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How do health insurance claim denials lead to extreme medical bills?

Denied health insurance claims are one of the three main contributors to high out-of-pocket healthcare costs, representing approximately $63 billion in costs to patients per year.

As the patient, you expect the insurance company to pay out claims for in-network or pre-approved care. But in reality, nearly 20% of in-network insurance claims end up being denied, and almost none of them are appealed.

Understand how health insurance claims work.

In order to get paid for their services, a healthcare provider must submit a health insurance claim to your insurance company. Insurance companies may use a variety of justifications for denying a health insurance claim. There are a wide variety of justifications used, but the most common are:

  • The patient was missing a required referral or pre-authorization
  • The specific service or care was excluded from the plan’s coverage 
  • The service or care was not a medical necessity

These determinations may involve considerable subjectivity. The determinations may not even be made by a human, but instead set by an error-prone computer algorithm. As a result, patients with large medical bills due to a denied health insurance claim should always consider an appeal.

How to handle bills due to denied health insurance claims.

You can and should appeal denied health insurance claims. When hospitals appeal, they have a 63% success rate. But due to the confusing rules, jargon and red tape, consumers are only successful 13% of the time. If you are concerned you may be one of the 87% unsuccessful consumer appeals, you can learn how to write a successful insurance appeal letter or hire an expert medical billing advocate from Resolve.