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Denied: How to appeal an insurance company decision

Most Americans have prescription drug coverage, but that doesn’t mean your health insurance plan will cover a medication that the doctor orders.

Most Americans have prescription drug coverage, but that doesn’t mean your health insurance plan will cover a medication that the doctor orders. There are several reasons why an insurance company denies coverage for a drug—and several steps you can take to appeal that decision.

More than 161 million American adults – that’s roughly 1 out of every 2 people – use prescription medications, according to the Health Policy Institute at Georgetown University. However, a poll released by NPR, the Robert Wood Johnson Foundation, and the Harvard T.H. Chan School of Public Health in 2020 revealed that when a patient’s insurance plan won’t cover the cost of a certain prescription drug, nearly half opt to go without. It doesn’t have to be that way.

Why Your Prescription May Be Denied Coverage

In some cases, the reason for your denial may be as simple as a clerical error. In others, getting your insurance plan (often referred to as the payor) to cover a prescription will take time, potentially a mountain of paperwork, and persistence.

Reasons an insurer may deny coverage:

  • The prescribed medication is deemed “not medically necessary.” In this case, you’ll need to ask your doctor for help in explaining why this specific prescription or treatment is necessary for your medical condition.
  • The drug isn’t on your plan’s formulary or costs more than a lower-tier drug. A drug formulary (also called a drug list) is a list of generic and brand-name prescription drugs covered by your health plan. The formulary is usually divided into tiers or levels of coverage based on medication type or usage.
  • The drug is new, investigative, or experimental.
  • They require prior authorization. Much like it sounds, prior authorization is an approval that you need from your insurer before filling a prescription.
  • They require step therapy. Step therapy requires you to prove that less-expensive drugs don’t work for you before your insurer will cover a higher-tier, costlier option. You may have to try less-expensive drugs before the one prescribed by your doctor is covered.
  • You have a “pre-existing condition.” This means that your medical issues began before you joined the insurance plan

How to Start the Appeals Process

The first step: Call your insurance company to find out why the medication was denied. Here some questions you should ask:

  1. Is this drug on the formulary?
  2. Are there any coverage restrictions on this medication? This will help you learn if prior authorization is needed, or if a lower dose may be covered.
  3. Are there any alternatives to this drug that are covered by my plan?
  4. Can this medication be covered under the medical portion of my benefits? Some types of drugs, such as compounded medications, may be covered by your plan’s medical benefits instead of your pharmacy benefits.

Based on the answers, you may qualify for a coverage exception or may need to file an internal appeal. Depending on the specifics of your plan, your doctor may be able to ask your insurer’s medical management department or medical director to conduct a peer-to-peer review of the prescription request. That may resolve the issue without requiring a more formal internal appeal or exception request.

If your physician has requested a peer-to-peer review and coverage still is denied, you have the right to challenge the decision. Read your plan’s coverage documents, or call your insurer, to learn the specific process. You also can find this information in your Explanation of Benefits (EOB) or denial letter, as well as in your plan’s Summary of Benefits and Coverage information.

How to Apply for an Exception Request

You, your doctor, or an appointed representative may request an exception to your insurer’s formulary or tiering system for a prescription medication. To qualify for an exception, you or your doctor will need to submit a statement about the medical necessity of the drug. This information can be submitted by phone or in writing, depending on your plan’s requirements.

In the request, your doctor should include (if applicable):

  • That all other drugs covered by the plan haven’t been or won’t be as effective as the one now prescribed
  • That any alternative drugs covered by your plan have caused or are likely to cause harmful side effects
  • The reason a higher dosage than typically allowed by the plan has been prescribed (for example, that a lower dose hasn’t worked or you need a higher dose due to your weight)

Don’t forget to ask if your plan will cover the requested drug until the company makes a decision.

If your insurance plan doesn’t grant an exception request, you may appeal that decision, too.

How to Appeal Your Insurance Plan’s Decision

If you and your doctor agree that this medication is necessary, you’ll need to challenge the insurance company’s decision via an appeal. An appeal (sometimes called a grievance) refers to any of the procedures used to dispute an insurance company’s coverage decision. It is your right to appeal a coverage denial and have it reviewed by a third party, and your insurance company is obligated to fully explain the denial process to you.

There are two main methods of appealing your insurance plan’s decision:

  • Internal appeal: You have the right to an internal appeal if your claim was denied or your coverage was canceled. That means the insurance company must conduct a complete, objective review of your claim, its decision, and your reason for appeal. If your need for the prescription is urgent, your insurer must expedite the review process.
  • External review: An external review is an evaluation of your claim that’s conducted by someone outside the insurance company.

How to File an Internal Appeal

If you (or your doctor) file a claim asking for prescription coverage and it’s denied, the insurance company must notify you in writing with the reason(s).

To file an internal appeal, you must:

  • File your appeal within 180 days (6 months) of being informed that your claim was denied. If you have an urgent health situation, you can request an external review at the same time as your internal appeal to expedite a decision.
  • Complete all of the forms required by your health insurer. Be sure to include your name, claim number, and health insurance ID number on all correspondence.
  • Submit any additional information that you think will help your case, including a letter from the doctor who prescribed the drug for you.
  • Keep copies of all forms and letters that you send.

If you purchased health insurance through the federal Marketplace established under the Affordable Care Act, your state may have a Consumer Assistance Program (CAP) that can help answer your questions or file an appeal for you. Your state’s department of insurance may also be helpful.

If your insurance company still denies your claim, you can request an external review, which is a reconsideration of your original claim by professionals with no connection to your insurance plan.

Don’t assume your request will be kicked up to the next level automatically. Be sure to communicate your request for a second-level or independent external review to your insurer.

How to File for an External Appeal

Check your EOB or the denial letter you received after the internal appeal for information about the independent review organization (IRO) that will handle your external review. If your state doesn’t have an external review process that meets the minimum consumer protection standards, the federal government’s Department of Health and Human Services (HHS) will oversee the process.

To qualify for an external review, you need to submit a written request to your insurer within four months of receiving a notice or final determination that your claim was denied. The external review organization will then review your claim and either agree with your insurer’s decision or rule in your favor. Your insurer is required by law to accept the decision, which you should receive within 45 days—or in less than 72 hours if the request is urgent.

Jodi McCaffrey is an award-winning freelance health and wellness writer based in New Jersey.