Retrospective Denial: An Insightful Discovery

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Have you ever been denied the necessary coverage from your health insurance provider? Probably not. But have you ever been denied coverage even after taking the mysterious ‘preapproval’? There is a slight chance that your answer might be yes.

In this post today, we’ll focus on the recent rise of ‘Retrospective Denial’ and what the reasons are behind its dramatic outbreak.

What is Retrospective Denial?

In simple words, retrospective denial is the fact when your insurer denies paying for the health services you already took. It can be tests or even procedures. You might fall victim to retrospective denial due to a single line in your insurance policy saying, “We do not guarantee any payment”.

It’s more common now than ever, thanks to the pre-approval policy of the health insurance providers, otherwise known as prior authorization. It’s as simple as checking with your insurance company to see whether it is going to pay for the services or not.

Even then, you can’t be sure of anything. We’ll look at some examples in the latter part of this post to understand the problem.

How Does it Happen?

That’s actually a very good question. To understand it better, let’s take a look at a scenario.

You need to do some tests. It might be for diagnostics purposes or any other health-related issues you might be suffering from. As per the pre-approval policy, you do the necessary paperwork with your insurer and they approved you to take the test.

You take the tests as usual. They were quite expensive ones but you don’t have to worry because your insurance is covering it, right? Once you get the reports, it might come out negative. You were fearful for no apparent reason. Congratulations to you.

But not yet. Now, you receive a fat bill from your health provider because your insurance didn’t pay for it. According to them, the tests you took were medically unnecessary. So, it is now your burden to pay off the service provider.

The whole process you just went through, is retrospective denial. It’s sometimes due to ‘medically unnecessary’ services, or you took the services after your time frame of approval was over. In either case, you are the one left with the bill and numerous sleepless nights ahead of you.

The worst part about retrospective denial is that the patient might not even realize what is happening with the insurance. Some insurance companies directly deal with the service providers to do all the paperwork. When that happens, the patient remains completely in the dark without realizing that they are running into a vicious trap.

Another common scenario is where the insurer grants you a verbal approval but later denies it. It’s an age-old trick to deny insurance claims without compromising reputation. You shouldn’t fall for that. The least you can do is make sure all your paperwork is in order.

Some Cases of Retrospective Denial

  1. Darla Markley, a transverse myelitis patient got the pre-approval from her insurer to do some tests. After the tests were done, it was discovered that Marla also suffered from a vitamin deficiency, beriberi. The insurer denied the $34,000 medical bills saying the tests weren’t needed. Five years later, Darla and her husband Andy had to declare bankruptcy.
  2. Pharmacist Melita Passaic, living in Missouri had gotten the go-ahead from their insurer because there was ‘no need’ for any prior authorization to perform genetic tests. After the tests were done, the Pasagics receive a bill of $5,000 because their insurer declared that the tests were medically unnecessary.

Take Away

According to current legislation, there is no penalty for health insurance providers if they deny coverage seeking refuge to the retrospective denial. Unfortunately, it’s an integral part of the business model which is essential to keep the insurance business alive.

A light at the end of the tunnel is that there are investigative committees forming countrywide to take matters of retrospective denials seriously. There is no silver lining to the matter so far.

As Americans, all we can do is stay more vigilante and read the clauses of our insurance policy more carefully. Also, it’s a good idea to look for what the insurance actually covers before submitting an application for the so-called ‘pre-approval’.

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