Why Did Medicare Deny My Claim?

There is a perception that denied Medicare claims are on the rise, and evidence seems to bear that out. The Hill reported five years ago that the American Medical Association (AMA), comparing the denial rates of Medicare and seven leading national insurance companies, had concluded that “Medicare was the most likely to deny any part of a claim, with a 6.9 percent rate.”

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Surprise for Medicare recipients

While up-to-date figures regarding Medicare denials are not readily available, Kaiser Health News reported six months ago that “of the 1.1 billion claims submitted to Medicare in 2010 for hospitalizations, nursing home care, doctor’s visits, tests and physical therapy, 117 million were denied.”

That comes out to a denial rate of close to 11 percent.

All of those figures suggest there was more than a 50 percent increase in the rate of denied Medicare claims over the course of several years leading to 2010. Many observers have commented that the increase has only continued full throttle since then.

By all accounts, many Medicare recipients get a surprise when they look over their Medicare Summary Notices (MSNs). These are the quarterly statements people on Medicare receive showing the charges health care providers or suppliers billed to Medicare for their health-related services during the statement period. MSNs also show what Medicare actually paid those providers and suppliers.

It appears a sharply rising number of people are learning that Medicare isn’t paying providers and suppliers what they expected, and many Medicare recipients are getting the shocking news that their Medicare claims have been denied altogether.

What are the leading causes of Medicare denied claims?

Denial is often the result of simple error—specifically:

• Doctor error

Some providers fail to provide all the requested information when they file claims for their patients. As a result, Medicare may be unable to verify the legitimacy of these claims. Any inaccuracy or lack of required information can lead to denial of a claim. For example, if a doctor inadvertently bills Medicare for the wrong service, Medicare will not approve the claim.

Recognizing how busy their doctors can be, many people are hesitant to raise concerns about Medicare and billing, and simply assume providers will do what is necessary to ensure their claims are approved and paid by Medicare. Unfortunately, a growing number of Medicare patients come to regret taking that approach when their MSNs arrive in the mail.

Fortunately, provider error can easily be corrected by resubmitting a claim with correct and complete information. It certainly is preferable, however, to avoid denial altogether by ensuring proper information is submitted to Medicare in the first place.

Another type of doctor error results in denial of many claims. It is important to establish that any service for which a claim is filed is medically necessary, and it’s vital to present adequate evidence of medical necessity with any claim. Unfortunately, doctors sometimes fail to provide sufficient information to establish medical necessity, and claims are denied as a result.

If a claim is denied because medical necessity has not been established it is not sufficient simply to add information establishing medical necessity to the original claim. If a claim has been denied due to questions of medical necessity the only way to have the denial reversed is through appeal. More on appeal later.

• Patient error

Some patients learn the hard way that their provider is not enrolled in Medicare. It is vital to know whether a provider is enrolled in Medicare before accepting services. Otherwise, bad news is nearly certain to follow.

It’s also important to make sure information about Medicare enrollment is up to date. In recent years, many doctors have elected to leave Medicare out of frustration with the billing formula that governs how doctors are paid by Medicare. The current billing and payment formula, called Sustainable Growth Rate (SGR), is tied to a balanced-budget law Congress passed in 1997, which at the time sought to connect physician fee increases to the nation’s GDP.

As the Houston Chronicle reports, “the formula assumed low growth rates, and cuts expected to be modest turned out to be large.” The result is that many doctors, feeling grossly underpaid for the services they provide Medicare recipients, decide to leave Medicare, and many patients who are unaware that their doctors have left Medicare are learning that their Medicare claims have been denied.

While doctor and patient error account for the bulk of errors leading to Medicare denials, it is also important to be on the lookout for errors made by the contractors responsible for processing Medicare claims.

For people who have other insurance as well as Medicare, there is another type of error to be aware of. Being covered by more than one insurer involves having a primary and secondary payer in specific cases. In some cases, error on the part of Medicare or another party may indicate Medicare is the second payer for a service when in fact it is the primary payer. As a result, a claim may be denied because Medicare determines that another insurer should be paying its share of the claim first.

An error of this sort can often be corrected by calling 1-800-MEDICARE. For help determining whether Medicare is a primary or secondary payer, the Medicare Coordination of Health Benefits Contractor can provide assistance at 1-800-999-1118.

What to do if your claim is denied

If you believe your claim should be approved and paid, the most important thing to do is … PERSIST. Many people with valid claims that are denied simply give up, and it costs them dearly.

While many people do not learn their claims have been denied until they look over their quarterly Medicare Summary Notices, other people are more proactive and manage to head off potential problems before they become serious.

If you don’t want to wait until your MSN arrives in the mail, you can track your Medicare claims by visiting www.MyMedicare.gov. Claims are normally available for tracking or viewing within 24 hours of processing.

Appealing a denied Medicare claim

You have the right to appeal if Medicare or your Medicare plan denies payment for a service you think it is obligated to cover. This applies to prescription drugs as well as to doctor or other healthcare provider services.

If you have Original Medicare, you can begin the appeal process by following instructions on the back of your MSN or by filling out a one-page Redetermination Request Form and sending it to the Medicare contractor indicated on your MSN.

Normally, you need to file your request within 120 days of receiving the MSN, and you can expect a decision from the Medicare contractor within 60 days after your request is received.

There are similar procedures to follow if you would like to appeal a Medicare Part C (Medicare Advantage) or Medicare Part D (prescription drug plan) denial. In either case you should contact your plan in order to learn more about your appeal rights and how to begin an appeal. Do not delay, as requests for Part C and Part D appeals should be made within 60 days.

Can you really expect to win an appeal?

If your claim was denied in error—or if Medicare simply requires you to provide further information to support a valid claim—yes, you have an excellent chance of winning an appeal.

As Reuters reports, 40 percent of Medicare Part A appeals and 53 percent of Part B appeals were granted in 2010. In the case of big ticket durable medical equipment appeals, 44 percent of appeals were successful. Meanwhile, over half of appeals to Medicare Advantage plans and prescription drug plans were successful.

Unfortunately, many people whose Medicare claims are denied never even try for reversal. Kaiser reports that, of the 117 million claims that were denied in 2010, only 2 percent were appealed.

Medicare appeals can be filed by Medicare beneficiaries or healthcare providers, and the process is straightforward. As Medicare.gov explains:

“The appeals process has 5 levels. If you disagree with the decision made at any level of the process, you can generally go to the next level. At each level, you’ll be given instructions in the decision letter on how to move to the next level of appeal.”

No legal representation is required to file an appeal, although Reuters advises, “for second-, third- and fourth-level appeals, you may want help” such as the assistance of “your State Health Insurance Assistance Program (SHIP), a network of non-profit Medicare counseling services that provides free counseling services.”

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The fifth and final level of appeal takes place in a federal district court.

While the process of appealing a Medicare claim denial is not nearly as daunting as many people believe, anyone who has ever had a Medicare claim denied would probably agree that it is much better to avoid denial altogether than to set out to get a denial reversed. Fortunately, simply taking care to provide correct and complete information with a claim, establishing medical necessity, and ensuring that a provider is currently enrolled in Medicare should prevent denial in the majority of cases.

Keeping yourself informed by tracking and monitoring your Medicare claims is always a wise move if you want to avoid unwanted surprises and ensure Medicare is living up to its responsibilities to you. And, if you’re determined to get even more out of Medicare, you’ll definitely want to look into Medicare supplement plans, which are designed to fill the gaps in Medicare coverage while keeping your monthly healthcare costs well within your budget.

If you’ve ever had a Medicare claim denied, tell us about it!

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