List of Reasons Why Health Insurance Claims Are Denied

Health insurance claims can be fully or partially denied, for a variety of reasons. When a claim denial occurs, the patient and provider have the opportunity to appeal the decision. You can reduce the chance that a claim will be denied by being prepared before you receive or render services. For example, follow the health insurance plan's procedures for obtaining pre-authorization of services, and ensure that the services you are rendering or receiving fall within the medical necessity criteria guidelines. In addition, first confirm that benefits are covered, and if they are, determine and their limitations.

Lack of Medical Necessity

• In order to pay claims for medical services, the care rendered must be medically necessary. Often, routine services are not questioned. However, according to the Physicians News website, the health insurance plan may require that health providers show a medical need for the patient to receive specialist doctor visits, surgeries and non-routine procedures. Many health insurance plans base medical necessity on established criteria, and if the claims submitted are deemed not medically necessary, the claim will likely be denied unless the provider can prove otherwise.

Lack of Pre-authorization

• A fundamental practice of managed care is pre-authorization of services. Many health insurance plans closely manage any non-routine health services, including hospitalizations, procedures, surgeries and behavioral and substance abuse care. These services often require the patient to obtain pre-authorization of services before receiving services. Failure to obtain pre-authorization often results in an administrative denial of claims payment. Providers often obtain the pre-authorization on behalf of the patient to prevent this from occurring.

Benefits Exclusion or Exhaustion

• Most health insurance companies have a list of services that are not covered. According to the Health Net Federal Services website, services such as cosmetic surgery, infertility treatment, experimental surgery, gastric bypass and methadone treatment are usually excluded from the benefit plan coverage. In addition to exclusions, some benefits may have limitations. For example, your health insurance may cover only 30 days of inpatient treatment for behavioral problems or substance abuse. When a claim is submitted for benefits that either are excluded or have exceeded the benefit limitation, they will be denied.