California Denied Insurance: Appeals Frequently Successful

May 13, 2014, 6:00PM. By Heidi Turner

Pasadena, CAWhen patients have their California insurance claim denied, they can often feel frustrated and believe there is no point in appealing the decision. When they do appeal their denied disability insurance and their appeal is denied, they may want to give up entirely, rather than undergoing another fight. But according to some reports, policyholders who have their insurance claim denied stand a good chance when they appeal to a third party.

According to a report by Capital Public Radio, patients who appeal denied health care services through third parties win their appeal approximately half the time. Under the Affordable Care Act, insured patients have the right to appeal their denial both to their health plan and to an outside reviewer.

Based on data from the California Department of Managed Health Care, between 2006 and 2013, the average success of patient appeals to the largest insurance companies was between 50 and 57 percent.

Although insurance carriers get a lot of criticism for wrongly or purposely improperly denying claims, there are errors that can occur during the process that may also result in a claim being denied. These include billing errors or data entry errors.

Regardless of the reason for the denial, the system can be frustrating and overwhelming for patients, who are likely dealing with their own health issues while appealing their insurance denials.

Meanwhile, the rate of denials appears to vary wildly among insurers. According to a 2011 report by the Government Accountability Office (GAO), denial rates for the first quarter of 2010 were 19 percent, but around 25 percent of insurers had denial rates lower than 16 percent, while another 25 percent had denial rates of higher than 40 percent.

The same report found that in four states that kept records of outcomes of appeals, the success rate of appeals filed with insurers was between 39 percent and 59 percent. The GAO also found that coverage denials occurred for many reasons, including duplicate claims, billing errors and missing information on the claim.

“Further, the data we reviewed indicated that coverage denials, if appealed, were frequently reversed in the consumer’s favor and that appeals and complaints related to coverage denials sometimes resulted in financial recoveries for consumers,” the report noted.

In other words, although having a claim denied can be incredibly frustrating, policyholders who appeal the denial stand a reasonable chance of having that denial reversed. In cases where lawsuits are filed, consumers may be able to recover punitive damages, depending on the circumstances of their case.