Appealing a "not covered" or plan exclusion denial

A medical necessity denial says the plan covers that kind of care but decided you did not meet its rules. An exclusion denial says the plan does not cover the service at all. HealthCare.gov defines excluded services as health care services that your health insurance or plan doesn't pay for or cover.

That difference limits what an appeal can do. An appeal asks the plan to apply its own terms correctly. If the terms clearly leave the service out, a letter about how much you need it usually has no rule to point to, and the plan can deny it again.

External review has the same limit. The federal process covers denials that involve medical judgment, as determined by the external reviewer, so a plain contract exclusion may not qualify. If the exclusion turns on a medical question, such as whether a service is cosmetic or experimental, ask for external review anyway and let the reviewer decide.

Read the exact words of the exclusion in two documents:

• The Summary of Benefits and Coverage. This standard form must list the exceptions, reductions and limitations of the coverage. Your plan must send one within seven business days of a request.
• The full plan document. The summary is short. The plan document or certificate of coverage has the controlling language. In an employer plan covered by ERISA, the administrator must, on your written request, furnish the contract or other instruments under which the plan is established or operated. It may make a reasonable charge for the copies.

Then compare the exclusion with the denial notice, which must cite the specific plan provisions on which the decision is based. Check:

• Does the exclusion describe what you actually received, or only something similar?
• Was the claim billed with a code that triggered the exclusion when another code fits better?
• Does the exclusion list its own exceptions?
• Did the plan change its terms during the year, and were you told?

The wrong service or code. If the provider billed the wrong code, the usual fix is a corrected claim; see billing or coding errors. Plans must give you the diagnosis and treatment codes and their meanings on request.

Essential health benefits. Individual and small-group plans must cover the essential health benefits package, which spans 10 categories: outpatient care, emergency services, hospitalization, maternity and newborn care, mental health and substance use disorder services, prescription drugs, rehabilitative and habilitative services, lab services, preventive care, and pediatric services. Coverage must be substantially equal to the state's benchmark plan, and plans may not exclude an enrollee from coverage in a benefit category, other than pediatric services. CMS posts each state's benchmark plan. If an individual or small-group plan excludes something your state's benchmark covers, ask your state insurance department.

State coverage mandates. Some states require insurers to cover additional services and procedures. These state laws generally apply to fully insured plans and not to self-funded employer plans. Ask your HR office which kind of plan you have.

Mental health parity. If the exclusion targets mental health or substance use disorder care, federal parity law may apply. The Labor Department says the law makes sure visit limits, prior authorization and proof of medical necessity are comparable to medical and surgical benefits. Disputes over whether a plan applies medical management rules in a comparable way are eligible for external review. Ask the plan to explain how the exclusion compares with its rules for medical and surgical care.

If the excluded item is a drug, ask for a formulary exception. Plans that provide essential health benefits must have a process to request and gain access to clinically appropriate drugs not otherwise covered. The plan must decide within 72 hours for a standard request and within 24 hours for an expedited request based on urgent circumstances, and a denied request can be reviewed by an independent review organization.

Medicare drug plans have their own exception process; see Medicare Part D appeals.

• Your employer. If your employer's plan is self-funded, state insurance mandates generally do not apply. HR or the benefits office can tell you who decides the plan's terms and whether an exclusion is under review for future years.
• Regulators. For individual and fully insured plans, contact your state insurance department; the National Association of Insurance Commissioners lists contact information and how to file a complaint. For employer plans, Labor Department Benefits Advisors answer questions at 1-866-444-3272.
• Hospital financial assistance. Nonprofit hospitals that are tax-exempt must have a written financial assistance policy that applies to all emergency and other medically necessary care they provide, and must post the policy, the application and a plain-language summary on a website. Ask the billing office for the application.
• Manufacturer programs. If the item is a drug or device, ask the prescriber's office whether the manufacturer runs a patient assistance program.