Health Insurance Claim Denied? Now What?

We pay a lot for our health insurance, too much if you ask me. So when we end up sick or injured and actually have to use it, nothing’s more frustrating than seeing a denial come through the mail.  Am I right?

I read in a 2017 study by HFMA (Healthcare Financial Management Association) that $262 billion in medical (read hospital) claims were initially denied in 2016. Another study by (Government Account Office) GAO, found the rate of denials varied significantly across insurance providers—from 6 to a whopping 40 percent.

The silver lining? The HFMA study also reported that 63 percent of the claims initially denied were eventually paid.  My family members and I have been the recipient of many, many medical insurance claim denials. Luckily, we’ve been able to get most of them paid. And if you follow some of these tips you should be able to get some of yours paid too.

First and foremost: Read your policy. A lot of problems (read denials) can be avoided when you understand what’s covered and what’s not.

  • Sometimes you think a procedure will be covered, but find in the fine print it is excluded. Finding this out before the procedure, especially if it’s an elective surgery, could save you from a big financial nightmare.
  • Is there a network that you must stay within? Using an out-of-network provider or facility can result in a denial or a reduction in benefit at the very least. Just because the doctor is in the network doesn’t mean the facility he is using for your procedure is. Always check ahead of time.
  • Does your plan require a referral or pre-authorization? Diagnostic tests like MRIs and CT scans often require pre-authorization from you insurance company.  Be your own advocate: ask the doctor ordering the test if they are going to be taking care of the pre-auth or obtaining the referral on your behalf. Don’t assume they are going to or you might end up being responsible for the bill.

Did they send the bill to the wrong insurance company?  Did your insurance change since the last time you saw this doctor?  Make sure the bill went to the correct company.  Sometimes families have coverage from two different policies.  If that’s the case then coordination of benefits (COB) could be the problem.  Depending on the circumstances, errors can occur when determining which insurance is primary vs secondary.

Transcription errors are often the culprit. Make sure names are spelled correctly and all important data like dates of birth are correct.  Typos happen more often than you think. Those claim can easily be fixed and resubmitted for payment.

The reasons for some denials aren’t as easy to identify or rectify as others. Don’t hesitate to call your insurance company (the customer service number is on the back of your insurance card or listed on your denial letter or EOB) or your medical provider if you don’t understand the reason for the denial listed on your Explanation of Benefits. Sometimes there are diagnosis or procedure coding issues, insufficient medical necessity or timely filing issues.

The two most important things to do when inquiring about a denial is to keep calm (emotions can run high during these circumstances!) and take lots of notes. Always ask for the name and title of the person you are talking to and jot down the time and date of the phone call. Before hanging up ask if there is a reference number associated with the conversation and be sure to write that down as well. There was a time when my son was having a procedure and I called both the insurance company and the surgery center prior to the procedure to verify it was in-network since I couldn’t find it listed.  Afterwards, insurance denied the claim saying the facility was out-of-network. It turned out the surgery center did not become an in-network facility until one week after his procedure.  Since I was able to provide the name of the person I spoke with, date and time of the call, along with the reference number provided during the conversation the insurance company paid the claim at the in-network rate.

If you don’t understand the reason for the denial ask questions until you do. Then if you still think the claim should be paid gather the necessary evidence you might need to get the claim paid: including referrals, prescriptions, or other relevant information. Also speak with your provider.  They want the claim paid as badly as you do.  See if there is anything you can provide to help with the appeal process.

Remember, appealing a denied claim takes time.  It’s important if you are working it out on your own to let the provider know what’s going on.  If you call them and tell them you are working with your insurance company trying to get it paid, they will oftentimes put the account on a hold, meaning they will not send it off to a collection agency.  These holds do not last forever so continual communication is a must if you want your account to stay in good standing.

The important thing to remember is just because a claim is denied doesn’t me you can’t get it paid and the three most important things you can do to move forward is communicate, communicate, communicate.

A. Alliance Collection Agency, Inc. is a full service, licensed accounts receivable management and debt collection agency providing highly effective, customized one on one management and recovery solutions for our business partners.  Founded in northern Illinois in 2005, we have been proudly improving the bottom-line on behalf of our business partners in and around Chicagoland for over 13 years.

Welcome to the Wild Ride: The Debt Picture Heading into 2019

Do you ever feel like you have been put in a blender and someone hit the ‘frappe’ button?

Or as a good friend of mine is fond of saying, sometimes life feels like “being in a cow pasture in a tornado with a thimble for an umbrella.”  His language is a bit more colorful, but since this is a family blog, I have rephrased a bit to reach a ‘G’ rating.

At all events, if you are feeling like this you are not alone.  The last month or so has been a really wild ride in politics, finance, the economy, and consumer spending.  And then let’s just throw in the holidays for good measure!

If you are an investor, or even have your retirement savings in the stock market, you could not have missed the wild drop and subsequent swings in market value.  Rising interest rates and concern about trade policies and the impact on the world economy seemed to be the fundamental finger that hit the ‘frappe’ button.

And yet the consumer remains pretty confident.  While the most recent trends in consumer confidence have tempered a bit, they are still high and no doubt are reflected in the continuing record setting levels of household debt.

The Federal Reserve of New York released their latest report on household debt, this time for the 3rd Quarter of 2018, and noted once again we hit another record at $13.51 trillion (read the report here) Among some of the findings are:

  • This was the 17th consecutive quarter with an increase, up 1.6% from the second quarter of 2018.
  • Total household debt is now $837 billion higher than the previous peak in the third quarter of 2008.
  • Mortgage balances continue to grow and now stand at $9.1 trillion, an increase of $141 billion from the previous quarter.
  • New auto loans grew by $158 billion, which is the highest seen since 2004.
  • Credit card balances hit $844 billion (a $15 billion increase).
  • The aggregate credit card limit rose for the 23rd consecutive quarter, a 1.3% increase.

Of interest is that the median credit score for housing loans was 758 which the Fed suggests means that since the housing loans are primarily going to those with high credit scores, availability of mortgage loans is actually pretty tight.

In contrast, those with subprime credit scores were given a much greater percentage of auto loans.

There is some not so good news in the report, at least if one is concerned about the consumer’s ability to repay their debt:

  • Aggregate delinquency rates increased in the third quarter.
  • 7% of outstanding debt was in some state of delinquency, an uptick of .2%. While that does not seem like much, that was the largest uptick in seven years.
  • Of the $638 billion that is in delinquency, $415 billion is seriously delinquent.
  • Much of this shift is due to a large increase into delinquency for student loans.
  • That said, credit card delinquencies (greater than 90 days) have continued to rise, and have been doing so for more than a year. They remain elevated when compared to historic levels.
  • Auto loan delinquencies have continued to increase and have been doing so since 2012.

Some additional interesting data has been published recently in a blog by Wallet Hub.  Alina Comoreanu, writing “Credit Card Debt Study: Trends & Insights” for the company (read the blog here) points out the following:

  • Although the consumer has been able to repay their debts to this point, the rise in additional credit card debt has now countered these repayment efforts.
  • Debtors repaid $40.8 billion in credit card debt in the first quarter of 2018, but then accumulated $38 billion in new debt.
  • Wallet Hub says they also see an additional $70 billion in new credit card debt by the end of 2018.

Of particular interest is Wallet Hub’s observation that “Looking at the average credit card debt per household, it increased 2 percent from $8,107 in the third quarter 2017 to $8,284 in the third quarter 2018. The third quarter balance is approximately $177 from being ‘unsustainable’ for consumers…”

Things to worry about?  Certainly.  We always encourage vigilance by our valued clients, and in particular to take a few steps to ensure your outstanding debts are collected promptly:

  • Turn over your placements to us for collection at your earliest possible convenience. The old saying that ‘the older they are the farther they go’ is quite true.
  • Review your year-end receivables now and turn them over to us as soon as possible. With tax season fast approaching this is the optimal time to initiate collection activity.
  • If you do not have a consumer financial agreement in place with your customers, strongly consider using one. This type of payment agreement (where the consumer agrees to your terms for payment) is a powerful collections tool.  Put one to work for you.

A. Alliance Collection Agency, Inc. is a full service, licensed accounts receivable management and debt collection agency providing highly effective, customized one on one management and recovery solutions for our business partners.  Founded in northern Illinois in 2005, we have been proudly improving the bottom-line on behalf of our business partners in and around Chicagoland for over 13 years.

Good Debt or Bad? Is there a Difference and Does it Matter?

“I can get no remedy against this consumption of the purse: borrowing only lingers and lingers it out, but the disease is incurable.” —Falstaff from Henry IV (pt 2); William Shakespeare.

A. Alliance is in the business of collecting ‘bad’ debt on behalf of our clients.  In fact we have become very good at it.  That is certainly making something good out of something bad.

In most cases, however, collecting a ‘bad debt’ from a customer of one of our clients is not a singular event.  In fact, a single debt we may collect is often only a small part of the larger piece of the ‘bad’ debt a person may owe to many other companies.  Thus the importance of credit scores as a bellwether of a person’s credit worthiness.  While increasingly under scrutiny, credit scoring is still an important tool for businesses to use when granting credit.  For all of us it is also very important that we understand what affects our credit score and how we can maintain a good one.

Importantly, debt in and of itself is not a bad thing.  Virtually all of us carry some debt, and those that don’t may not be managing their financial lives very well.  Debt is a financial tool. When used properly, and with intelligence, it can be a very powerful tool to build a very good life. Yet, every day we see the aftermath of ‘debt gone wild’ and the financial and personal carnage it can leave behind.

Writing for CNBC, Deborah Nason, in an article entitled “Plenty of confusion about good debt vs. bad debt” discusses key differences between the two.  Understanding the ins and outs of debt are critical to our financial health, and she points to the 2015 study by NerdWallet which reports the average U.S. household carries …” $15,310 in credit card debt and $132,086 in total debt.” And that is an AVERAGE household.

Many times debt problems are simply the result of consumers not understanding the cost of borrowing and how their borrowing costs can change unexpectedly over time.  For that matter many of us lack a basic understanding of the things that impact our credit score and good credit standing.

One goal she suggests is that we all strive to clearly understand what goes into our credit score and what we can do to optimize it.  One thing, in particular, is to know our credit limits.

Nason quotes certified financial planner Kathryn Hauer of Wilson David Investment Advisors as suggesting consumers keep their debt ratios (that is, debt to total available credit) to under 30 percent.  Even if you pay off your credit card debt each month, more than that can start to adversely affect your credit score.

She also quoted Shawn Tydlaska, CFP, founder and CEO of Ballast Point Financial Planning regarding some common misconceptions about what impacts our credit scores (quoting now):

  • Myth: You need to carry a balance on your credit card. The balance does not affect a credit score, but a healthy payment history does.
  • Myth: Checking your credit score will hurt your score. It is only the “hard” inquiries [e.g., applying for a new line of credit] that affect credit scores.
  • Myth: Your income affects your credit score. Income affects the ability to obtain a new line of credit or a favorable interest rate, not the FICO score.
  • Myth: Your spouse has good credit, so you don’t need to worry about yours. It is important to improve one’s own score, especially when applying for loans where both spouses’ credit is considered.
  • Myth: You don’t need a credit card. By not having a credit card, you don’t have any credit payment history.

So, ideally we should all maintain a healthy amount of ‘good’ debt and minimize the bad if for no other reason than it can help and even improve our financial health. However, poor or negligent understanding of credit limits, terms and conditions can lead to serious financial consequences.

Every day A. Alliance helps our clients maximize their financial health. Can we help you too?

A. Alliance Collection Agency, Inc. is a full service, licensed accounts receivable management and debt collection agency providing highly effective, customized one on one management and recovery solutions for our business partners.  Founded in northern Illinois in 2005, we have been proudly improving the bottom-line on behalf of our business partners in and around Chicagoland for over 13 years.

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