article.aspx?articleId=53482

Centers for Medicare & Medicaid Services. (n.d.). Coordination of benefits. U.S. Department of Health and Human Services. https://www.cms.gov/medicare/coordination-benefits-recovery/overview

Centers for Medicare & Medicaid Services. (n.d.). Ending surprise medical bills. U.S. Department of Health and Human Services. https://www.cms.gov/nosurprises/Ending-Surprise-Medical-Bills

Centers for Medicare & Medicaid Services. (n.d.). Explanation of benefits. U.S. Department of Health and Human Services. https://www.cms.gov/medical-bill-rights/help/guides/explanation-of-benefits

Centers for Medicare & Medicaid Services. (n.d.). Health insurance terms you should know. U.S. Department of Health and Human Services. https://www.cms.gov/medical-bill-rights/help/guides/health-insurance-terms

Centers for Medicare & Medicaid Services. (n.d.). Know your rights when using health insurance. U.S. Department of Health and Human Services. https://www.cms.gov/medical-bill-rights/know-your-rights/using-insurance

Centers for Medicare & Medicaid Services. (n.d.). Medicare National Correct Coding Initiative (NCCI) FAQ library. U.S. Department of Health and Human Services. https://www.cms.gov/medicare/coding-billing/national-correct-coding-initiative-ncci-edits/medicare-ncci-faq-library