6 ways to get your health insurance to pay your medical bills

Here are some key steps to avoid having your claim denied

Published: July 2014

It’s a letter no one wants to receive: notice that your insurance company will not pay your doctor, medication, or hospital bill. In many cases, those denials are in error—leaving you, the patient, on the hook for unexpected expenses or with a big fight on your hands.

Errors can be caused at any of multiple points in the claims-processing cycle—from the doctor’s office or hospital to any of the clearinghouses that transmit claims across the 50 states (each with their own regulations). Complicating matters are the many insurers that often have individual billing systems and claims-processing software. When any step in the cycle fails, the bill is denied.

Things are only going to get worse. In October 2015, a diagnostic coding system called International Classification of Diseases-10 will become available for doctors, hospitals, and insurers. The new system increases the number of diagnosis codes from 14,000 today to 69,000. The transition is likely to cause a huge spike in denials.

Read also eight expensive health insurance mistakes and How to pick a health insurance plan.

Though you can’t prevent all possible errors from derailing your claim, there are precautions you should take to reduce the chance that your bill will be denied. Here are six steps you should take:

1) Make sure you have no missing or incorrect information on the claim form. Although this is a common error, it is arguably the easiest to avoid.

Double-check that all of the tedious information requested on those long forms you fill out every time you see a new provider is exact. Also look carefully at the spelling of your name, your subscriber insurance policy number, group number, and name of guarantor, as well as your date of birth and the name of your employer. The good news: Patient portals—websites that allow communication with your doctor’s electronic health records—will be increasingly available as doctors adopt new government standards, allowing you to enter and update material yourself.

2) Ensure that the diagnostic or procedure code is listed and is correct. Payer processing software will reject codes that are incorrect, incomplete, not covered, or not relevant to each other (e.g., when the diagnostic code does not support the action of the procedure code). Once the new ICD-10 system is in place late next year, you may be asked where an injury took place (whether it was in your kitchen or your chicken coop) or whether an animal was involved, and you have to be specific: a bite by a mouse can be coded differently from one by a rat. References to the body will distinguish between right and left and will drill down to specific parts. So what was simply a generic contusion in the old language (924.9) could now be coded as “contusion of right thumb without damage to nail, subsequent encounter” (42422 S60011D) as the consequence of having been bitten by a mouse (75212 W5301XS) in the driveway of your mobile home (77600 Y92024).

If your visit or service is denied, check to see whether the rejection is related to an incorrect or incomplete code and call the billing department. Be patient: Your medical information forms will be even more complicated in the future when providers try to capture all of that detail.

3) Get preauthorization. Insurance companies may require that your provider submit a request for preauthorization explaining the need for a medical procedure. That is increasingly common; many tests, procedures, and medications require preauthorization to determine medical eligibility prior to service.

Ask in advance whether a test or treatment requires preauthorization and whether your planned hospital stay has been approved. Know whether your plan requires referrals for services such as seeing a specialist.

4) Understand the benefits if you have more than one insurance policy. This is because your claim may be rejected if the order in which it is submitted to the carriers is deemed incorrect.

Fill out a coordination of benefits form to be sure that your claims are paid correctly by identifying the health benefits available to you as a Medicare beneficiary, coordinating the payment process, and ensuring that the primary insurance company (whether Medicare or another insurer) pays first. That can be tricky. If you are still working but are also on Medicare, your employer’s plan is primary if the company has 20 employees or more; it’s secondary if it has fewer. Coordination of benefits is also a problem if you have more than one commercial insurance carrier when you and your spouse are covered under two or more policies. In that case be sure to ask both of the insurance companies about their coordination of benefits rules.

5) Don’t be surprised that if your claim is due to an automobile accident or a work-related accident, insurance companies in some states will reject it. In those cases, your claim will need to be billed to the automobile (no fault) or worker’s compensation carriers. It will also be denied if a third party is responsible, such as the grocery store where you slipped on a wet floor. The claim should be covered under the store’s liability policy.

Call the responsible insurer and get the case numbers, claim representative’s name and contact information, and date of injury, and keep a record. You may find that some diagnoses set off automated rejections for being “work- or injury-related,” even when they are not. It’s not unusual, for example, to see insurers deny a claim for carpal tunnel syndrome even when it has nothing to do with the patient’s work.

6) Don’t fret when the bill arrives anyway. When you receive health services from a physician, hospital, or facility that has not contracted with your insurer, you will be billed the difference between the amount paid by the health plan and what the provider charged.

Be certain your provider is in your network. That is critical when you receive services from a hospital or medical center because not all departments necessarily accept the same plans. The emergency room physicians may be in-network, but the radiology department personnel who interpret your tests may not be. If you receive a bill from an in-network doctor related to your deductible, make sure it is for the adjusted amount that your insurance company would have paid, not the doctor’s regular fees.

—Orly Avitzur, M.D., M.B.A., medical adviser to Consumer Reports
Editor’s Note: This article appeared in the July 2014 issue of Consumer Reports Money Adviser.