A Simple Guide to Handling Health Insurance Claims Denied as Out-of-Network

Step 1: Review the Denial Notice

• What to do: Carefully review the denial notice from the insurance company to ensure it specifies that the claim was denied because the client is considered out-of-network.

• Why: Confirming the exact reason for denial is critical before taking further action. It may also contain instructions or details that could be useful in resolving the issue.

  
  

If the denial reason doesn't seem clear on the EOB/ERA, then call the insurance company and speak to a representative to get a direct and clear explanation.

Step 2: Verify client’s Network Status

• What to do: Check the client's insurance plan to confirm whether they were indeed out-of-network at the time of service. This should have been done before the client was seen, but nonetheless it's still worth the effort to check it again.

• Why: Sometimes errors can occur when the insurance company misidentifies the provider's network status. Confirming the client's coverage can help you decide the next steps.

• How: Contact the insurance company by phone or use their provider portal to verify network status at the time of the service.

  
  

Step 3: Review the Contract with the Insurance Provider

• What to do: Review the terms of your contract (if applicable) with the insurance plan. Make sure that the terms are clear about out-of-network billing and reimbursement.

• Why: Understanding your contractual obligations can help you determine if you have the right to appeal based on the client's situation.

  
  

Step 4: Contact the client’s Insurance Company

• What to do: Call or send a written inquiry to the insurance company to clarify the denial. Ask for a detailed explanation of why the claim was denied as out-of-network. Sometimes these inquiries can also be performed via the insurance company's web portal.

• Why: Insurance companies may have specific procedures or guidelines that you need to follow for in-network exceptions, such as during emergency situations or if the client had a referral or needed a pre-authorization number.

  
  

Step 5: Submit an Appeal (if applicable)

• What to do: If the client’s claim was denied as out-of-network, and you believe the denial was incorrect or there are extenuating circumstances, submit an appeal.

  • Include relevant documentation: copies of the client’s insurance card, referral letters, emergency medical services forms, and any other pertinent information.

• Why: Appeals are a formal way to ask the insurance company to review the decision. Some claims can be overturned if the evidence shows the provider should have been in-network or if the service meets an exception.

  
  

Step 6: Provide Documentation of Network Status

• What to do: If the denial is due to the provider being out-of-network, submit any documentation that shows you were misclassified or should have been considered in-network (e.g., a network participation agreement, letters from the insurance company indicating you were a participating provider at the time of service).

• Why: Proof of misclassification can sometimes resolve the issue without needing to go through an appeal process.

  
  

Step 7: Offer a Good Faith Estimate

• What to do: If the appeal is unsuccessful and the insurance company still denies the claim, consider offering the client a "good faith estimate" of the costs that will be incurred and discuss payment options. I want to stress again that any client money owed should be collected either before the client is seen or while the client is in the office. 

• Why: This ensures transparency and helps avoid any misunderstandings between you and the client. It’s also helpful for clients who may want to appeal their out-of-network charges.

  
  

Step 8: Notify the client and Resolve Payment

• What to do: Once the issue has been resolved (or after the appeal is completed), inform the client about the outcome and any resulting financial responsibilities.

• Why: Clear communication with the client helps ensure they understand the charges, any adjustments made, and their out-of-pocket costs.

  
  

Step 9: Stay Updated with Payer Policies

• What to do: Keep updated on changes to payer policies and reimbursement rules, especially regarding out-of-network coverage.

• Why: Staying informed can help prevent future claim denials and allow you to better navigate insurance issues when they arise.

  
  

Step 10: Follow-Up if Necessary

• What to do: If you do not hear back from the insurance company within the time frame specified by their appeals process, follow up on the status of your claim.

• Why: Sometimes claims can get lost or delayed, and following up ensures the issue is handled promptly.

  
  

Oftentimes, insurance companies are in no rush to approve and pay claims, so you will need to stay on top of these denials and appeals. You need to be aware of the time limit that each insurance plan will allow for you to appeal a denied charge. 

I have also noticed that insurance companies respond quicker and more favorably when the client calls them and complains. Of course, as billers and providers we want to handle these issues for the client as a courtesy, but I've had cases where I was repeatedly calling and sending letters without a response, while the client called one time and was able to get the insurance company to reprocess the claims correctly or at least respond to the appeal.

Additional Tips:

• Keep detailed records of all communications with the insurance company and the client.

• Be proactive in notifying clients about potential out-of-network issues before services are provided, whenever possible.

• Utilize client advocates or billing specialists if necessary for complex cases.