Health insurance claim denials and downcodes: What can I do?
(Note. I’m writing this mostly from a patient perspective, but it also applies to practitioners.)
What is a health insurance denial?
A denial is when the health insurance refuses to pay for a medical service or treatment that has been provided or requested.
Some reasons health insurance processors give for denials of bills and/or prior authorization requests:
- A service isn’t covered by the plan
- A service is said to be “not medically necessary”
- A plan only covers “in-network” providers
- Maximum plan coverage has been reached
- Filing error
- Coding or billing error
(Note. As an SLP, a frequent reason that prior authorization requests for a child’s speech-language therapy was denied by a private health insurance company was “This service is only covered in cases of accident, injury, stroke, or autism spectrum disorder”. Sometimes there was an addition allowing coverage for other congenital and/or genetic conditions.)
What is downcoding during claims processing?
The health insurance company changes a higher-level CPT (i.e., procedure) code (e.g., CPT 99214 indicating moderate complexity over 30 minutes) to a lower-level CPT code (e.g., 99213 indicating low complexity 20 minutes).
No matter in- or out-of-network it results in lower reimbursement as the lower code is associated with a lower payment amount.
Column A = Billed Amount
Column B = Member Rate (nothing there because this is out-of-network)
Column C = Not payable by plan
Column D = Applied to deductible (I hit my out-of-network deductible early this year.)
Column E = My copay (does not apply to out-of-network)
Column F = Remaining amount (Amount billed – Notpayable)
Column G = Plan’s share (For me, this was 75% of the amount they deemed appropriate after downcoding)
Column H = My coinsurance (For me, this was 25% of the amount they deemed appropriate after downcoding)
Column I = My total share (Coinsurance + Not payable by plan)
You (and your practitioner if they are in-network) must watch your explanation of benefits for downcoding. This isn’t something they will tell you with a phone call or an email. It appears with those numbers referencing the reason which is at the bottom of the bill.
So if you see those numbers, look for a reason. If you are struggling to read the explanation of benefits, then ask a biller at your hospital, the specialist, or you could even email me.
Health insurance companies will say they do this to prevent upcoding by practitioners (which is fraud).
What do I do now?
- Review the denial notification (These are not easy to understand for anyone – even some doctors can’t read an Explanation of Benefits. Ask for help from your provider, insurance company, a friend, me, anyone, if it’s confusing)
- Contact your provider
- Contact your insurance company.
- Ask them why
- Ask what can be done to correct the claim
- Sometimes it is a simple processing error. (Once my annual woman’s exam was processed by my health insurance as if my husband was the patient, despite this clearly being inaccurate. It was reprocessed correctly without an appeal)
- Other times the doctor didn’t provide enough information, or the insurance company needs to see case notes.
- Gather the documents you need (medical records, test results, practitioner notes)
- File the internal appeal: This information is on the explanation of benefits, and sometimes you can do this through your health insurance online portal.
- If you need to fax the appeal, then keep a copy of the sent receipt. (I use e-fax.)
- If you need to snail mail the appeal, then note the date and time you sent it or even send it certified mail return receipt. (I say this after having my private insurance claiming they did not receive documents multiple times.)
- Learn about the appeal process:
- DEADLINES are important (set calendar reminders, whatever you need to follow-up on these)
- Know what to do next if the appeal is denied: Sometimes you file an external appeal, sometimes you have another level of internal appeal
- If you are struggling with the process, then contact your State’s Insurance Department (often there is a regulatory body like an insurance bureau and a group that helps navigate appeals)
Why don’t people file appeals?
Gupta, Collins, Roy, and Masitha (2024) noted the following a Commonwealth Fund publication:
- 45% of insured working-age adults received a medical bill or being charged a copay for a service they thought should be covered by health insurance
- Of those, less than half of those reporting billing errors challenged them. The most common reason: Lack of awareness about their right to challenge a bill.
- About 2 of 5 who challenged (i.e., appealed) their bill, reported it was reduced or eliminated by the insurance company.
- 17% reported that their insurer denied coverage for care recommended by their doctor; more than half said neither they nor their doctor challenged the denial
- About 6 of 10 adults who experienced a coverage denial also experienced delayed care
There are many issues cited in this report for how the complexity of health insurance in the United States has affected patients who struggle to understand what is and what isn’t covered and their financial liabilities.
Personally, even selecting a health plan each year is complicated by terms like the following:
- HMO
- PPO (but some of these are really HMOs pretending to be PPOs)
- POS (point of service)
- In-network deductible
- Out-of-network deductible
- In-network max out of pocket
- Out-of-network max out of pocket
- Wait! There’s more! Then you have 105% of the maximum allowed medicare rate for out-of-network
- Then how much of the out-of-network bills go toward your deductibles? Does all that go toward the max out of pocket out-of-network? (You’d be surprised.)
- Does the coverage change based on the service? (Yes.)
- Do they change coverage based on the service provider? (i.e., facility vs. clinic)
- Are there a maximum visits?
- With my insurance cover allied health services (i.e., speech-language pathology, physical therapy, and occupational therapy)? How many visits per year? Are these capped individually or across services? Copay? Are there exclusions?
The list goes on…
What can I do if I lose the appeal at all the levels available?
If your plan is through your (or your spouse’s) employer: Explain the issue to HR at your company. There might be something in what they negotiated that could change the situation, or they could negotiated better benefits for the next plan year. Some employers even have support available for employees in these instances.
Advocate. You could also contact your State and Federal representatives to express your frustration regarding the situation and request a change to requirements for healthcare insurance that would prevent this from happening. This won’t take care of the current claim, but it might lead to change in the future.
Here are two TikToks from my personal experience navigating claims with my private insurer.
Disclaimer. This article is based on research and personal experience. This information is not intended as legal advice or healthcare advice. It is informational.