Health Plan Disputes: An Overview

You can fight a denial of coverage or incorrect bill from your health insurance company. Here's how.

Disputes between consumers and their health insurance companies are becoming more and more common. Disagreements can crop up over things like denial of coverage for medical services already received, a refusal to authorize a procedure or visit to a specialist, or an incorrect charge for office visits or services.

Because these days it seems that coverage disputes go hand-in-hand with having medical insurance, it's important to know how to proceed when you disagree with a charge or decision from your health plan provider. This article outlines each step to take. (If you are struggling to pay lots of medical bills, a related problem, see Nolo's article Managing High Medical Bills.)

First Steps: Know Your Plan and Your Rights

Before you call customer service or ask for an internal review, make sure you know what your health plan does and does not cover and what procedures you must follow in order to get coverage in the first place. Carefully read the Summary Plan Description as well as the plan's Evidence of Coverage (this is the detailed description of the plan). You can get the Evidence of Coverage from your employer. If you are self-insured, get a copy from your insurance company.

Once you've armed yourself with the appropriate information, you can:

• decide whether your complaint is worth pursuing (for example, if your health plan requires you to get a referral before seeing a specialist, and you failed to do so, your attempt to get coverage for the specialist's visit will most likely be a waste of time), or
• point to the relevant part of the contract when arguing that the health plan erred in denying coverage.

Keep in mind that you can avoid some health plan disputes by learning about the details of your health plan before you use it. (For tips on learning everything about your health insurance, see Nolo's article Understanding Your Health Insurance Coverage.)

Informal Methods: Calling Customer Service

If you disagree with a health plan charge or coverage decision, you should start by calling customer service. Customer service agents may be able to reverse an erroneous charge or approve services that were originally denied. If the agent can't help, ask to speak with a supervisor. Sometimes the agent will ask you to submit more documentation (like a letter from your doctor) or resubmit documents the plan claims not to have received.

Obtain a Notice of Denial

If your complaint involves a denial of coverage or refusal to authorize services, ask the health plan for a letter that gives you notice of the decision and an explanation of the health plan's position.

Ask for an Internal Review

If you cannot resolve the problem by contacting customer service, it's time to use the health plan's internal review process (also called an appeal) and make a formal request that your health plan change its decision about services or payment. All health insurance companies and plans must establish rules and procedures to handle appeals (your plan may also call it a "consumer complaint" or "grievance").

Your Evidence of Coverage will outline how to initiate the internal review process and time limits for doing so. Sometimes the process begins with a call to a complaint or grievance hotline. Often, you must follow up by submitting a completed form. Attach all documentation supporting your position. (To learn more about preparing a complaint for internal review, see Nolo's article Health Plan Disputes: Internal Reviews.)

Your health plan must respond to your appeal within the time period outlined in the Evidence of Coverage. If the health plan's decision is less than satisfactory to you (this is called an "adverse determination" or "adverse decision"), you may be able to seek review from an organization outside of your health plan.

Arbitration

Some health plans contain a voluntary or mandatory arbitration clause. In arbitration, you submit your dispute to a neutral third party who considers each side's position and then makes a decision. If the arbitration is mandatory (meaning you are required to submit the dispute to arbitration as part of the review process), it cannot be binding which means you are not required to accept the arbitrator's decision. If the arbitration is voluntary (meaning you can choose whether or not to submit the dispute to arbitration), it may be binding (that is, the arbitrator's decision is the final word in the dispute). To learn more about arbitration, see Nolo's article Arbitration Basics.

Most states have an external review program that lets a consumer appeal a health plan's negative decision after an internal review. In a few states, these programs are available only for disputes with managed care plans (like HMOs and PPOs). 

Do You Have a Right to External Review?

The type of health plan you have dictates whether you are entitled to an external review (also called an independent review) of your dispute. You can usually get an external review if you are:

• self-insured (you enrolled in the plan and pay for the premiums yourself), or
• covered by an insured employer-sponsored plan (you have health insurance through your job and your employer buys coverage from an insurance company, such as Blue Cross).

You are not entitled to external review if you are enrolled in a self-funded employer-sponsored plan. This means you have health insurance through your job and your employer pays for the health care costs of its employees directly, rather than purchasing insurance from an insurance company. (To determine which type of plan you have, see Nolo's article Understanding Your Health Insurance Coverage.)

Procedures for External Review

The procedures in an external review of a health dispute vary by state. That means you'll have to review your policy to find out what types of disputes are eligible for review, the time limits for bringing a complaint, and how to proceed with your appeal. In most cases, you must complete the internal review process before you can ask for an external review. The external review is usually available for free or a small charge. Most states allow the consumer to give written authorization to let a third party (for example, a medical provider) file the appeal.

Limited Issues on External Appeal

Unlike the internal review, an external review is usually limited to determinations of what is a "medical necessity." That means the dispute must involve a procedure, treatment, or prescription drug that you and your doctor believe is essential for your health, but your health plan disagrees. For example, your doctor believes that a new prescription drug is essential to treat your asthma, but your insurance plan's position is that the drug is experimental and hasn't been shown to help asthma patients.

For the most part, you cannot obtain an external review of a coverage issue (like whether your fertility treatment falls within your plan's definition of covered procedures).

Preparing Your External Appeal

In most states, the review panel does not conduct a hearing. Instead, you must submit all your evidence and arguments in writing. Be sure to read the external review requirements carefully and submit everything that is requested.

According to the Health Care Marketplace Project, many external appeals are denied because:

• the consumer does not have a right to an external appeal (for example, the consumer participates in a self-funded employer-sponsored health plan)
• the consumer did not complete the internal review process before seeking external review
• the issue does not involve a determination of medical necessity, and
• the consumer did not provide all requested information (for example, the patient failed to submit consent forms).

If you want the panel to consider your appeal, make sure you have met all preconditions and that your issue is appropriate for external review.

Go to Court

If an internal or external review of your health plan dispute doesn't give you the results you were looking for, you may be able to sue your health plan in court. Whether you're allowed to go to court often depends on the type of plan you have and the state where you live. Determining whether you can sue an insurance company can be complicated and the lawsuit itself is sure to be complex as well so it's wise to seek the advice of an attorney who specializes in insurance cases.

For help in choosing a good attorney, read Nolo's article How to Find an Excellent Lawyer. For help in choosing a good attorney, use Nolo's Lawyer Directory for a list of insurance attorneys near you (click the "Types of Cases" and "Work History" tabs to find out about the lawyer's experience, if any, with medical insurance cases).

File a Complaint With the HMO Accrediting Organization

The following applies only to patients who have a dispute with an HMO. Many HMOs are accredited by an independent organization such as the National Committee for Quality Assurance (www.ncqa.org), the American Accreditation HealthCare Commission/URAC (www.urac.org), or the Joint Commission on Accreditation of Health Care Organizations (www.jcaho.org). Because HMOs want to remain in good standing with these groups, filing a complaint with an accrediting organization might spur the HMO into resolving the issue to your satisfaction.

File a Complaint With the State Insurance Department

Also for HMO patients: Most HMOs are licensed by a state insurance department. So filing a complaint with your state's insurance department may spur the HMO into action or might even prompt the department to intervene in your dispute.

To learn about managing health care expenses and dealing with other pressing financial issues, get The Busy Family's Guide to Money, by John Waggoner, Kathy Chu, and Sandra Block (Nolo with USA Today).