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What to Do When Your Insurance Company Denies Your Mental Health Claim
Have you received a letter or an explanation of benefits (EOB) from your insurance company saying that they’ve denied a claim for therapy or other mental health care?
If so, you may feel helpless, frustrated, or confused. You may want to do something about it but don’t know where to begin.
This is by design—your insurance company is hoping you won’t fight back. But you have the right to appeal their decision. Empower yourself by knowing your rights and going through the process, and you may just win the battle to get your care covered.
In this article, we explain the basic steps of the appeal process, the rights you have under healthcare law, and where to go for more information or help if you need it. Read on to learn seven of our top tips for what to do when your insurance won’t cover your mental health care.
Understand what's happening.
Insurance companies benefit financially by denying claims, so they do it a lot.
The New York Times reports that of the 1.4 billion claims filed with employer-based health plans each year, 100 million are initially denied.
Many insurance companies use auditing software that issues automatic denials of claims. Misspelled names or coding errors can cause the software to reject a claim. In many cases, claims over a certain amount are also denied before a person has even had a chance to review them.
In other cases, insurance company reviewers make the decision to issue a denial. It isn’t uncommon for insurance providers to deny behavioral health claims, especially for expensive services like long-term inpatient or residential care.
However, these denials are not always issued in good faith and don’t always reflect a thoughtful review.
Insurance companies count on people accepting denials without a fight. When people do fight, they often win; The New York Times reports that 50 percent of appeals are successful.
Figure out why your claim was denied.
How you should appeal depends on the reason your claim was denied. If it was because the claim had inaccurate or incomplete information, like a wrong billing code or missing diagnosis, you can often win your appeal simply by submitting (or having your provider submit) a corrected claim.
Why Are Claims Denied?
A claim may be denied because:
- It was not filed in a timely manner.
- It was for a service not covered by your plan.
- It was for an out-of-network or out-of-area provider.
- It was for a service considered to be experimental or investigational.
- It was for a higher level of care than your insurance company thinks you needed.
- It was for a service your insurance company says wasn’t “medically necessary.”
- Pre-authorization or referral was required but the service was provided without it.
- The amount of coverage you requested exceeds your plan’s limits for that type of service.
- Information on the claim was incorrect; for example, a name was misspelled or the wrong billing code was used.
You can appeal a denied claim for just about any reason it was denied, but some types of denials are harder to argue against than others.
An appeal is a written argument challenging your insurance company’s reasons for denying the claim. Winning an appeal rests on your ability to show that your insurance company isn’t actually doing what the plan says they’ll do or covering what they say they’ll cover.
For example, if the insurance company denied your claim as medically unnecessary, you’ll need to make a good argument as to why the service was medically necessary. If the insurance company denies the claim as not being for a covered service, you’ll have to argue why it is a covered service according to your plan (or according to insurance laws that say what your plan has to cover).
Learn how the appeal process works.
The appeal process tends to follow certain steps, but the details vary from plan to plan. What you need to do should be outlined in full in your plan booklet.
The plan booklet is a document that represents your contract with the insurance company and is longer than the Summary of Benefits (SOB) you often receive when you sign up. While most SOBs are only 2-4 pages long, plan booklets are often over a hundred pages long.
Make Sure You Have a Copy of Your Plan Booklet
If you don’t have a copy of your plan booklet, you can request one from your insurance company. You may be able to log in to your insurance company’s website and find, download, or request a digital copy. If not, the next best way to get a copy is to call the customer service number on the back of your insurance card and request one.
Once you have your plan booklet, look up “Appeals” in the index or Table of Contents to find out your first steps. In nearly every case, you have the right to submit an internal appeal to your insurance company. This means that you can write a letter and collect evidence in support of your argument as to why the claim should have been covered and submit it to them directly. Some insurance companies allow a second internal appeal if your first is denied.
When your insurance company denies a claim as medically unnecessary or experimental, you can submit an external appeal to an independent review organization (IRO) if your internal appeals are denied. You usually do this through or with the help of your state’s Department of Insurance. Only five states don’t allow external appeals: Alabama, Mississippi, Nebraska, South Dakota, and Wyoming.
Thorough, detailed arguments make stronger appeals. You'll need to explain why you believe a service should be covered, and you'll make a better argument if you can cite specific passages in your plan.
When claims are denied for reasons of medical necessity, you’ll need to get letters from your behavioral healthcare provider explaining why your care was necessary.
Also consider including medical records, other letters of support, and EOBs for similar services your company covered in the past. You may need to complete and sign certain forms for your appeal to be considered valid. These forms should be referenced and included with the denial letter. Make sure you keep copies of anything you submit to your insurance company!
Don't miss appeal deadlines.
Once you learn that a claim has been denied, you usually have 180 days from the day you received the denial letter or EOB to submit a first appeal.
Some insurance companies may have tighter deadlines, though, so make sure you confirm how much time you have in your plan booklet. If you can’t find that information, you can call the customer service number for your insurance company and ask.
The deadline for a second internal appeal varies but should be listed in your plan booklet or other documents provided to you by your insurance company. In most cases, the deadline for submitting an external appeal is four months after you receive a denial of your internal appeal.
Know your rights.
State and federal laws establish minimum standards for insurance plans, and you have a right to hold your plan provider to these standards. Knowing your rights and what these laws require can strengthen your appeal.
Which Laws Govern Insurance Plans?
The most important laws you should know about when you’re fighting an insurance denial are:
- The Employee Retirement Income Security Act of 1974 (ERISA)
- The Mental Health Parity and Addiction Equity Act of 2008 (MHPAEA)
- The Patient Protection and Affordable Care Act of 2010 (ACA)
Each of these laws requires insurance companies to comply with certain requirements. By knowing what these laws require, you’ll be able to spot when your insurance company isn’t following them.
Plans subject to ERISA (most plans not issued by a school, church, union, or city or county government) are required to establish an appeal process for denied claims.
Your appeal rights under ERISA include the right to receive free copies of your plan booklet and any other documents your insurance company used to support the denial. You also have the right to know the name and credentials of the reviewer who denied your claim.
To be in compliance with ERISA, medical necessity denials must include specific references to medical records and be completed by a reviewer with the appropriate credentials and experience to make that determination.
The Parity Act (MHPAEA) requires plans that cover mental health care to cover it at parity with medical care. This means that insurance plans with mental health benefits can’t restrict or limit their coverage of mental health care in ways they don’t restrict or limit coverage of the same level of medical care.
For example, if a plan covers unlimited outpatient physical therapy sessions, that same plan can’t limit outpatient mental health therapy to only a selected number of sessions. If your plan limits mental health services, it may be in non-compliance with the Parity Act.
The Affordable Care Act (ACA) extended parity requirements to individual and small group plans and requires those plans to cover mental health care as an essential benefit. This means small group plans issued after 2010 must include mental health coverage.
Unfortunately, large group plans aren’t required by the ACA to cover essential health benefits. When they do cover mental health care, however, large group plans must abide by parity requirements.
Reach out for help if you need it.
The appeal process can be difficult and confusing. You can reach out to your state’s Department of Insurance for help and for more information. Simply follow this link and select your state to find the contact information for your state’s insurance department. You may also be able to get help with your appeal from your employer’s human resources department.
If your claim is for an expensive service, you may want to consider hiring a company or person who specializes in appealing denied claims. In extreme cases, you may even want to reach out to a lawyer. If you exhaust the appeal process and your final appeal is denied, you may be able to file suit against your insurance company for acting in bad faith and not honoring your contract with them.
Before you start investing a lot in fighting your insurance company, you should consider whether it's worth it.
Pick your battles.
Paying for expert help can be expensive and probably isn't worth it if your denied claim is for a smaller amount than what you'd pay to fight it.
You should also consider how much of your time and emotional resources you want to use fighting your insurance company. If your first appeal is denied and you’re not sure what to do, you may want to talk to the provider who performed the service. Ask them if they can charge you a sliding-scale fee instead of trying to use insurance since you’ve learned your insurance won’t cover the service.
In the end, it may be just as satisfying to get help from your provider as to win an appeal. As long as you find a way to get the care you need at a price you can afford, you’ve won the most important battle.
Starting therapy can be scary, but we’re here to help
Stephanie Hairston is a freelance mental health writer who spent several years in the field of adult mental health before transitioning to professional writing and editing. As a clinical social worker, she provided group and individual therapy, crisis intervention services, and psychological assessments.