You open the envelope expecting reimbursement and find a denial letter instead. The procedure your doctor ordered, the prescription you’ve taken for years, the ER visit you thought was covered — rejected. Sometimes the reason is buried in policy fine print you never saw. Sometimes there’s no clear reason at all.

The short answer

Insurers deny claims for two broad reasons: legitimate policy exclusions (the service wasn’t covered, you went out of network, prior authorization wasn’t obtained) and process or judgment calls that range from defensible to illegal. Around 30% of in-network claims submitted to Medicare Advantage plans are denied, and commercial insurers follow similar patterns. You have the right to appeal every denial — and appeals work: roughly 50% of internal appeals for medical necessity denials are overturned, and external reviews reverse insurers at even higher rates for certain claim types.

The most common claim denial reasons

Coverage and eligibility issues

The service or item simply isn’t covered under your policy. This includes:

  • Experimental or investigational treatments not yet approved as standard care
  • Cosmetic procedures (unless medically necessary, like reconstruction after cancer)
  • Services explicitly excluded in your policy documents — some plans don’t cover chiropractic, acupuncture, or hearing aids

You’re also denied if you weren’t eligible when the service was provided — your coverage lapsed, you missed a premium payment, or the service happened before your effective date.

Prior authorization and referral gaps

Many policies require you to get approval before certain procedures, imaging, or specialist visits. If your doctor’s office didn’t submit a prior authorization request, or if the insurer denied the request, the claim is rejected even if the service itself is normally covered.

HMO plans often deny claims when you see a specialist without a referral from your primary care doctor, even if that specialist is in-network.

Out-of-network providers

If your plan is an HMO or EPO, out-of-network care is typically not covered except in emergencies. PPO plans usually cover out-of-network care but at a much lower rate, and the denial may be partial — the insurer pays their allowed amount and you’re responsible for the balance.

Emergency-room surprise billing falls here: the hospital is in-network but the ER doctor or anesthesiologist isn’t. The federal No Surprises Act now limits your liability in many of these cases, but insurers still deny the claims and leave you to invoke the law.

“Not medically necessary”

This is the denial reason that causes the most friction. The insurer’s medical reviewer decides the service wasn’t medically necessary based on clinical guidelines — even when your own doctor ordered it.

How medical necessity is actually evaluated: Insurers compare your diagnosis and the requested service against clinical practice guidelines (published standards from medical societies), peer-reviewed evidence on treatment effectiveness, and their own internal medical policies. For example, an MRI for lower back pain might be denied if you haven’t first tried physical therapy for six weeks — not because the MRI is never appropriate, but because evidence-based guidelines say conservative treatment should come first. The problem: these internal policies are often not published in full, so you’re denied based on criteria you never saw.

This happens frequently with:

  • Imaging studies (MRI, CT scans) the insurer deems premature or not supported by your diagnosis code
  • Inpatient hospital stays the insurer believes should have been outpatient
  • Brand-name drugs when a generic exists or when the insurer’s formulary requires step therapy
  • Durable medical equipment like power wheelchairs when the insurer’s policy requires a trial of a manual chair first

The standard isn’t “what your doctor wanted” — it’s what the insurer’s medical policy defines as appropriate for your diagnosis and treatment history.

Coding and paperwork errors

Your claim is denied because:

  • The diagnosis code doesn’t match the procedure code submitted by your provider
  • Duplicate billing — the same service was billed twice
  • Missing information like the date of injury for an accident-related claim

These are clerical denials. They’re fixable, but you or your provider’s billing office has to resubmit with corrections.

Timely filing limits

Every policy has a filing deadline — the window in which your provider must submit the claim after the service date. Most policies allow 90 days to one year, though timelines vary by insurer and state.

If your doctor’s billing department sits on the claim too long, the insurer denies it as late — and you may be left holding the bill even though you did nothing wrong.

When denials cross into bad faith

Multiple prescription bottles representing denied medication coverage in insurance claims
Photo by Lance Reis on Pexels

State insurance laws — guided by the NAIC Unfair Claims Settlement Practices Act — define certain insurer behaviors as illegal. Red flags include:

  • Denying a claim without investigating or requesting records
  • Failing to explain the denial reason in the letter
  • Ignoring your appeal or delaying a decision past the state-mandated deadline
  • Changing the denial reason after you appeal (a sign they didn’t have a good reason the first time)
  • Denying based on a blanket policy rather than reviewing your specific case

If your insurer misses the prompt-payment deadline — typically 30 to 45 days after receiving a clean claim — many states require them to pay statutory interest and sometimes penalties. Yet most consumers never know to ask for it.

How to appeal an insurance denial

Woman reviewing insurance documents to prepare claim appeal
Photo by Mikhail Nilov on Pexels

Every denial letter must include appeal instructions and a deadline. Read both carefully. Appeals overturn denials more often than most people realize — especially when you provide the right clinical documentation.

Internal appeals

You start with the insurer’s own internal review process:

  1. File within the deadline. Deadlines vary by plan type and state:

    • ERISA employer plans: 180 days in most cases
    • Medicare Advantage: 60 days
    • California ACA and state-regulated plans: 180 days for standard appeals; 6 months for some disability denials
    • New York: 45 days for most health insurance appeals; 180 days for life and disability
    • Florida: 120 days for HMO appeals

    Your denial letter will state your specific deadline. When in doubt, file within 30 days to be safe.

  2. Get the clinical records. Ask your doctor’s office for visit notes, test results, and a letter of medical necessity explaining why the service was appropriate for your diagnosis and why alternatives wouldn’t work. For medical-necessity denials, cite the specific clinical guidelines that support your doctor’s decision. Attach these to your appeal.

  3. Submit in writing. Even if you call, follow up with a written appeal sent via certified mail. Reference your claim number, the service date, and the denial reason. Be specific about why the denial is wrong — don’t just restate that you disagree.

The insurer must respond within 30 days for urgent pre-service appeals (you need the treatment now) and 60 days for standard appeals under federal rules. State rules sometimes shorten these windows — New York requires decisions on urgent appeals within two business days.

Success rates: Internal appeals overturn roughly 50% of medical-necessity denials when strong clinical documentation is provided. Procedural denials (coding errors, timely filing) are overturned at even higher rates once corrected.

External review

If the internal appeal is denied, you have the right to an independent external review — a third-party medical reviewer not paid by the insurer. This is where the overturn rate climbs sharply: external reviewers reverse insurers in 30–40% of medical-necessity cases and higher for certain treatments like cancer care and emergency admissions.

  • For ACA marketplace and employer plans: External review is free and the decision is binding on the insurer. You typically have four months after the final internal denial to request it. Some states allow you to file for external review at the same time as your internal appeal if the case is urgent.

  • For Medicare Advantage: You can request an Independent Review Entity (IRE) review if your internal appeal fails. There’s no cost. File within 60 days of the denial.

  • For state-regulated plans: Rules vary. Some states assign a review to the state insurance department; others use independent review organizations. California offers Independent Medical Review (IMR) at no cost; New York provides external appeal through certified independent review agents.

Healthcare.gov’s appeals page walks through the process for ACA plans.

When to involve your state insurance department

If the insurer misses deadlines, won’t explain the denial, or you suspect bad faith, file a complaint with your state insurance department. They can investigate and sometimes force the insurer to reopen the claim. Find your state department through the National Association of Insurance Commissioners directory.

What the denial letter must tell you

State laws and federal rules (ERISA for employer plans, Medicare for Advantage) require denial letters to include:

  • The specific reason for the denial
  • The policy provision or medical guideline it’s based on
  • Your appeal rights and the deadline
  • How to request your file — you’re entitled to see the records the insurer reviewed

If any of these are missing, the denial may be improper. Note it in your appeal.

FAQ

Can I appeal a claim denial more than once?

Yes. Most plans allow two levels of internal appeal before you escalate to external review. Each level must be filed within the stated deadline, and the insurer has a set number of days to respond. If you miss a deadline, you lose that appeal level.

What happens if my doctor’s office didn’t submit prior authorization?

The claim is usually denied, but it’s worth appealing — especially if it was an urgent situation or the doctor’s office can document they tried. Some insurers allow retroactive prior authorization in limited cases. You can also file a complaint with your state insurance department if the denial leaves you with a large bill for a service that should have been covered.

Do I need a lawyer to appeal an insurance denial?

Not for the internal and external review stages — those processes are designed for consumers to navigate independently, and external review is free. If the denial involves a large sum, a serious health condition, or suspected bad faith, consulting a lawyer who specializes in insurance claims (often on contingency) may be worth it. Your state bar association can provide referrals.

Insurance denials are frustrating, but they’re not final. The appeals process exists because insurers make mistakes and sometimes deny claims they shouldn’t. Document everything, meet your deadlines, and don’t assume the first denial is the last word — the reversal rates prove that persistence pays.

Not insurance or financial advice. Denial and appeal rules vary by state, plan type, and insurer. This article explains general principles — consult your policy documents and state insurance department for your specific situation.