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Why insurers deny claims

In a perfect world, health insurers would allow each and every claim, and would cover care and treatment from any center or any hospital in any country. At first glance, this would be great for all people with health insurance plans, however, this is simply not a reality for the majority of health insurance plans largely because of the cost attributed to covering claims.

This cost would be passed along to the insurance holder in the form of ultra high premiums that could see drastic yearly increases. While international insurers strive to offer coverage with high limits and near worldwide coverage, they have limitations set on the plan in terms of what, or how much, is covered. To that end, there will be times when some medical care claims are denied.

Individual Health Insurance Plans

Here, we look into the main reasons why insurers deny claims and what your options are if you have a claim denied. First though, it is worth explaining just how insurers will let you know a claim has been denied.

How will I know insurers have denied my claim?

Anytime you submit a claim to an insurer that is denied, they will provide you with what they call an Explanation of Benefits (EOB) which is a document that explains what exactly was covered and what was not covered. Depending on the insurer, this may be a physical document that is mailed to you, or it may be an email or even an update on your insurer’s online portal.

Like many other forms of official documents, the EOB will have information including the care performed, doctor’s fees, plan information, and if necessary, the amount the claimant is responsible for. While the numbers are usually clear enough, there will be a series of codes used, which will usually be explained by the insurer via a legend. Some of these codes will be the insurers code for the care provided, others will be used to explain why the claim or parts of the claim were rejected.

Why will they deny claims?

While there are a number of codes insurers can use in the EOB, especially when it comes to the denial of claims, there are a number of common reasons insurers will deny a claim. Here are 6.

Incomplete or inaccurate information

Should information be missing from a claim, insurers will ask for it first, and will usually attach a deadline for the submission of the extra information needed. If it is not provided, then the claim may be denied.

The bigger issue here, however, is inaccurate information. Fraud is a serious concern in the health insurance industry, and insurers are going to great lengths to combat it. According to the Association of Fraud Examiners, nearly all of the top 10 most common types of health care fraud are related to the provision of inaccurate information. If there is any concern that a claim has provided inaccurate information, it will raise flags with the insurer. This means the claim will be investigated and maybe even denied.   

Care is not covered by your plan

This is arguably the most common reason a claim is denied by an insurer. Almost all health insurance plans have exclusions, and if you submit a claim for care that is excluded, the insurer will deny it. To avoid this, it would be a good idea to review your plan documentation to ensure you know what is, and isn’t covered.

Other things to be aware of in relation to this are if there are any moratoriums or waiting periods attached to certain benefits such as dental or maternity. If there are, and you submit a claim within this period, the insurer will likely deny the claim.    

No referral or preauthorization was secured

Some insurers attach a condition on their insurance plans that for some types of care (especially those that are more costly) that you need to get a referral from a doctor or secure preauthorization for coverage from the insurer before you receive care.

If this is not done or proof is not submitted when you submit a claim, the insurer may deny the claim. To be clear here: Not every insurer will require a referral or preauthorization for all claims.  

Claim filed past claim time limit

In order for a claim to be considered, insurers will often have a set time limit that all claims must be submitted within. While there is no industry standard, many insurers will have a limit of 3-6 months from the time the care is received for most claims.

Be sure to review your plan documentation to see if there is a limit and to submit claims within it to ensure claims are considered.  

Care sought outside of provider network

International health insurers all have a preferred network of healthcare providers that have agreed to accept payment directly from the insurer, or provide favorable rates of care. Some insurers, especially local insurers, will attach a stipulation that in order for a claim to be fully covered, care needs to be received from within the insurer’s network. If care is not received within this network, an insurer may deny the claim.

Claim limit reached

With the vast majority of health insurance policies, there is a limit to the amount of care that can be claimed each year. Some will limit coverage to a set number of doctor visits while others will have a dollar amount. This will vary by plan and provider, but if you go over the limit the provider will reject the claim.  

Can I do anything if my claim is denied?

The short answer to this question is: Yes. For almost every claim that is denied, you do have a number of options available to you. The first is that you can contact the insurer and ask them to take another look into the claim. This will usually work, but may not be the most effective method of having the claim reviewed.

If you secured your insurance through Pacific Prime, your best bet would be to talk with our claims team. We can help look into why your claim was rejected and even reach out to the insurer to help with a claim review.

Barring that, it may be a good idea to switch providers or upgrade an existing plan. By having a more robust plan with better coverage elements the chances of having a claim rejected go down. Contact us today.

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Jess Lindeman

Content Strategist at Pacific Prime Hong Kong
Jessica Lindeman is a Content Strategist at Pacific Prime. She comes to work every day living and breathing the motto of "simplifying insurance", and injects her unbridled enthusiasm for health and insurance related topics into every article and piece of content she creates for Pacific Prime.

When she's not typing away on her keyboard, she's reading poetry, fueling her insatiable wanderlust, getting her coffee fix, and perpetually browsing animal Instagram accounts.
Jess Lindeman