Just ask Tim and Denise F., who opted to spend more than the cost of a basic policy, thinking that they were providing the best possible coverage for their children. When 3-year-old Allison had recurrent ear infections, their pediatrician recommended she have tubes put in her ears, or possibly face permanent hearing loss.
“We were shocked to learn that our company wouldn’t pay for it,” says Tim. “To fight them would have taken weeks, or even months. We didn’t want Allison to have to wait. So we dipped into our savings and paid for it ourselves.”
It’s estimated that about only one-third of health insurance claims filed are ever fully reimbursed to the client. When an insurance company denies a charge, or pays less than the full amount, they must tell you exactly why. This is communicated to you in an “Explanation of Benefits,” or “EOB.” This is typically a one or two-page document in which the insurance company lists what was paid and to whom. Or, it may list what the insurance company is refusing to pay, in which case it must explain why not.
Sometimes this explanation is written in a sentence or phrase, such as “over and above reasonable and customary charges” or “not covered by policy.” In many cases, however, the insurance company merely lists a code with an asterisk. You then have to search the EOB to find the code’s interpretation. (They don’t make it easy!) The code might read something like: Code OA – Over and Above Reasonable Charges, or
If your insurance provider claims that an expense is not covered, read your policy. If it specifically lists the treatment as not covered, then there probably isn’t much you can do. But, in many instances, there’s a gray area. The person making the initial decision is usually a clerical worker who follows a black-and-white set of guidelines. This person doesn’t take into account the particular details of each case, or any extenuating circumstances that might exist.
For example, suppose your child requires speech therapy, and your policy states that services for “non-medical” reasons are not covered. The clerical person may take a quick look at your claim, and then deny it because he or she interpreted the speech problem as being non-medical. You, however, might point out that the reason for the speech defect lies in the fact that your child has throat nodules, which is a physical and medical condition. Hopefully, your doctor would support your opinion in this regard, and even write a note to that effect.
HMO’s and Doctors’ Incentives
If you are with an HMO, be aware that many HMO’s have systems in place whereby the doctors have financial incentives to keep you from running up excessive charges. The more your doctor can keep your medical costs down, the more your doctor will be paid by the HMO.
It’s crucial that you find out whether these types of financial incentives are in place. Doctors and insurance companies are usually not bound by law to inform you of this, but if you specifically ask them about it, they cannot lie (that would constitute fraud). So, it’s up to you to ask. Whenever possible, do so in writing so you can hold them accountable if they are untruthful in their answer. (Many of the proposed insurance reform laws would force doctors and insurance companies to make this disclosure before treating you.) If you learn that this financial incentive exists, don’t let that doctor’s advice be the last word on what procedures and treatments are best for your family!
One of the most frustrating complaints arises when an insurance company claims the expenses are above “reasonable and customary” and then pays only a partial amount, leaving you to pay the balance. For instance, if your speech therapist charges $100 per session, and your policy states it will pay 80 percent of your medical expenses, you might assume that means $80 of the $100 charge. But the insurance company might instead inform you that the “reasonable and customary” charge for a speech therapist is only $50, and therefore they will pay only 80% of $50, which means only $40!
Often, “reasonable and customary” is a vague term that insurance companies refuse to define. It may vary depending on where you live. You should start by asking your insurance company’s customer service representative to explain to you how they determine the reasonable and customary amount for this particular treatment. Don’t be surprised if the customer service rep doesn’t know the answer. In many cases, the rep’s only reference is what pops up on the computer screen when they input your name or zip code. Still, try to get as much information as possible from this person, and then ask to speak to the supervisor.
Always write down everything that is said to you, including the name and title of each person with whom you speak. Continue to climb your way up the hierarchy until you find someone who is willing to listen to your point of view, and pay the charges. If you are still unsuccessful, you should file an appeal.
Filing an Appeal
Companies don’t usually provide you with appeal forms. Instead, you must write a letter expressing why you believe the expense should be paid under the policy. Include any supporting documentation, such as medical testing and notes from doctors.
Your policy must explain the procedure for appealing, and give you a deadline to do so. A typical deadline might be “90 days from the date of the EOB that denied payment.” Each policy is different, so it’s crucial that you read your own.
Your appeal must be in writing. Sometimes a customer service representative will tell you that he or she can solve this problem for you, but you should not rely on this, especially if you don’t hear back in a reasonable amount of time. The person may have neglected to follow through, moved on to a new position, or even may have brought the problem to a supervisor, thinking he or she would correct the situation, and then learned that the boss was not willing to do so. Meanwhile, your appeal deadline may have passed and you’ll have no legal proof that you ever objected.
Send your appeal letter U.S. Certified Mail, Return Receipt Requested, so that you have proof that it was filed in a timely manner. Follow whatever format your policy requires, and keep a copy of what you send.
People are often surprised to learn that their insurance company doesn’t have to reply to their appeal! Your policy may actually state that if you don’t hear back in, say, 60 days, then you can consider it denied. Other policies, however, state that if you don’t hear back in a certain amount of time, you have automatically won your appeal. That’s why its important that you send your appeal with some legal proof of delivery.
If Your Appeal Is Denied
If your appeal is denied, then you are faced with deciding whether to pursue the matter in court. Insurance companies are well-known for giving out as little information and explanation as possible, unless pressed to do so by an attorney’s subpoena. You should certainly take this avenue if the company’s denial is posing a serious medical threat to your child. The decision is more difficult, however, when it concerns a lesser medical matter, or involves recovering relatively small amounts of money the company owes you.
At the very least, staying vigilant and taking the time to oversee each claim can save you hundreds, or even thousands, of dollars. And, most likely, it will assure a higher quality of health care for you and your family.
More advice from Patti Paniccia:
When Your Child-Care Needs Collide with Your Job
Patti Paniccia is a former CNN correspondent and a lawyer. She teaches “Gender and the Law” at