What to Do When Your Insurance Company Denies Your Mental Health Claim

Have you received a letter or an explanation of benefits (EOB) statement from your insurance company informing you 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.

1. Understand what's happening.

Insurance companies have financial motivations to deny claims and do so on a regular basis. 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 with misspelled names or coding errors or any claims over a certain amount. In other cases, insurance company reviewers make the decision to issue a denial.

It is not 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 often rest more on automatic processes than 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.

2. Figure out why your claim was denied.

How to appeal a denied claim depends on the reason for the denial. Denials issued because a claim had inaccurate or incomplete information, like a wrong billing code or missing diagnosis, can often be overturned simply by submitting (or having your provider submit) a corrected claim.

Other reasons claims may be denied include:

• Pre-authorization or referral was required.
• The claim was not filed in a timely manner.
• The claim was for a service not covered by the plan.
• The claim was for a service that was not medically necessary.
• The claim was for services from an out-of-network or out-of-area provider.
• The claim was for a service considered to be experimental or investigational.
• The claim was for a service provided at a higher level of care than was needed.
• The amount of coverage requested exceeds plan limits for that type of service.

An appeal is a written argument challenging your insurance company's reasoning for denying the claim. Winning an appeal rests on your ability to counter the insurance company's reasoning.

3. Learn how the appeal process works.

The appeal process varies from plan to plan but generally follows certain guidelines. Your plan's appeal process should be outlined in full in your plan booklet or contract, which you have the right to request if you don't already have a copy.

In nearly every case, you have the right to submit an internal appeal to your insurance company. Some insurance companies allow a second internal appeal if your first is denied. When your insurance company denies a claim because they believe a service was medically unnecessary or experimental, you can submit an external appeal to an independent review organization (IRO) if your internal appeals are denied. 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!

4. 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. 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 to an IRO is four months after you receive a denial of your internal appeal.

5. 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. Relevant laws include:

• 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)

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 MHPAEA requires plans that cover mental health care to cover it at parity with medical care. This means that insurance plans that cover mental health care can't impose any restrictions or limits on it that they don't impose on equivalent 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 MHPAEA.

The 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.

6. Reach out for help if you need it.

The appeal process can be arduous and confusing. You can reach out to your state's Department of Insurance for information and guidance. You may also be able to get help 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 appeals 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.

7. 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 how to proceed, you may want to inquire with your treating provider about being assessed for a sliding-scale fee 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.

Posted on 05/12/2019 by Stephanie Hairston, MSW

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 masters-level clinical social worker, she provided group and individual therapy, crisis intervention services, and psychological assessments. She has also worked as a technical writer for a medical software company and as an editor for a company that appeals denials of insurance coverage for behavioral health treatment. As a writer, she is motivated by the same desire to help others that brought her into the field of social work and believes that knowledge is one of the most essential recovery tools. She strongly believes in the mission of OpenCounseling and in making therapy accessible for everyone.