What to Do If an Insurance Company Denies Your Claim (Guide)

What Happens When an Insurance Company Denies Your Claim?

When you ask what to do if an insurance company denies a claim, start by understanding what the denial actually means. Your provider submitted a claim with your member ID, diagnosis codes (ICD-10), and procedure codes (CPT/HCPCS). The insurer's claims system or medical reviewer evaluated that submission against your plan's coverage rules and returned a denial with a specific reason code.

Common denial codes include CO-50 (not medically necessary), CO-197 (prior authorization missing), CO-96 (non-covered service), and CO-45 (charges exceed fee schedule). Each code points to a different fix. A coding error needs a corrected claim from your provider. A medical necessity denial needs clinical documentation and a letter from your doctor. A prior authorization gap needs retroactive auth or an appeal showing urgency.

Do not pay the provider's full balance while your appeal is pending unless they threaten collections. Many providers will hold the account during an active appeal, especially for in-network services. Ask your provider's billing department to note the account as “appeal pending” and request they not send the balance to collections until the appeal process concludes.

Step-by-Step: What to Do After a Claim Denial

1. Get the denial in writing. Request a formal denial letter with the specific reason code, policy section cited, and appeal instructions. Phone denials are not sufficient for appeals.
2. Review your EOB line by line. Match the denied service to the reason code. Note the appeal deadline — typically 180 days for ERISA plans, 60 days for ACA marketplace plans.
3. Request your claim file. Under ERISA §503, employer plans must provide all documents used in the denial decision. This includes internal clinical review notes your insurer relied on.
4. Gather supporting documentation. Collect medical records, a letter of medical necessity from your doctor, relevant clinical guidelines (NCCN, ACR, ADA), and prior treatment history.
5. File your internal appeal. Submit through your insurer's member portal (Availity, myCigna, UHC member site) or pharmacy benefit manager portal for medication denials.
6. Request external review if internal appeal fails. ACA §2719 guarantees independent external review for marketplace plans. ERISA plans may offer voluntary external review.
7. Escalate to your state insurance department. For fully insured plans, file a complaint when internal and external appeals fail or the insurer misses mandated deadlines.

Weak vs. Strong Language When Fighting a Denied Claim

Where to Submit Your Health Insurance Appeal

The submission channel depends on what was denied. Medical services — office visits, imaging, surgery, hospital stays — are appealed through your health plan's member portal. Availity handles appeals for many Blue Cross Blue Shield plans. UnitedHealthcare, Cigna, and Aetna each maintain their own member portals with dedicated appeals sections.

Medication denials route through your pharmacy benefit manager (PBM), not your medical plan. Check your insurance card for the PBM name — Express Scripts, OptumRx, or Caremark are the three largest. CoverMyMeds provides an electronic bridge between your prescriber and the PBM, allowing your doctor to submit clinical documentation and appeal letters directly. Ask your prescriber to initiate a CoverMyMeds appeal if your medication was denied at the pharmacy counter.

Appeal Deadlines by Plan Type

Mark the deadline on your calendar the day you receive the denial letter. Submit your appeal at least one week early to account for portal processing delays. If your evidence is incomplete, file a timely appeal stating that additional documentation will follow — a late appeal is almost always permanently barred.

Your Rights Under ERISA §503 and ACA §2719

These federal protections exist because insurers denied claims without transparency for decades. ERISA §503 gives you the right to request every document the plan used to deny your claim — internal clinical review notes, peer-to-peer call summaries, and policy manuals. Submit your request in writing to the plan administrator listed on your denial letter.

ACA §2719 goes further for marketplace plans by requiring independent external review after internal appeals fail. An independent physician — not employed by your insurer — evaluates your medical evidence and issues a binding decision. External review overturns denials in roughly 50% of cases where internal appeal failed, because the reviewer has no financial incentive to deny.

Why Insurance Companies Deny Claims (And How to Fix Each Reason)

1. Not medically necessary (CO-50). Submit a physician letter, clinical notes, and specialty society guidelines (NCCN, ACR, ADA) supporting the service.
2. Prior authorization missing (CO-197). Request retroactive authorization from your insurer, or appeal showing the service was emergent and could not wait for pre-approval.
3. Out-of-network (CO-96 or balance billing). Check No Surprises Act protections for emergency and certain facility-based services. Appeal with documentation that in-network care was unavailable.
4. Coding errors. Ask your provider to review and resubmit with corrected diagnosis or procedure codes. Many coding denials resolve without a formal appeal.
5. Step therapy (medication denials). Document prior medication trials through your PBM portal (Express Scripts, OptumRx, Caremark) and submit via CoverMyMeds with your prescriber.
6. Plan exclusion. Review your Summary of Benefits and Coverage. If the service should be covered under your plan tier, appeal with policy language citations.

External Review: Your Backup When Internal Appeal Fails

Internal appeals are reviewed by the same insurer that denied your claim — just a different department. External review puts your case before an independent medical reviewer with no financial tie to your plan. For ACA marketplace plans, this is a guaranteed right under §2719. Submit your request through your state's external review organization or your plan's designated IRO.

The external reviewer evaluates your medical records, your doctor's letter of medical necessity, and relevant clinical guidelines. Decisions are typically binding on the insurer. The process takes 30–60 days for standard review, or 72 hours for urgent cases involving life-threatening conditions.

When to Contact Your State Insurance Department

State insurance departments offer free mediation for fully insured health plans. File online with your denial letter, EOB, appeal correspondence, and medical records. The department assigns an examiner who contacts your insurer and may facilitate resolution. While they cannot force payment in every case, mediation resolves many disputes without litigation.

If your employer self-funds its health plan under ERISA, your state department has no jurisdiction. Contact the U.S. Department of Labor's Employee Benefits Security Administration (EBSA) instead. ERISA plans are governed by federal law, and your appeal rights flow from §503 rather than state regulation.

Keep copies of every document you submit and every response you receive. Create a dedicated folder — physical or digital — for your denial letter, EOBs, appeal submissions, portal confirmation screenshots, and call logs. If your case reaches external review or litigation, this organized record becomes the foundation of your argument.

How to Appeal a Denied Medication Through Your PBM

Pharmacy denials follow a different workflow than medical claims. When your pharmacist says the claim was rejected, ask for the rejection code and which PBM processed it. Log into your PBM's member portal and locate the appeals or prior authorization section. For many specialty and high-cost medications, your prescriber must initiate the appeal through CoverMyMeds — an electronic system that transmits clinical documentation directly to the PBM.

Your prescriber should include: diagnosis codes, prior medication trials with dates and outcomes, relevant clinical guidelines supporting the requested drug, and a statement explaining why alternatives are inappropriate for your condition. Step therapy denials are overturned most often when you document that required first-line medications were tried and failed — with pharmacy records proving fill history through your PBM.

Frequently Asked Questions

Answers to the most common questions about what to do when an insurance company denies your claim.