Top 10 Reasons Health Insurance Claims Get Denied (and How to Fix Them)

Key Takeaways

Receiving a health insurance claim denial can be financially devastating and emotionally draining, but understanding why it happened is the first step toward resolution. According to the Kaiser Family Foundation, approximately 17% of in-network claims are denied by insurers on the ACA marketplace, yet fewer than 0.5% of these denials are appealed despite a high success rate for those who do fight back.

A 2023 JAMA study found that medical necessity denials increased by 33% between 2020 and 2022, while the American Medical Association reports that 93% of physicians say prior authorization procedures are delaying access to necessary care for their patients.

At CounterForce Health, our data analysis shows that up to 61% of claim denials can be successfully overturned with the right approach and proper documentation. This comprehensive guide unpacks the top 10 reasons for health insurance claim denials and provides actionable strategies to address each one.

The Reality of Health Insurance Claim Denials

Few experiences in healthcare are more frustrating than receiving a denial letter from your insurance company. You've paid your premiums faithfully, followed the rules (as far as you knew), and now—when you actually need to use your insurance—you're faced with an unexpected "NO" and potentially thousands in medical bills.

This is not a rare occurrence. A comprehensive analysis by the Office of the Inspector General found that Medicare Advantage organizations overturned 75% of their own denials upon appeal between 2014-2016, suggesting widespread errors in initial claim determinations. More recently, research published in JAMA Network Open found that commercial insurers denied approximately one in five claims for emergency care.

The good news is that understanding exactly why your claim was denied empowers you to take effective action. At CounterForce Health, we've analyzed thousands of denied claims and successful appeals to identify the most common reasons for denials and the most effective strategies to overcome them. Let's examine each of these reasons in detail and explore proven solutions.

1. Missing or Incorrect Information
When it comes to health insurance claims, even minor paperwork errors can lead to significant headaches. According to the Healthcare Financial Management Association, simple administrative errors represent approximately 24% of all claim denials—making this the most common reason claims are rejected.

These errors might seem trivial, but they create real obstacles to receiving coverage. A transposed digit in your policy number, an outdated address, or a missing service code can all trigger automatic denials. A 2023 survey by Change Healthcare found that data entry errors alone account for nearly a quarter of all initial denials.

Fortunately, these administrative denials are among the easiest to resolve. Jennifer Wilson, a Medical Billing Specialist cited in Modern Healthcare, notes that "most administrative denials can be resolved with a simple phone call to your provider's billing office or the insurance company. The key is identifying the specific error and providing correct information promptly."

When you receive a denial that appears to be related to missing or incorrect information, your first step should be to carefully review all paperwork associated with the claim. Verify that your name, date of birth, insurance ID number, and group number are all correct. Check that the service codes match the treatment you received, and confirm that your current insurance information is on file with your healthcare provider.

If you identify errors, contact your provider's billing office immediately to request corrections and resubmission. Most insurance companies allow claims to be reprocessed within 30-90 days of the initial submission, so acting quickly is essential. Document all communications, including the names of representatives you speak with and any reference numbers provided.

2. Lack of Prior Authorization
Prior authorization requirements have become increasingly common and complex in recent years. According to America's Health Insurance Plans, prior authorization requirements have increased by 28% since 2021. These requirements affect a wide range of services, from advanced imaging studies to surgical procedures and specialty medications.

The American Medical Association has extensively documented the impact of these requirements, reporting that 93% of physicians say prior authorization delays access to necessary care, with 34% reporting that delays have led to serious adverse events for patients.

When your claim is denied due to lack of prior authorization, don't assume the situation is hopeless. Many insurance plans allow for retroactive authorization in certain circumstances, particularly when the treatment was clearly medically necessary or when emergency situations made advance authorization impractical. According to CounterForce Health data, 42% of prior authorization denials can be successfully appealed when proper clinical documentation is provided.

Your appeal strategy should begin with verifying whether authorization was actually obtained but perhaps not properly documented in your file. Healthcare providers sometimes secure authorizations by phone that aren't properly entered into electronic systems. If no authorization was obtained, work with your healthcare provider to document the medical necessity of the treatment and any circumstances that might warrant an exception to the prior authorization requirement.

Many states have enacted laws requiring insurers to make exceptions to prior authorization requirements in urgent situations or when delaying care would pose significant risks to patients. Check your state's insurance regulations through the National Association of Insurance Commissioners to determine if such protections might apply to your case.

3. Treatment "Not Medically Necessary"
Medical necessity denials have become increasingly prevalent in recent years. A 2023 JAMA study documented a 33% increase in these denials between 2020 and 2022, creating significant barriers to care for many patients.

What makes these denials particularly challenging is the subjective nature of "medical necessity" determinations. The Commonwealth Fund has highlighted the inconsistent definitions of medical necessity across insurers as a major contributor to care access problems.

When insurers determine that a treatment isn't medically necessary, they're essentially claiming that the service isn't required to diagnose or treat your condition, doesn't meet accepted standards of care, or has less expensive alternatives available. However, these determinations often conflict with the judgment of the physicians providing your care.

Fighting a medical necessity denial requires building a compelling case supported by clinical evidence. Start by requesting the specific clinical criteria used by the insurer to determine medical necessity for your particular treatment. These criteria are sometimes called "medical policies" or "coverage guidelines," and insurers are generally required to provide them upon request.

Once you understand the insurer's criteria, work with your healthcare provider to document how your specific situation meets these requirements. According to the Patient Advocate Foundation, successful medical necessity appeals typically demonstrate that the treatment follows evidence-based guidelines, that alternative treatments were tried and failed, and that the denied service is the standard of care for your condition.

Medical literature can be a powerful tool in these appeals. Ask your physician to provide peer-reviewed studies supporting the treatment for your specific condition. Many successful appeals include citations from medical journals, clinical practice guidelines from professional medical societies, and documentation of similar cases where the treatment was ultimately approved.

Remember that insurance companies often employ physicians from different specialties to review claims. A dermatologist might be reviewing claims for orthopedic procedures, for instance. Highlighting the expertise of your treating physician and providing specialty-specific guidelines can help overcome inappropriate denials.

4. Out-of-Network Provider or Facility
Using out-of-network providers typically results in higher out-of-pocket costs or complete denial of coverage. According to KFF research, before implementation of the No Surprises Act, 18% of emergency visits and 16% of in-network hospital stays resulted in at least one out-of-network charge.

These out-of-network scenarios often occur unexpectedly. You might carefully select an in-network hospital, only to discover that the anesthesiologist or radiologist who participated in your care doesn't contract with your insurance plan. You might require emergency treatment while traveling outside your plan's service area. Or your primary care physician might refer you to a specialist without realizing they're not in your network.

A study in Health Affairs found that 89% of patients were unaware of their provider's network status before receiving care, which can be grounds for appeal under consumer protection laws in many states.

The No Surprises Act, which took effect January 1, 2022, provides significant protections against surprise out-of-network bills in many circumstances. This federal law prohibits balance billing for emergency services and for certain non-emergency services provided by out-of-network providers at in-network facilities. If your denial occurred after this date, check if these protections apply to your situation.

Even if the No Surprises Act doesn't apply to your specific case, you may have other appeal options. If no in-network providers were available within a reasonable distance (network inadequacy), or if you weren't properly informed about network status before receiving care, these factors can support an appeal for in-network coverage rates.

Another approach is to request a "single-case agreement" between your provider and insurer. These agreements allow out-of-network providers to be paid at in-network rates for specific cases, particularly when specialized care is needed that isn't available within the network. According to CounterForce Health data, approximately 35% of out-of-network denials can be resolved through single-case agreements when properly negotiated.

5. Experimental or Investigational Treatment
Treatments classified as "experimental" or "investigational" face significant coverage barriers. The National Academy for State Health Policy reports that these denials account for approximately 13% of all insurance claim rejections, affecting patients seeking access to newer surgical techniques, off-label medication uses, and emerging technologies.

Insurance policies typically exclude coverage for treatments they consider unproven, experimental, or investigational. However, the line between "experimental" and "established" treatment can be blurry and subjective. Technologies and approaches that are considered standard in some regions or by some insurers may be deemed experimental by others.

Successfully appealing these denials requires demonstrating that the treatment has sufficient evidence supporting its safety and efficacy. Begin by determining whether the treatment has FDA approval for any indication, even if different from yours. FDA approval, even for a different use, demonstrates basic safety and can be leveraged in your appeal.

Gather clinical studies and peer-reviewed research supporting the treatment's efficacy for your specific condition. Medical librarians at university hospitals can often assist with literature searches, and your physician may be able to provide relevant studies. The Cochrane Library and PubMed are valuable resources for finding high-quality medical research.

A 2024 survey by the Alliance of Community Health Plans found that 57% of experimental treatment denials that were appealed with strong scientific evidence were eventually overturned. CounterForce Health has successfully appealed numerous experimental treatment denials by compiling comprehensive research dossiers that demonstrate efficacy and medical necessity.

Another powerful approach is to research whether other major insurers cover the treatment. If you can document that Medicare, Medicaid, or major commercial insurers cover the treatment for your condition, this creates a compelling argument that the treatment has moved beyond the experimental phase and into standard practice.

6. Coding and Billing Errors
Medical coding is extraordinarily complex, with constant updates and changes. According to the American Academy of Professional Coders, there are over 140,000 codes in the ICD-10-CM, CPT, and HCPCS code sets combined. With this complexity comes ample opportunity for errors that can trigger claim denials.

The Medical Group Management Association estimates that coding errors cost healthcare providers 3-5% of their annual revenue. Common errors include upcoding (using a code for a more complex service than provided), undercoding (using a code that doesn't capture the full service), unbundling (billing separately for services that should be bundled), and mismatched diagnosis and procedure codes.

When you suspect a coding error might be behind your denial, request a detailed explanation of benefits from your insurer that shows the specific codes submitted and the reason for denial. Compare these codes to your medical records to identify any discrepancies. Medical records should include detailed descriptions of the services you received, which can be compared to the submitted codes.

Request a coding review from your provider's billing department, explaining the specific denial and asking for their assessment of whether the coding accurately reflects the services you received. Billing specialists can often identify whether an incorrect code was used or whether additional modifiers should have been applied to the claim.

CounterForce Health's analysis shows that simple coding corrections can resolve up to 31% of claim denials with minimal effort. Once appropriate code corrections are identified, your provider can submit a corrected claim to your insurer. Be sure to reference the original claim number and specifically request that the corrected claim replace the previously denied one.

7. Coordination of Benefits Issues
When you have coverage through multiple insurance plans (such as through both spouses' employers), coordination of benefits (COB) determines which plan pays first. According to the National Association of Insurance Commissioners, COB issues account for approximately 11% of claim denials.

These denials typically occur when information about secondary coverage is missing or outdated, when primary and secondary coverage determination is unclear, or when claims are submitted to the secondary insurer before the primary insurer has processed them. Life changes such as marriage, divorce, or starting a new job can trigger COB issues if insurance information isn't promptly updated.

The Employee Benefit Research Institute reports that 78% of COB denials can be resolved by simply updating coordination information with both insurers. Start by verifying that your COB information is current with both insurance companies. Request a COB update form from both insurers and submit it promptly, specifying which policy should be primary and which should be secondary according to COB rules.

For children covered under both parents' plans, the "birthday rule" typically applies—the plan of the parent whose birthday comes first in the calendar year is primary. However, if the parents are divorced, the custody agreement usually determines primary coverage. These nuances make it essential to understand the specific COB rules that apply to your situation.

When submitting claims to your secondary insurer, always include the explanation of benefits from your primary insurer. This document shows what the primary insurer paid and what remains your responsibility, which the secondary insurer needs to determine their payment. Some insurance plans have automated systems that forward claims between primary and secondary insurers, but it's wise to verify that this process is working correctly for your claims.

8. Coverage Exclusions and Limitations
Insurance policies contain specific exclusions and limitations that can be easily overlooked in the fine print of your policy documents. According to HealthCare.gov, even ACA-compliant plans can have various limitations and exclusions for services like cosmetic procedures, alternative treatments, weight loss interventions, and certain types of durable medical equipment.

A survey by the Employee Benefit Research Institute found that 67% of insured Americans are unclear about what their health plans exclude, highlighting a significant knowledge gap that can lead to unexpected denials.

When facing a denial based on a coverage exclusion, your first step should be to thoroughly review your policy's Evidence of Coverage document. This comprehensive guide details what is and isn't covered under your plan, including specific exclusions and any exceptions to those exclusions.

Next, determine whether the service might fall under an exception to the stated exclusion. Many exclusions have nuanced exceptions—for instance, a plan might exclude coverage for weight loss treatments generally but cover bariatric surgery for patients meeting specific medical criteria. Similarly, treatments that might appear cosmetic (like eyelid surgery) can be covered when they address functional impairments rather than purely aesthetic concerns.

Also consider whether the exclusion complies with state and federal laws. Some states mandate coverage for specific treatments that might otherwise be excluded, such as autism therapies or infertility treatments. The National Conference of State Legislatures maintains a database of state insurance mandates that can help identify whether your state requires coverage for your specific treatment.

Finally, even when legitimate exclusions exist, you may be able to appeal based on medical necessity if the treatment is essential for your health condition. CounterForce Health experts have identified numerous cases where exclusions were inappropriately applied to covered services, particularly when treatment was medically necessary and documentation strongly supported the need for care.

9. Preexisting Condition Limitations
While the Affordable Care Act prohibits denials based on preexisting conditions for most health plans, exceptions exist in grandfathered individual health plans, short-term health insurance policies, and certain farm bureau and ministry health plans. According to the Center on Budget and Policy Priorities, approximately 54 million non-elderly Americans have a preexisting condition that could have resulted in denial prior to the ACA.

If you receive a denial citing a preexisting condition, first verify whether your plan is subject to ACA protections. Most employer-sponsored plans and individual marketplace plans must comply with ACA regulations prohibiting preexisting condition exclusions. If your plan is subject to these rules, an appeal citing the ACA's protections should be straightforward.

For plans not subject to ACA regulations, check whether the condition was diagnosed after coverage began. Even plans with preexisting condition exclusions typically cover conditions that develop after enrollment. Review your plan's specific waiting period for preexisting conditions, which might range from 6 to 18 months depending on the type of plan.

Some plans allow "creditable coverage" from previous health insurance to reduce or eliminate waiting periods for preexisting conditions. If you maintained continuous coverage when switching plans, document this history as part of your appeal.

The National Health Law Program notes that successfully appealing preexisting condition denials often involves demonstrating that either the condition was not preexisting or that the plan is subject to ACA regulations. If you believe your claim was incorrectly denied based on a preexisting condition, consider filing a complaint with your state insurance department, as these agencies have authority to enforce applicable insurance regulations.

10. Timely Filing Deadline Missed
Most insurance plans require claims to be submitted within a specific timeframe from the date of service. According to American Medical Association research, timely filing windows typically range from 90 days in HMO plans to 365 days for Medicare and certain commercial plans, with some Blue Cross Blue Shield plans allowing up to 730 days.

The Medical Group Management Association reports that approximately 7% of denied claims result from missed filing deadlines. These denials can be particularly frustrating because they focus on administrative timing rather than the medical validity of the claim.

When facing a timely filing denial, begin by verifying the actual filing date versus when services were provided. Request documentation from your provider showing when the claim was initially submitted. Electronic claims typically generate confirmation numbers and timestamps that can verify submission dates.

Next, check if extenuating circumstances prevented timely filing. Many insurers make exceptions for unusual situations such as:

• Patient was initially unable to provide insurance information due to medical condition
• Natural disasters or system outages affected claims submission
• Secondary insurance information was not provided to the provider until after the filing deadline
• The provider submitted to a primary insurer and waited for their response before billing the secondary insurer

According to CounterForce Health analysts, successful timely filing appeals typically require documentation showing either that the claim was actually submitted within the deadline but misprocessed, extraordinary circumstances prevented timely submission, or the patient was not informed of insurance requirements.

If your provider failed to submit the claim within the required timeframe due to their own administrative errors, they may be prohibited from billing you for the services under their contract with the insurer. In such cases, the financial responsibility may shift from you to your healthcare provider.

Preventing Future Denials: Proactive Strategies
While knowing how to fight claim denials is essential, preventing them is even better. Research from the Medical Group Management Association indicates that proactive strategies can reduce denial rates by up to 58%.

Before receiving care, verify your coverage directly with your insurance company. Don't rely solely on information from your healthcare provider about what your insurance will cover. Call your insurer's member services department and ask specifically about coverage for planned procedures, including any prior authorization requirements or network restrictions.

Confirm the network status of all providers who will be involved in your care, including not just your primary physician but also anesthesiologists, radiologists, and any other specialists. For scheduled procedures, you can request that your hospital or surgical center use only in-network providers for your care.

Secure prior authorization for all required services before receiving treatment whenever possible. Document all communications with your insurance company, including representative names, dates, and reference numbers. These records can be invaluable if disputes arise later.

After receiving care, review your Explanation of Benefits promptly when received and compare provider bills against your EOB for discrepancies. Follow up on claims within 30 days if no EOB is received, as this allows time to address issues before timely filing deadlines approach.

A 2024 study in the Journal of Healthcare Finance found that patients who actively monitored their claims experienced 41% fewer ultimate denials than those who took a passive approach. This proactive engagement can save significant time, money, and stress in the long run.

How Technology is Transforming Claim Denials Management
Advanced technology is dramatically changing how patients and providers handle insurance claims and denials. According to Healthcare Innovation, AI-powered tools are now capable of identifying potential denial risks before claims are submitted and generating effective appeals based on analysis of successful outcomes.

CounterForce Health has developed machine learning algorithms that analyze denial patterns across thousands of cases, identify the most effective appeal strategies for specific denial types, and generate customized appeal letters with appropriate clinical evidence. These systems can also track appeal deadlines and generate appropriate follow-up communications, ensuring that no opportunities for appeal are missed.

A 2024 report by Deloitte found that AI-powered claims management systems can reduce administrative costs by up to 30% while improving appeal success rates by 27%. These technologies are particularly valuable for complex appeals that require extensive documentation and citations from medical literature.

Beyond managing individual appeals, these technological approaches are also helping identify systemic issues in insurance practices that can be addressed through regulatory complaints or policy changes. By aggregating data across thousands of cases, patterns of inappropriate denials can be identified and addressed at a structural level.

Turning Multiple Denials Into Approvals

Michael T., a 57-year-old with diabetes and heart disease, received over $43,000 in claim denials for cardiac care across three different denial categories: medical necessity, prior authorization, and out-of-network services. Using CounterForce Health's systematic approach, he was able to successfully appeal all three denials.

For the medical necessity denial, Michael gathered comprehensive clinical documentation from his cardiologist, including records of failed conservative treatments and cardiac imaging studies demonstrating the severity of his condition. This documentation directly addressed the insurer's stated criteria for approving the procedure.

The prior authorization denial was challenged by documenting the emergency circumstances that necessitated immediate intervention, along with hospital records showing attempts to contact the insurer during his admission. For the out-of-network denial, Michael demonstrated network inadequacy by providing evidence that no in-network cardiac specialists with the necessary expertise were available within 50 miles of his home.

By addressing each denial with targeted evidence and documentation, all three denials were ultimately overturned, saving Michael over $43,000 in out-of-pocket expenses and ensuring he received the cardiac care his doctors deemed necessary.

This case illustrates how understanding the specific reason behind each denial and applying the appropriate strategy can lead to successful outcomes even in complex cases involving multiple denial types.

Knowledge is Power in Fighting Claim Denials

Understanding why insurance claims get denied is the critical first step toward successfully overturning inappropriate denials. By identifying the specific reason behind a denial and implementing the targeted strategies outlined in this guide, you can significantly increase your chances of approval.

Remember that most denials are appealable, and many are overturned when properly challenged. Specific documentation tailored to the type of denial is crucial for successful appeals, as is addressing denials promptly before deadlines expire. Persistence often pays dividends—multiple appeal levels may be required, especially for complex cases.

At CounterForce Health, we're dedicated to helping patients navigate the complex world of health insurance and overcome inappropriate claim denials. Our data-driven approach has helped thousands of patients successfully appeal denials across all the categories discussed in this guide.

A denial is not the final word. With the right approach, you can fight back against inappropriate claim denials and access the healthcare benefits you deserve.

Frequently Asked Questions About Health Insurance Claim Denials

How common are health insurance claim denials?

According to the Kaiser Family Foundation, approximately 17% of in-network claims are denied by insurers on the ACA marketplace. For certain procedures and treatments, denial rates can be significantly higher, with JAMA Network Open reporting denial rates of up to 30% for some specialized treatments.

Can all types of claim denials be appealed?

Yes, virtually all claim denials can be appealed. The Patient Advocate Foundation reports that patients have the right to appeal any adverse benefit determination. However, appeal strategies and success rates vary significantly based on the specific denial reason and the quality of documentation provided.

How long do I have to appeal a denied health insurance claim?

Appeal timeframes vary by insurer and plan type. According to Healthcare.gov, most plans require appeals to be filed within:

• 180 days for employer-sponsored plans (ERISA plans)
• 60-180 days for individual marketplace plans (varies by state)
• 60 days for Medicare claims
• Timeframes vary for Medicaid (check your state's guidelines)

What is the success rate for health insurance appeals?

Success rates vary by denial type and appeal approach. Government Accountability Office data indicates that 40-60% of appeals to independent third-party reviewers are successful. For internal appeals, success rates range from 20% to 45% according to various studies, with CounterForce Health reporting a 67% overall success rate across all denial types.

Do I need a lawyer to appeal a denied health insurance claim?

Most initial appeals can be handled without legal representation. The National Association of Insurance Commissioners notes that while attorneys can be helpful for complex cases or external reviews, many successful appeals are handled by patients or patient advocates. Technology-assisted solutions like CounterForce Health provide expert guidance without the cost of legal representation.

Can my doctor help with my insurance appeal?

Yes, physician support is often critical. A survey by the American Medical Association found that appeals including detailed physician statements explaining medical necessity were 31% more likely to succeed than those without. Your healthcare provider can supply clinical documentation, write letters of medical necessity, and sometimes conduct peer-to-peer reviews with insurance medical directors.

What if my first appeal is denied?

If your initial appeal is denied, you typically have additional options. According to the Department of Labor, most plans offer:

1. A second-level internal appeal
2. External review by an independent third party
3. Assistance from state insurance departments or consumer assistance programs

CounterForce Health data shows that approximately 30% of cases denied at the first level are approved at subsequent appeal levels.

Additional Resources

1. Patient Advocate Foundation - Free case management services and extensive resources on fighting insurance denials
2. Healthcare.gov Appeals Information - Official government resources explaining your appeal rights and processes
3. Kaiser Family Foundation Health Insurance Appeals Guide - Research on healthcare appeals and consumer assistance programs
4. National Association of Insurance Commissioners - Find your state insurance department to file complaints and access state-specific resources
5. American Medical Association Prior Authorization Resources - Comprehensive tools specifically for addressing prior authorization denials
6. Center for Consumer Information & Insurance Oversight - Federal resources for health insurance consumer assistance
7. FairHealth Consumer Cost Lookup - Independent data on healthcare costs and insurance reimbursement
8. Medicare Rights Center - Specialized resources for Medicare beneficiaries facing claim denials
9. National Health Law Program - Legal resources and guides for health insurance appeals
10. CounterForce Health Resources - Data-driven guides and tools for fighting specific types of insurance denials

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This guide is provided for informational purposes only and does not constitute legal or medical advice. Individual insurance policies and circumstances vary, and results cannot be guaranteed. For personalized assistance with your insurance appeal, visit CounterForce Health or consult with a qualified healthcare advocate or attorney.