Why Claims Get Denied: The Most Common Reasons

Receiving a claim denial can feel alarming, but it helps to know that denials are common and often correctable. Before you can push back effectively, you need to understand why your claim was rejected. Your insurer is legally required to send you an Explanation of Benefits (EOB) — a document that itemizes what was billed, what was paid, and the specific reason for any denial. Read it carefully before taking any action.

The most frequently cited denial reasons include:

  • Prior authorization not obtained: Many insurers require advance approval for certain procedures, specialist visits, imaging, or medications. If your provider didn't request that approval beforehand, the claim may be denied even if the service was medically appropriate.
  • Out-of-network provider: Seeing a provider outside your plan's network — sometimes without realizing it — often results in a denial or a dramatically reduced benefit. Understanding your network boundaries is one of the most practical habits for avoiding surprise costs.
  • Medical necessity disputed: Insurers may determine that a service wasn't medically necessary according to their clinical criteria, even if your doctor ordered it.
  • Coding or billing errors: Administrative mistakes — a wrong diagnosis code, an incorrect procedure code, or a simple data-entry error — are surprisingly common and straightforward to fix.
  • Service not covered under your plan: Some services are explicitly excluded from certain plans. Reviewing your Summary of Benefits and Coverage (SBC) — a standardized document all plans must provide — can clarify what's in and out.
  • Coverage lapsed or eligibility issue: If a premium payment was missed or an enrollment issue occurred, the insurer may show you as ineligible on the date of service.

Deadlines Are Non-Negotiable

Every step in the appeals process has a time limit. Internal appeal windows under ACA rules are at least 180 days from the denial date, but your specific plan may differ. External review requests also carry deadlines. Missing either window can permanently forfeit your right to challenge the denial, so identify your deadlines on day one and calendar them immediately.

This article provides general information about the health insurance claims and appeals process. It is not legal or medical advice. Coverage terms, timelines, and procedures vary by plan, insurer, and state. Consult your plan documents and, if needed, a licensed insurance professional or patient advocate for guidance specific to your situation.

How to Appeal a Denied Claim

Under the Affordable Care Act (ACA), all non-grandfathered health plans are required to offer both an internal appeal process (handled by your insurer) and access to an external review (conducted by an independent third party). These protections apply whether you have marketplace, employer-sponsored, or other qualifying coverage.

1

Obtain and decode your Explanation of Benefits

Locate the EOB your insurer sent after the claim was processed — it may arrive by mail or be available in your online member portal. Identify the specific denial reason code and its written explanation. If the language is unclear, call the member services number on your insurance card and ask a representative to walk you through it.

Tip: Keep a written record of every call: note the date, representative's name, and a summary of what was said. This log can support your appeal later.
2

Check for simple billing or coding errors first

Contact your provider's billing department and confirm that the diagnosis code (ICD code) and procedure code (CPT code) submitted match the actual service provided. Ask them to cross-check the insurer's claim record against what was submitted. A corrected claim resubmission often resolves denials caused by administrative errors without a formal appeal.

Warning: Do not assume your provider's office will catch errors automatically. Billing offices handle high volumes and may not flag issues unless you ask directly.
3

Gather supporting documentation

Before filing an appeal, collect: your EOB, a copy of the original claim, your plan's Summary of Benefits and Coverage, any prior authorization correspondence, and relevant medical records. If the denial cites lack of medical necessity, ask your treating physician to write a letter of medical necessity — a formal statement explaining why the service was clinically appropriate for your condition.

Tip: Your doctor's letter carries real weight in appeals. Ask them to reference the specific clinical guidelines or peer-reviewed standards that support their recommendation.
4

File your internal appeal within the deadline

ACA-compliant plans must allow at least 180 days from the denial notice for you to file an internal appeal. Check your EOB or plan documents for your plan's specific deadline — some are shorter. Submit your appeal in writing, include all supporting documents, and send it via certified mail or through your insurer's secure online portal so you have confirmation of receipt.

Warning: Missing the appeal deadline can eliminate your right to challenge the denial. Prioritize this step even if you're still gathering documentation — you can supplement your appeal later in many cases.
5

Request an external review if the internal appeal is denied

If your insurer upholds the denial after the internal appeal, you have the right to an external review by an independent organization. For most plans, this right kicks in automatically after an internal appeal is exhausted. Your denial notice must, by law, include instructions for requesting external review. The independent reviewer's decision is typically binding on the insurer.

Tip: State insurance commissioners also handle consumer complaints and may be able to assist if you feel the process is not being followed correctly. Look up your state's insurance department through the National Association of Insurance Commissioners (NAIC) website.
6

Consider additional resources if needed

If the process feels overwhelming, several free resources exist. Your state's insurance department can field complaints and explain your rights. Hospital systems often have patient advocates on staff. Nonprofit organizations focused on specific conditions may also offer guidance. For complex or high-dollar denials, a licensed patient advocate or health insurance attorney may be worth consulting.

Physician Letters Frequently Change Outcomes

Appeals supported by a detailed letter of medical necessity from a treating physician are overturned at notably higher rates than those without one. When requesting this letter, ask your doctor to be specific: reference the diagnosis, the clinical rationale for the service, and any relevant treatment guidelines. A generic note is less persuasive than a targeted clinical argument.

If you're unfamiliar with the broader mechanics of how health plans work — such as what deductibles, networks, and benefits mean in practice — the complete health insurance walkthrough is a helpful foundation before diving into an appeal.

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Insurance Basics Editorial Team · Contributor

Insurance Basics Editorial Team is the collective byline for our editorial team and contributor network. Articles published under this byline or an editorial pen name are researched, written, and reviewed according to our editorial standards for clarity, consistency, and independence before publication.

The content on this site is for informational purposes only and is not a substitute for professional advice. Always consult a qualified professional for guidance specific to your situation.