Insurance Claim Denied

Why insurance claim denials happen — and why most can be reversed

Health insurance companies deny claims for a range of reasons — some legitimate, most not. The most common denial reasons include medical necessity determinations (the insurer claims the service wasn't medically necessary), prior authorization failures (the provider didn't obtain pre-approval, or the approval was incorrectly documented), coding errors (the wrong diagnosis or procedure code was submitted), coordination of benefits issues (when multiple insurers are involved), and network disputes (the insurer claims the provider was out-of-network when they weren't).

What these denials have in common is that the decision is made by an insurance company employee or automated system — not a physician who has reviewed your case, not someone who knows your medical history, and not someone with any financial incentive to approve the claim. Insurance companies are businesses, and claim denials save them money. The appeals process exists precisely because Congress recognized that insurers have both the motive and the structural capacity to deny claims incorrectly at scale.

Independent research consistently shows that a majority of denied claims that are properly appealed result in a favorable outcome for the patient. The key word is "properly." An incomplete, undocumented, or incorrectly filed appeal is denied at a high rate — not because the underlying claim is invalid, but because the appeal didn't meet the insurer's procedural requirements.

The federal framework for insurance appeals

The Affordable Care Act established federal rights for patients whose insurance claims are denied by plans subject to the ACA's requirements. These rights include the right to an internal appeal — a review of the denial by the insurer — and the right to an external appeal — a review by an independent organization not affiliated with the insurer — when the internal appeal fails or the denial involves an urgent medical situation.

Internal appeals must be decided within specific timeframes: 72 hours for urgent care situations, 30 days for non-urgent pre-service claims, and 60 days for post-service claims. External appeals must be decided within 45 days for standard reviews and 72 hours for urgent cases. These timelines are legally enforceable, and insurers who miss them can be held accountable.

Some employer-sponsored plans governed by ERISA (the Employee Retirement Income Security Act) have different rules than ACA-compliant individual and small group plans. Medicare and Medicaid have their own distinct appeals processes. Our case managers assess which framework applies to your specific plan before building the appeal.

Not sure where to start? Get a free consultation — our case managers will review your situation at no cost.

What a complete insurance appeal requires

Insurance appeals fail most often because they are incomplete. The denial letter your insurer sent specifies the reason for denial — and the appeal must directly address that reason with documentation that contradicts it. A letter saying "I disagree with this denial" is not an appeal. It is a complaint, and it will be treated as one.

A properly prepared appeal for a medical necessity denial, for example, must include the specific clinical criteria your insurer's own coverage policy uses to evaluate medical necessity for the service in question, documentation from your treating physician establishing that your clinical presentation meets those criteria, peer-reviewed literature supporting the medical necessity of the treatment when available, and a clear, documented argument connecting your case to the criteria.

Appeals for prior authorization failures require documentation of why the failure occurred — whether the provider submitted the request incorrectly, whether the insurer's processing of the request was delayed, or whether the denial of the authorization was itself incorrect — along with clinical support for the service.

Appeals for network disputes require documentation establishing the provider's network status at the time of service, which may involve reviewing the insurer's own provider directory, the provider's contract status with the insurer, and any representations made to you about network coverage at the time you sought care.

Prior authorization denials: a growing and specific problem

Prior authorization — the requirement that providers obtain insurance approval before delivering certain services — has expanded dramatically in recent years. Insurers now require prior authorization for a wide range of services, including medications, imaging procedures, specialist visits, surgeries, and inpatient admissions. The administrative burden on providers is significant, and errors in the authorization process are common.

When a prior authorization is denied, the consequences are serious. The patient either goes without the care, pays out-of-pocket, or receives the care and faces a claim denial afterward. When the authorization is denied incorrectly — because the insurer applied the wrong criteria, failed to consider the clinical evidence, or processed the request under the wrong code — the denial is appealable on the same grounds as any other denial.

Our case managers address prior authorization denials through the standard internal and external appeals process, supplemented by clinical documentation from your treating provider. For urgent situations — where a denial is preventing time-sensitive care — we pursue expedited appeal timelines and, when necessary, regulatory complaints to state insurance commissioners or CMS.

MedErase handles this for you. Get a free consultation and our case managers will assess your specific bill.

Coordination of benefits: when multiple insurers are involved

When a patient has coverage from multiple insurance sources — a primary plan and a secondary plan, for example — the coordination of benefits rules determine which insurer pays first and how much each is responsible for. Errors in coordination of benefits are common and frequently result in claims being improperly denied by one insurer based on an incorrect assumption about the other.

These situations require a detailed review of both plans' coordination of benefits provisions, the applicable state rules, and the specific sequencing of how the claim was submitted and processed. Our case managers handle coordination of benefits disputes as a specific component of our insurance appeal practice.

External appeals: when internal review fails

When an insurer upholds a denial through its internal appeal process, the next step is an external appeal — a review by an independent review organization (IRO) that is not affiliated with the insurer and is required to make its determination based on clinical and coverage criteria alone. External appeals reverse internal appeal denials at a meaningful rate, particularly for medical necessity determinations where the clinical evidence supports the treatment.

The external appeal process has strict procedural requirements. The request must be submitted within a defined timeframe after the internal appeal determination — typically 60 days, though this varies by state and plan type. The request must specify the correct grounds for external review and include all relevant documentation. Our case managers manage the complete external appeal process, including selecting the appropriate independent review organization and ensuring all submission requirements are met.

Insurance appeals for No Surprises Act violations

The No Surprises Act created a specific category of insurance disputes: situations where an insurer has improperly applied out-of-network cost-sharing to a bill that should have been processed at in-network rates. When this occurs, the patient has both the right to file a complaint with HHS and the right to appeal the insurer's determination through the standard internal and external appeals process.

Our case managers handle No Surprises Act insurance disputes as a component of our ER bill and surprise billing practice. When an insurer has processed a claim incorrectly under the No Surprises Act, we file both the regulatory complaint and the insurance appeal simultaneously — creating the maximum available pressure for a corrected outcome.

Frequently asked questions about insurance appeals

How long do I have to appeal an insurance denial?

For internal appeals, most plans provide 180 days from the date of the denial notice to file an appeal. Some plans have shorter windows. For external appeals, the timeframe is typically 60 days after the internal appeal denial. Missing these deadlines eliminates your appeal rights for that denial — which is why acting quickly matters.

What if my doctor already appealed and it was denied?

A physician's appeal letter is not the same as a complete patient appeal package. Physicians frequently file appeals without the clinical documentation depth, the procedural knowledge, and the coverage policy analysis that a properly prepared appeal requires. A prior physician appeal that was denied does not preclude filing a patient appeal — and we approach the appeal fresh, addressing any deficiencies in the prior attempt.

Can I appeal a denial for care I've already received?

Yes. Post-service claim denials — denials for care already delivered — are fully appealable. The appeals process applies to both pre-service denials (where you're being told a planned service won't be covered) and post-service denials (where care has already been delivered and the claim for that care was denied).