It should have been a slam-dunk. My wife underwent two back-to-back surgeries to treat an eye melanoma. Through the surgeon, she had obtained written permission from our health insurance company to use his services and those of the hospital where he operated. Neither was in our specific insurance plan--in health insurance vernacular, they were out-of-network--which explains why the pre-approval was mandated.

Imagine our shock when after the surgeries, the health insurer turned down the surgeon's fees, the anesthesiologist's fees, and the hospital's fees. That left my wife and I stunned and holding the bag for almost $40,000.

Sorry, You Lose. Pay Now!  

According to the health insurance industry hundreds of thousands of claims are rejected every year for a variety of reasons. That amounts to hundreds of thousands of rejected claims every year. Worse, only one in ten policyholders fights to the end of the appeals process to have their rejected claims paid. That's because the appeals process can last up to four months through the first two steps alone and possibly another couple of months if the appeals process drags on. Ninety percent of policyholders, battered by the challenge and exhausted by the struggle, give up before they reach the last step. 

During the long appeals period, hospitals, doctors, and other medical professionals continue to hound the policyholder for payment. And, as I discovered to my dismay, hospitals and doctors can be shockingly indifferent to your pleas. They want their money, and many don't care whether they get it from the insurance company or the hapless policyholder. They push hard for payment and are not reluctant to turn over unpaid bills to collection agencies. In fact, half of all bankruptcies filed in the United States are because distressed debtors cannot pay their medical bills. 

My wife and I finally connected with a very accommodating woman in the health insurer's customer service department who told us that based on the strength of our argument, she would submit our appeal to Claims. The bottom line: Two days later the health insurer paid the outstanding claims. The month-long conflict was over. For others struggling through the appeals process, however, this is a fairy tale. Most outcomes are neither as quick nor as happy. But take heart: there is a way to improve the chances of winning your claim.

The Heart of Your Appeal: The Business Case 

There's a reason that my wife was successful while many claims languish for months and many decisions go against the policyholder. It has everything to do with preparing a potent argument that presents your case in the most favorable light. This was my "business case," a term suggested to me by David Neikrug, CEO of The Optimatum Group, a company that helps employers contain their healthcare costs. Regardless of how strong your case, you face an uphill climb if it isn't presented in a cogent, business-like manner.

Click here to read the appeals cover letter that I wrote for my wife. Notice that it is contained on one page. It's important to keep this, your main document, short (two pages at most) because you don't want to bore the parties who review your case with a dozen pages of cover letter minutiae. 

The first half of the cover letter briefly describes the history of my wife's melanoma. The second half, titled in capped bold black letters "Summary and Conclusions," outlines her case point by point. This second half of the letter is the heart of your appeal, your business case. The eyes of decision-makers are drawn to it as soon as they open the letter.

Use this format if you wish to compose your own cover letter, but obviously fit it to your own circumstances. There are any number of reasons why a health insurance company may reject your claim. The insurer is obligated to let you know what those reasons are, normally through an Explanation of Benefits form that describes what claims were rejected and why. Typical reasons for rejected claims include "services not covered by the policy," a charge for services that are not "usual, reasonable and customary," filing a claim past the time allowed by the health insurer, and simple clerical errors. 

You should also keep the doctor, hospital, and anyone else the insurance company hasn't paid in the loop. They want to know if you're actually taking steps to appeal the claim (because so many claimants do not). With any luck, their cooperation may buy you a little time, and time during an extended appeals process is crucial.

The business case works only if you have a strong argument. It won't magically transform a losing proposition into a winner. If, for example, you have elective cosmetic surgery and your policy excludes payment for it, the insurance company is not going to pay the claim no matter how well you state your case.

You May Need Help Preparing Your Business Case

A smart option is to consult professionals who make a living helping people prepare insurance claims. These are called Claims Assistance Professionals (CAPs), and their association is called the Alliance of Claims Assistance Professionals (ACAP). ACAP has two headquarter offices. You can reach the California Office in Torrance, California, at (888)394-5163 (toll free) and the Austin, Texas, office at (512) 394-0008. You will also find a listing for registered CAPs across the United States at http://www.claims.org/Referrals.htm

There are also other resources available to help you argue your case. A few of the more prominent are:

• State Insurance Commissions. Health insurance bought by individuals or through an employer is regulated by states, not the federal government (Medicare is handled separately, as shown below). Their website has a listing of state insurance commissions by the type of insurance you have (HMO or PPO).
• Centers for Medicare Services (CMS). These regional offices help seniors with managed care health insurance complaints and grievances. Their services are similar to what state insurance offices provide for individuals not in the Medicare program.
• UnitedPolicyHolders.org. This is one of the better organizations that provide consumer-oriented insurance information. It's independent, supported by grants, and provides state by state contacts to help you resolve your claim.
  

• For seniors only: Contact the sources listed on the website of the Administration on Aging.

Stay the Course!

To win your appeal you must be businesslike, persistent, and resourceful. You cannot allow the emotion and stress of a rejected claim to overwhelm your judgment and common sense. Be smart and stay the course.

Ron Smith, who has type 2, writes articles on health, senior, and business issues. He is author of the book Scambusters, Harper Collins 2006.