What to Expect in a Denial Appeal Process with Health Insurers

By: Pearl Walia

When do Payer Disputes Result in an Appeal? 

According to the Change Healthcare 2020 Denials Index, about 50% of denied claims result from front-end issues, including eligibility or prior authorization problems, service coverage disputes, questions of medical necessity, inadequate documentation, or untimely filing. In simple terms, the payer refuses to pay the claim at all for one of these reasons.1 

However, appeals don’t arise from outright denials; they can also result from an underpayment or overpayment. An underpayment occurs when the payer pays less than the contracted amount for the service provided, often due to downcoded CPT/HCPCS codes. An overpayment occurs when the payer determines it reimbursed the provider more than it should have, which is often discovered during audits; overpayments are typically deducted from future claim payouts, a practice known as a “takeback.” Providers have the right to appeal a denial, underpayment, or overpayment. 

The good news is that many denials are recoverable, though the process takes real work. Understanding the appeals process and preparing the right documentation is critical to a streamlined, successful appeal. Once a claim is submitted, if a payer denies it, the provider may file an internal appeal requesting that the payer reconsider its decision. The appeal process then proceeds as follows: 

1. Establish Appeal Legitimacy 

Because payers deny payment for a variety of reasons, it is important to categorize each denial by its likelihood of recovery. Few practices have the time and resources to appeal every denial, so an efficient appeal strategy means focusing the effort where it counts. The same logic applies for underpayment and overpayments: make sure you have the adequate documentation to support your position before moving forward. Payer denials generally fall into two categories: 

• “Soft” (administrative) denials: Caused by billing errors, untimely filing, or missing documentation, these have high recovery rates (often 60-80%), if addressed within the payer’s appeal deadline. 
• “Hard” (clinical) denials: These stem from a lack of prior authorization, unapproved out-of-network services, lack of medical necessity, or other policy exclusions. Because they challenge the eligibility of the service itself, they require significant clinical justification and have lower recovery rates (typically 20-40%). 

Identifying the root cause of each denial and sorting it up front helps a practice focus its limited time and resources where they’ll actually pay off. 

2. Track the Appeal Deadline 

Before anything else, note the deadline for filing, according to the individual payer’s requirements: ● Medicare and Medicaid: generally allow 120 days from the denial notice to file a redetermination 

• Commercial Payers: typically allow anywhere from 30 to 180 days, depending on the plan. Always verify the specific deadline for the plan to prevent forfeiting the appeal entirely. 3. Gather the Necessary Appeal Information and Documentation 

Once the provider has decided to move forward with an appeal, they need to assemble the paperwork useful in recovering payment, including: 

• A letter of appeal: a cover letter that explains to the payer why the claim should be reconsidered and how the attached documentation supports the case. 
• Supporting Records: lab results, medical records, committees findings that back up the claim. ● Explanation of Benefits (EOB) or Claim Number: This ties the appeal to the original claim among the thousands a payer receives every day, preventing mix-ups or duplicate filings. 

4. Follow the Payer’s Appeals Process: 

The appeals process is not uniform across all insurance companies. It’s worth confirming their exact requirements before submitting, as appeal procedures can vary by insurance company and state law. 

5. Submit the Appeal 
6. Follow-Up with Health Plans During Pending Appeals 

Once the appeal is filed, practices should keep a running log of open appeals and check in with payers regularly to ensure that claims are being processed correctly and paid on time. 

7. File an External Appeal if Necessary 

If the payer continues to deny the requested reimbursement, the provider can request an external review. External reviews are conducted by neutral experts who are independent of the payer and evaluate the denied claim. It is important to double check the state’s requirements for filing deadlines and information necessary to proceed with an external appeal. An external review can uphold the payer’s decision, overturn it, or overturn it in part. This decision is binding. 

Why Can Appeals Feel So Frustrating? 

The appeal processes of certain health insurers can often discourage providers from filing at all. For example, some payers require appeal packets over a dozen pages long. The process of filing an appeal and waiting for the results can take a toll on a practice, especially if the appeal isn’t prioritized because it isn’t considered life-threatening. In an effort to guard against overutilization of health care, many payors place heavy emphasis on prior authorization and medical necessity requirements, and many claims are initially denied simply because the provider failed to adequately support the need for that treatment. These denials are burdensome not only because of the treatment and payment delays, but also because of the confusion around learning how to effectively self-advocate. 

How Can We Help? 

Our firm can make this tedious process simple. The most important objective of any practice is to provide timely, quality care for its patients and to be reimbursed appropriately for its hard-earned services. Because the appeal process can take significant time and resources, providers are encouraged to consult an experienced attorney to guide them through the process according to their individual needs and objectives.

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It should be noted that I am not your lawyer (unless you have presently retained my services through a retainer agreement). This post is not intended as legal advice; it is purely educational and informational, and no attorney-client relationship shall result after reading it. Please consult your own attorney for legal advice. If you do not have one and would like to retain my legal services, please get in touch with me using the contact information listed above.

All information and references to laws, rules, regulations, and advisory opinions were accurate as of this time, but laws are constantly evolving. Please get in touch with me to ensure that the law governing your business is up to date. Thank you.