Appealing health insurer’s denial can pay off, GAO study suggests

If your health insurance claim or your application to enroll in a private health insurance plan ever is denied, the first thing you should do is appeal the insurer’s decision.

In some cases, health insurers reverse their decisions up to 50 percent of the time, according to a study released March 16 by the U.S. Government Accountability Office (GAO).

That’s good news for insurance consumers who are counting on the promises laid out by the federal Patient Protection and Affordable Care Act to reform health care and provide insurance to more than 50 million uninsured Americans.

A study by the U.S. Government Accountability Office indicates a fair number of consumers’ appeals of health insurance companies’ decisions do succeed.

The GAO reviewed information collected by the U.S. Department of Health and Human Services from 459 health insurers throughout the country from January through March 2010. Government investigators wanted to determine what percentage of applications for enrollment in private health insurance plans were denied, and what percentage of claims for health care coverage were denied.

The findings: Applications for enrollment were denied about 19 percent of the time, although the rate of denial varied widely. For example, 112 insurers denied enrollment applications more than 40 percent of the time, while 115 insurers denied enrollment applications less than 15 percent of the time.

Most states collect different information on the percentage of health insurance applications or claims denied. However, the GAO was able to study figures for both categories from Maryland and Ohio.

Maryland insurers denied claims 16 percent of the time in 2007, the latest information available, but consumers there were able to appeal insurers’ decisions in their favor about 50 percent of the time, the GAO study shows. Ohio’s claim denial rate was 11 percent in 2009, the study says; consumers there enjoyed a 48 percent appeal rate.

John Dicken, the GAO’s health care director, cautions that it would be hard to apply the success rates in Maryland and Ohio to the rest of the country.

But nationwide information along those lines should be available at some point. The U.S. Department of Health and Human Services is starting to collect data on the numbers of health care appeals denied, Dicken told InsuranceQuotes.com. The newly formed Federal Insurance Office is expected to become a clearinghouse for information about health insurance.

According to the GAO study, health care coverage denials occurred for reasons such as billing errors involving duplicate claims or missing data, and insurers’ questioning of whether services were delivered before coverage began.

Sometimes, these denials can be based on mistakes like an incorrect code on a claim submitted by a doctor’s office, says Nancy Davenport-Ennis, CEO of the Patient Advocate Foundation, a nonprofit that helps people appeal denials of health care claims.

“You’ve got a lot of people in America who are ultimately paying a bill they don’t owe because they don’t realize it’s an incorrect code,” Davenport-Ennis told The Associated Press.

Here are three ways that consumers can dispute coverage denials:

• File an appeal with your health insurance company.

• Have an appeal reviewed by an independent medical panel established by your state.

• File a complaint with your state insurance regulator.

–Kevin Lyons