Tuesday, July 20, 2021

Appealing an Insurance Claim (Part One)


One of my current favorite TV commercials is one advertising the services of a local personal injury law firm.  The actors in it depict insurance adjusters who are trying to minimize their financial loss in a personal injury claim by using the “three D’s”: Delay, Deny, and Devalue.  (My wife can always tell what my favorite commercials are; I go around the house mimicking the actors and their lines: “No, DEE-ny.  I was going to delay but then decided, ‘No, I’ll DEE-ny that claim’”.)

Of course, insurance companies make great villains.  They are always portrayed negatively, giving more attention to their bottom line than to the insured’s interests, and in my opinion they don’t do much to dispel the image.

By coincidence, Kiplinger’s Retirement Report a couple of months ago ran a piece titled “Fight a Denied Advantage Claim” that cited some interesting statistics from the Office of the Inspector General (OIG) of the U.S. Department of Health and Human Services.  Let’s explore it a bit.

Medicare Advantage plans are operated by insurance companies under contract with Medicare.  You may hear them advertising that they offer you benefits above and beyond what regular Medicare covers—things like dental, vision, and hearing benefits.  And they offer these benefits at little or no additional cost to the Part B premium, and sometimes they even rebate all or part of the Part B premium that is deducted from the insured’s Social Security check.  But they can afford to do this by limiting their provider network (fewer doctors and hospitals to choose from), requiring pre-authorization for many services, strict application of rules for proper coding of claims by the providers, enforcing a primary care provider gatekeeper model, and other means.  It spells more work for providers’ offices and many denied claims.

The OIG found that between 2014 and 2016 75% of denied Medicare Advantage claims were overturned upon appeal.  That is an astounding figure and points to some very real problems with how these Advantage plans process claims.  But even more disturbing, when coupled with that statistic, is the finding that only 1% of claims denied by Advantage plans were appealed by either the enrollee or the providers.  What must these Advantage plans be saving through incorrectly denied claims that no one challenges?  Little wonder they can offer more benefits…especially if they find a way not to pay for them.

Perhaps there’s some truth to the insurance company negative stereotype, particularly in the personal injury field.  But I can speak from experience with Medicaid and Medicare insurance, that it is not typically the case in medical insurance.  No, the denied (or underpaid) claims are less about bad intentions and more about bad processes.  So much of the processing of medical claims is automated now; rarely, if ever, will there be a manager at the insurance company saying “Dee-ny this claim!  Dee-value that claim!”.  Here is what is probably at the heart of your improperly denied medical claim:

1.       Someone mis-programmed the automated claims processing software.

2.       Someone misunderstood or misinterpreted a rule for payment of certain types of claims.

3.       A provider was improperly set up in the insurance company’s database and was wrongly disqualified for payment.

4.       Someone failed to recognize the unintended consequences of a certain action, leading to incorrect claim denials.


Do you notice a common theme?  It’s incompetence.  Someone made a mistake.  An occasional mistake is understandable, especially considering the complexity of the rules and requirements of government insurance programs and of the software programs designed to automatically adjudicate medical claims.  But I would expect better testing, more double-checking before a change or new process is implemented.  That would reduce errors and inappropriately denied claims.  But you, as the enrollee, are on the hook for unpaid medical claims (at least non-Medicaid claims).  The provider often doesn’t have the time and personnel to go to bat for you.

So allow me to put it this way:  “To err is human, to forgive is divine, and to appeal a denied medical claim is genius.”

In my next post I will offer ideas for how best to appeal a denied or underpaid claim or other adverse determination by an insurance company.

Until next time,


“Don’t withhold repayment of your debts.  Don’t say ‘some other time,’ if you can pay now.” Proverbs 3:28 The Living Bible