Common Tactics Health Insurers and HMOs Use to Deny or Undervalue Claims
Dealing with health insurance claims can be frustrating, especially when insurers undervalue or deny legitimate requests for coverage. At Liggio Law in West Palm Beach, Florida, we know how often insurers put their financial interests above policyholders' needs. These tactics leave many patients struggling to afford necessary treatments and care.
Understanding the strategies health insurance companies and HMOs use to avoid paying claims is crucial for protecting your rights. From vague policy language to delays and denials, insurers use various methods to reduce payouts. Read on to learn more about how these companies operate and what you can do to fight back.
Delaying Claim Processing to Frustrate Policyholders
One of the most common ways insurers avoid paying claims is by dragging out the process. Delays create financial strain on policyholders, often forcing them to pay out-of-pocket for treatments while waiting for a response. This tactic discourages many from continuing to push for rightful compensation.
Insurers may repeatedly request additional documentation, even when all necessary paperwork has been submitted. They may also claim that files are incomplete or lost, requiring patients to resubmit information multiple times.
These strategies serve one purpose: to make policyholders give up. When delays become excessive, many patients seek alternative ways to cover their expenses. This leads directly to another common tactic—denying claims based on pre-existing conditions.
Citing Pre-Existing Conditions to Deny Coverage
Many insurers use pre-existing conditions as a reason to reject claims. Even when a condition should be covered under a policy, insurers may argue that symptoms existed before the policy went into effect. This practice unfairly shifts the burden onto policyholders, forcing them to prove eligibility.
Health insurance companies often comb through years of medical history to find any indication of a related issue. They may claim that a patient’s current condition stems from an old injury or illness, allowing them to deny coverage.
This tactic puts many individuals in the difficult position of needing treatment without financial support. Beyond pre-existing conditions, insurers also take advantage of vague policy language to deny claims.
Misinterpreting Policy Language to Limit Payouts
Insurance policies are filled with complicated language, making it difficult for policyholders to understand their full coverage. Insurers take advantage of this confusion by interpreting policy terms in ways that favor their bottom line. They may selectively apply definitions or argue that a treatment falls outside covered services.
For example, an insurer may claim that a procedure is "experimental" despite widespread medical acceptance. They might also state that a treatment isn’t "medically necessary" based on vague criteria.
These interpretations often contradict a doctor’s recommendation, leaving patients without coverage for critical care. Insurers also use step therapy as a way to limit treatment options and reduce payouts.
Using Step Therapy to Avoid Paying for Costly Treatments
Step therapy, or "fail first" policies, require patients to try lower-cost treatments before approving more expensive options. While insurers argue that this approach controls costs, it often delays access to necessary care and forces patients to endure ineffective treatments.
Some key factors to keep in mind include:
Forcing generic medications: Insurers may require patients to take lower-cost generic drugs before covering brand-name prescriptions, even when a doctor prescribes the latter.
Delaying specialist treatments: Patients may need to try primary care interventions before getting approval for specialized care, regardless of medical necessity.
Forcing repeated failures: Step therapy often requires multiple failed attempts with less expensive treatments before approving the originally prescribed option.
Ignoring physician recommendations: Insurers may deny coverage for certain treatments despite a doctor’s insistence that the care is essential.
These step therapy policies prioritize cost savings over patient well-being, leaving many without access to the treatment they truly need. Another tactic insurers use is claiming that a treatment isn’t medically necessary.
Claiming a Treatment Isn’t Medically Necessary
Medical necessity is one of the most frequent reasons insurers cite for denying claims. Even when a doctor prescribes a procedure or medication, insurers may argue that it’s not essential for the patient’s health. This gives them broad discretion to reject claims without a valid basis.
Health insurance companies use internal guidelines to determine medical necessity, often relying on cost-saving measures rather than patient outcomes. They may dispute the effectiveness of certain treatments, even when widely accepted in the medical community.
This puts patients in the position of having to justify their care decisions against corporate cost-cutting measures. Beyond denying claims as medically unnecessary, insurers also reject out-of-network claims to minimize payouts.
Rejecting Out-of-Network Claims to Reduce Payouts
Many insurers deny claims by stating that a provider is out-of-network, even when policyholders have little choice in where they receive care. This is especially common in emergency situations, where patients can’t reasonably select an in-network doctor or hospital.
Some insurers fail to update provider lists, leading patients to unknowingly receive care from an out-of-network provider. Others set reimbursement rates so low that patients are left covering most of the cost. These tactics make it difficult for policyholders to access care without unexpected expenses.
Out-of-network denials often force patients to manage complicated appeals to receive the coverage they were promised. Another common way insurers avoid paying claims is by refusing to cover certain prescription medications.
Refusing to Cover Certain Prescription Medications
Health insurance companies frequently deny claims for prescription drugs, arguing that they aren’t covered or that cheaper alternatives must be used first. Patients often find themselves in a battle to get necessary medications approved, even when their doctor has prescribed them as the best treatment option.
Some key factors to keep in mind include:
Formulary restrictions: Insurers maintain a list of approved drugs and may deny coverage for any medication not on that list, even if a doctor recommends it.
Prior authorization requirements: Patients must often go through a lengthy approval process before receiving coverage for certain medications.
Switching covered drugs: Insurers may remove a medication from coverage mid-year, forcing patients to switch treatments unexpectedly.
Imposing quantity limits: Some insurers restrict the amount of medication a patient can receive, even when a higher dosage is medically necessary.
By limiting medication coverage, insurers shift costs onto patients and create barriers to proper treatment. However, policyholders do have options when their claims are unfairly denied or undervalued.
How to Challenge a Denied or Undervalued Claim
When an insurer denies or undervalues a claim, policyholders have the right to challenge the decision. Appeals processes allow patients to request a review and provide additional evidence to support their claims. Knowing how to manage this process can significantly improve the chances of success.
Keeping detailed records of all communications, medical documents, and policy terms is essential. Patients should request written explanations for denials and seek clarification on the specific reasons for rejection.
If an insurer refuses to provide a valid reason, this may be grounds for further legal action. When standard appeals fail, legal intervention may be necessary to hold insurers accountable.
Contact an Attorney Today
If your health insurance company has denied or undervalued your claim, you don’t have to accept their decision without a fight. At Liggio Law, we help policyholders challenge unfair denials and recover the benefits they deserve.
Our experienced health insurance attorney serves clients throughout West Palm Beach and the entire state of Florida. Contact us today to discuss your case and explore your legal options.