How to Handle Large Disallowed Amounts on Insurance Claims

One of the many frustrations with the variety of insurance policies taken out by most individuals and families is large disallowed amounts. When someone actually has to file a claim for a payout from an insurance company, they often find that the company has many ways to deny full or partial payment, even for members who have faithfully paid out substantial premiums over time. One of these major strategies is to deny large amounts of claims as "disallowed." Those who need to figure out how to respond to insurance company denials for disallowed amounts can take advantage of a few commonly used major steps for addressing the problem of large medical costs that the insurance company refuses to pay. Here are some ways to handle large disallowed amounts on insurance claims effectively.

First off do not be confused with disallowed and network discount amounts. With re grads to health insurance an Explanation of benefits can show a disallowed amount but that actually is the network discount. A lot of times hospitals will send out a full bill before the insurance has applied the network discount. Always compare medical bills with the explanation of benefits. Next step is to call your broker for guidance. He or she will be able to research the claim very quickly and let you know what is going on with that. If you do have portion of the claims that are not covered then it's time to have the broker does some real research.


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    Go over your policy with a fine-toothed comb. The first step in addressing large disallowed amounts is to try to figure out generally why the company denied payment and how that fits into the actual provisions of the plan.
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    Understand the principle of necessity related to insurance claims. In various kinds of insurance including health, auto and home insurance, companies will generally only pay out for items that they consider necessary. In order to argue necessity, members should understand the conventions for this designation of costs.
    • Evaluate medical necessity issues for health insurance claims and get proof of medical necessity from a doctor. In many cases, the company is claiming that medical procedures are not medically necessary. A doctor who ordered the procedures can help prove that the measures were necessary for the health of the patient.
    • Explore non-necessity claims for auto or property. Understand why the company considers a fix unnecessary in order to argue against this verdict.
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    Get familiar with the insurance principle of market cost. Generally, insurance companies also don't want to pay out large sums of money for members to get repairs or medical care if they could have gotten the job done cheaper from another provider. This is a common cause of disallowed amounts.
    • Understand "Usual, customary and reasonable" costs for medical care. These "UCR" costs are often part of insurance company calculations for responses to major medical claims. This goes along with the idea that the member has to be treated in network by doctors who have a cost agreement with the company.
    • Read up on the shop clause of your auto policy. For large disallowed amounts on an auto claim, see if the policy allows you to go to a shop of your choice.
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    Figure out the member's responsibility for deductibles, co-pays and co-insurance. All of these partial responsibilities can effectively lead to a disallowed status for any percentage of a given claim.
    • Add up all deductibles and co-insurance and see if it fits with the company's disallowed amount. If not, address the discrepancy.
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    Appeal a large disallowed amount. Members often have the right to appeal any insurance company verdict, and should do it quickly to avoid any issues with a statute of limitations. During the appeal, the original denial may become clearer.
    • Use a legal letterhead if possible. Those who hire counsel for their insurance claims are more likely to get a conciliatory response from an insurance company.

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