Howstuffworks "How Health Insurance Claims Work"

Every time you go to a new doctor, you do the same thing: Fill out long forms with all your insurance information, then give your insurance card to the receptionist. So what happens next in the insurance process? How does a claim go through once the card is in the hands of the doctor's office?

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What happens to all those forms you fill out in the doctor's office?

Let's start with a simple definition. A health insurance claim is a bill for health care services that your health care provider turns in to the insurance company for payment. With many plans, when you go to the doctor for a routine checkup and your bill is $100, you pay a co-pay or coinsurance of $25 and your doctor bills your insurance carrier for the remaining $75.

Your insurance claim actually begins before you even make an appointment. Your insurance carrier is responsible only for paying benefits that are covered under your policy, so you should do some research to avoid being shocked when you settle up with your doctor or pharmacist. Don't hesitate to ask your insurance representative to clarify anything you don't understand. Read your policy thoroughly so you know what's covered. This is especially important when something comes up, like a diagnosis that requires treatment not covered in your policy.

After you've paid, your doctor sends your bill to an insurance claims processing center. The processing center gathers all relevant information from your doctor -- the patient information sheet, intake forms and the proper services documentation. These are compared to the insurer's explanation of benefits to see if the policy covers the services. If it does, your insurance carrier will submit payment for the remaining balance. If not, you are responsible for whatever balance is left after your co-pay.

That sounds easy enough, doesn't it? Most claims processes are smooth, but you may encounter some bumps in the road -- the dreaded denied claims. We'll find out what to do about those in the next section.

Denied Health Insurance Claims

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If you have a denied claim,
you can request a formal review
by the insurance company.

So, your claim has been denied, and there's a huge bill waiting to be paid. Claims can be rejected because the plan doesn't cover the procedure, medication or supply, or because the insurance company deems it medically unnecessary or experimental. If you think you've taken all the measures to avoid a rejected claim -- like calling the insurance company before the visit or thoroughly reviewing your policy -- you can try and turn the denial to acceptance.

If a claim is denied for any reason, including administrative error on the part of the insurance company, a quick phone call could solve the problem. If this doesn't work, you can request a formal review by the insurance provider. You must resubmit your claim, which is reviewed by a health care professional who specializes in the field in which the procedure or medication belongs.

We must note here that you usually have to go through with these formal reviews within a strict time line. If your formal request is denied, there is one more effort that could pay off. Each state has its own department of insurance that works to ensure that consumers are protected and that the regulatory processes of the insurance companies are fair. So, a call to your state's insurance department might help.

Common Reasons for Denied Claims

Treatment sought without prior authorization
Improper claim filing (missing information, illegibility)

Claims not filed within time limits

Treatment not covered by policy

Procedure deemed medically unnecessary

For more information about health insurance claims, check out the links on the next page.

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