By James Limbach

June 17, 2010

One provision of the healthcare legislation recently signed into law gives most people the right to file an appeal with an independent panel appointed by their state's insurance commissioner if an insurer denies a health-insurance claim.

Denial of claims is a common occurrence, judging from some of the correspondence receives.

Robert of Celina, OH, writes that after being a United American Insurance policyholder since 1998, he made his first claim in 2009. "I had a colonoscopy, an endoscopy and my gallbladder removed -- the latter putting me in the hospital for two full days," he tells us. According to Robert, the total payout from the company was only $200, "barely 1/4 of what I calculated my policy should have paid."

When he asked the insurance company, he says, "They explained that they only pay out $200 annually on the policy, which seems strange since my premiums are almost $600 per year. I believe this company is running a total scam."

"It has been a nightmare!" writes Bonnie of Plano, IL, about her experience with Humana. She tells that six months after her father was involved in a motorcycle accident, the company has yet to pay any bills.

"Now my mother is getting collection notices on some of them," she says. "I have called numerous times trying to get some answer as to why Humana has denied payment and all I get is that they need a referral from his doctor." Even though everything was submitted, she says, "I am still getting the same run-around -- they still say that they need a referral. I am at my wits end!!"

Appealing denials

Consumer Reports Money Adviser (CRMA) offers the following advice for people whose claims are denied:

• Before you even go to a doctor, read your benefit plan documents to make sure you understand what insurance will and won't cover. If any part of the policy is unclear to you, ask for clarification from your insurance agent, your insurer, or from a Medicare representative.

• Save copies of all paperwork from your doctor and your insurance company in chronological order.

• If your claim is denied, review all the paperwork as soon as possible, noting why the insurer denied the claim and why you think the bill should be covered. Then call your insurance company. Sometimes a simple error causes a denial, which can usually be cleared up quickly with a single phone call. If your insurer denies your claim a second time, it must send you a letter telling you that you have the right to have its decision reviewed by independent professionals. The company must also provide you with contact information for your state's insurance commissioner.

• You will need to submit a request for an external review within four months. Make sure your letter requesting an external appeal clearly explains why your procedure or medication was necessary, and why it should be paid for under your insurance policy.

• Be sure to keep a copy of everything you send to the insurance company for your records. Send letters by certified mail with return receipt requested.