Last Updated on 12 February 2020

What to Do When Your Health Insurance Claim is Denied

For most people, a health insurance policy is a measure of financial security in the face of potentially expensive medical bills. The processing of a claim for medical treatment received is a relatively straightforward process. However, the presence of opportunists and health insurance fraud has seen some stringent measures resulting in the denial of what is actually a valid claim. Fortunately, all is not lost when such a setback occurs.

Identify the Reason for Claim Denial

Health insurance claims can be denied for the following reasons:

Treatment isn’t covered by the policy: for example, Medicare does not recognise cosmetic/non-surgical cosmetic surgery, and a number of health funds excludes such procedures. In this case, even the costs of reconstructive surgery to repair cleft palates or burns will be ineligible for benefits.

Treatment from a non-participating hospital: health funds have a number of hospitals with whom they have an agreement for services rendered. You may still have Medicare to fall back on if you’ve received treatment from a non-participating hospital, although there is a high chance that you still have to pay a substantial amount out-of-pocket.

Paperwork error: sometimes, failure to submit a single piece of information on part of you or the doctor can result in a denied claim.

File an Appeal

Following the denial of a claim, a claimant usually has 30-90 days after the verdict to appeal. The code of conduct among private health funds ensures that the policy-holder has access to an internal process designed for resolving disputes. There is no fee for appeals, although the policy-holder does have to take time and effort.

Some health funds consider enquiries for information to be an appeal in itself, which results in a lower chance of an appeal being successful. As such, ensure that you have all relevant information (treatment received, documented eligibility for benefits) at hand before approaching the fund.

Get Things in Writing (Play Fair)

Documentation is extremely important when it comes to your appeal. This includes obtaining any information pertinent to your condition and treatment from your doctors and relevant healthcare facilities.

Medical records are especially relevant if your claim was denied due to treatment being received at a non-participating hospital, and to prove that the same treatment was unavailable at a participating hospital. They also provide reference to which any paperwork errors can be compared and rectified.

Additionally, documenting the appeal helps you keep track of the date and time you meet with the fund to discuss the appeal, as well as the person who assists you. All this can be sent directly to the person in the best position to aid your appeal and allow for a faster claims process.

Try to remember that, while you are appealing what you consider to be an unfair decision against you, it’s also likely that the health fund employee to whom you’re speaking is hearing about the issue for the first time. Be specific about the reason you’ve contacted them, as well as the resolution you’re aiming for.

Reduce Your Chances of Claims Denial

Understand your policy – no matter what policy you subscribe to, your health fund should be able to provide a thorough description of the cover received. The prospect of battling through the jargon and length is off-putting to most people, but taking the time to understand the product you’ve purchases allows you identify exactly what is and isn’t covered and saves you from the prospect of receiving a nasty surprise.

Policies can change – check your policy when you renew it as terms and conditions can change from year to year. One thing to look out for is whether your fund still lists your doctor or clinic as a participating facility.

Pre-authorisations may be necessary – some doctors may request lab tests from external facilities. Ensure that these are included under coverage by your fund, or if allowances can be granted. Alternatively, try to opt for participating labs.

Having a claim denied can be a very discouraging setback, especially when you face hefty charges for medical treatment. Many people actually accept the denial, which means they would certainly not receive the benefits, as opposed to going the extra mile and filing an appeal. Policy-holders are usually granted a number of appeals, and if a claim is repeatedly denied despite its validity, other avenues of appeal include the Private Health Insurance Ombudsman or the Australian Competition and Consumer Commission.


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