Learn How Insurance Companies Evaluate Claims

Page Contents:

• How Many Healthcare Claims Are Routinely Denied?
• Why are Health Insurance Claims Denied?
• How Do Insurance Companies Evaluate Requests for Treatment or Prior Authorization? 
• Does Each Insurance Company Have Its Own Unique Medical Policies?
• Insurance Companies Have Special Rules
• Do Policyholders Simply Forego Care When Their Insurance Company Denies a Request for Treatment? 
• What Happens When an Insurer Chooses to Delay Approving a Treatment or Prior Authorization? 
• Is There Recourse for the Policyholder Who is Denied Medically Necessary Care?
• What About Step Therapy and Prior Authorizations?
• How Scott Glovsky Can Help You Fight Your Insurer and Get the Treatment You Need

Having a medical claim denied can be one of the most frustrating, demoralizing things you will experience in your life. You have paid your insurance premiums every single month, like clockwork. Then, when you need something in return, your insurance company essentially turns its back on you. Perhaps your insurer tells you that the drug you need to control your diabetes so you can work and make a living is not medically necessary.

Maybe you are told that the cancer drug your doctor believes will allow you to live to see your children grow up is “experimental.” Perhaps your insurer tells you that the treatment that saved your life is out-of-network, so it will not pay. Or that before you can get the drug your doctor believes will calm your psoriatic arthritis, you have to go through tedious, time-consuming step therapy.

Perhaps your insurer simply denies any claim that happens to be for a treatment or drug that is expensive. Whatever your situation, it can be difficult to deal with a recalcitrant insurer when you are also dealing with an illness or chronic pain – or even worse, the illness of a child or a spouse. This is not a time when you should continue to deal with your insurer on your own.

Attorney Scott Glovsky has helped thousands of people just like you. Scott never hesitates to square off against an army of corporate attorneys because he is consistently more focused, better prepared, and ready to fight for justice for his clients. Scott started out as a corporate attorney but soon realized that he wanted to help those who really needed it. However, that experience enables him to understand exactly what drives these large corporations, how they will respond, and how to capitalize on their weaknesses.

Attorney Glovsky is not just the face of The Law Offices of Scott Glovsky – he is the founder, lead attorney, and the driving force behind the firm. Scott is happiest when he is fighting for justice against big corporate insurance companies who believe they are untouchable. When an insurer takes you to one of the lowest points in your life, Scott can make a positive difference in your life. You are no longer alone; Scott and his team will commit to your case and work tirelessly to help you get the outcome you deserve.

How Many Healthcare Claims Are Routinely Denied?

Health insurance companies that routinely reject recommended care can damage the health and the finances of those they insure. Unfortunately, hard-working Americans are consistently seeing their health insurance premiums rise as the benefits continue to shrink. Unfortunately, how often health insurance companies say “no” appears to be a closely guarded secret. There is no database where policyholders can go to look up a particular company’s denial rates.

It does not have to be this way; in 2010, federal regulators gained authority through the Affordable Care Act (AKA Obamacare) that required health insurers to provide data on their denials. This could have meant transparency for policyholders, yet 15 years later, the government has collected a mere fraction of what it should have. And experts say that what has been released is so confusing and inconsistent that it is virtually worthless.

This lack of information regarding which insurers are more likely to deny healthcare claims makes it feel like choosing a health insurer is a game of chance when in reality, it can be life and death. While it varies based on specific plan and state, the limited data we have suggests that as a whole, Affordable Care Act non-group qualified health plan (QHPs) insurance companies deny between 10 and 20 percent of the claims they receive. HealthCare.gov insurers denied  19 percent of in-network claims and 37 percent of out-of-network claims in 2023..

Insurers have a very good reason to avoid providing their denial numbers – since less than 1 percent of policyholders will appeal a denial, denying claims has become an actual business model. Of that 1 percent who appeal a denial, the internal appeal yields about a 56 percent second denial—which means 44 percent had their claim approved.

Unfortunately, although there is also an external denial process, at this point, policyholders facing denials are too often exhausted with the time-consuming process and simply give up. They either forego the medical care their doctor says they need, or they try to pay for it on their own. (Sadly, some people think that they don’t actually need the medical care because their insurance company claimed the care was not “medically necessary.”) Few people have the resources to pay for denied medical services on their own, so they are more likely to skip crucial medical care because while they faithfully pay their health insurance premiums, their insurer plays fast and loose with benefits.

Why are Health Insurance Claims Denied?

According to a January 2025 KFF report, the most common reason provided by insurance companies for healthcare claim denials was “other” at 34 percent. Excluded services accounted for 16 percent of service denials, 9 percent involved lack of prior authorization, 6 percent were denied because the insurer claimed the treatment was not medically necessary, and 18 percent were “administrative issues,” which included errors in paperwork or coding errors, or omissions in paperwork.

Exceeding benefit limits accounted for 12 percent of denied claims. While the 34 percent for “other” is not explained, it could include the insurer denying a treatment or surgical procedure because it is “experimental” or “investigational.” The lack of transparency and data reporting by health insurance companies makes determining the actual numbers extremely difficult.

Healthcare insurance companies are businesses, and, as such, they are set up to make money – usually lots of money. The more claims and treatments a company denies, the better its financial bottom line is at the end of each year. This reason gives insurers an incentive to deny care. Each company has its own system in place that limits the level of care it will provide – especially when that care is expensive.

How Do Insurance Companies Evaluate Requests for Treatment or Prior Authorization?

To navigate healthcare claim denials effectively, it is essential to understand that the system is designed to prevent claimants from accessing care. Each company sets up its own medical policies that define when it will cover a specific medical treatment, and under what circumstances. These broad policies are essentially a one-size-fits-all solution of sorts, as the policies are applied across the board to every policyholder who has insurance through that particular company.

Of course, from the patient’s point of view, this is a terrible system. Suppose your physician tells you that you need a specific surgery, treatment, medical test, or prescription drug. Since it is unlikely that your doctor will order something that you do not actually need, it can be devastating when your insurer denies your doctor’s orders. Even worse, it’s often not as if a real doctor on the other end took the time to go through your medical history to see why your doctor prescribed the surgery, treatment, test, or drug.

Insurance companies match your claim against the boxes that must be met in their policies. If your treatment fails to check all their boxes, they will simply deny the request for care. But you are unique and different. Instead of calling your doctor or looking at your medical records, the systems in place dictate that your treatment is checked against their checklist and  often a nurse then briefly reviews it. If it fails to meet all the criteria, the treatment is denied.

However, in California, only a doctor can deny medical treatment, so after the insurance company’s nurse reviews the claim and states that it fails to meet company criteria, it is sent over to an on-staff doctor who looks at it for maybe a minute or so, then rubber-stamps it with yet another denial. Many of the doctors who are employed by insurance companies no longer practice medicine. They often do not keep up with the newest treatments and drugs, they simply sit behind a computer and go through 80 or so requests a day.    

These practices do not look out for policyholders in the least. To the insurance company, you are a faceless number who wants something from it that is going to cost it money. It is bureaucracy at its finest, and it hurts those who count on their insurance company to take care of them when life brings unexpected medical crises.  

Does Each Insurance Company Have Its Own Unique Medical Policies?

Both doctors and patients dislike the system that requires them to get approval in advance for an increasing array of services. This causes delays and, in some instances, harm to the patient. Anyone who has a medical condition knows what a process the system is without factoring in insurance. Doctors are often overwhelmed by the number of patients they are required to see, and it can take weeks, even months, to schedule an appointment with a specialist.

By the time you do get in, suppose your doctor finds a medical issue and tells you that you need a specific test, a surgical procedure, a treatment, or a prescription drug. When your insurance company requires prior authorization, you could be adding days, weeks, or more time to the process. Again, policyholders have no way of knowing how many requests for prior authorizations that insurers get – and what percentage they deny.

Insurance Companies Have Special Rules

Insurance is a very different animal from the other items that we, as consumers, buy, use, and enjoy. If you want to buy a car, the dealership allows you to drive it before you hand over money and sign the contract. If you buy coffee at your local Starbucks and find you are not happy with the taste, you have the option of buying your coffee somewhere else tomorrow.

When you buy insurance, on the other hand, you do so hoping you will never need it. Few of us buy insurance specifically to cover the prostate cancer we expect to be diagnosed with. There is no try before you buy or the ability to switch to another insurer if you do not like the way your current health insurer treats you. This creates a significant power imbalance between insurance companies and policyholders. We are expected to give our insurers large quantities of money with nothing more than a vague “promise” that they will be there for us in return.

Because insurance is so unique, there is a legal principle called, “Implied covenant of good faith and fair dealing.” This principle means once a claim comes in and you need to use insurance, your insurer is supposed to keep your interests equal to its own. There is a duty on the part of insurance companies to perform a full, fair, prompt, and thorough investigation. We hope they will search for information that will support covering our medical treatment.

Unfortunately, this is too often the exception rather than the rule. Medical claims go to insurance companies, and insurance companies deny claims when they fail to check one of their medical policy boxes. And usually nobody ever talks to you – the patient – or to your doctor. You might desperately need back surgery so you can improve your quality of life and do the everyday things you want and need to do. Your doctor agrees, and you have hope that finally, you might be able to return to a normal life.

Then, a doctor for the insurance company denies the request for back surgery, saying it is not medically necessary. The thing is, the doctor who denies your request has a good chance of being a podiatrist, an obstetrician, a urologist, or another type of specialist who knows absolutely nothing about back surgeries. The system is unfair and frustrating in ways only those who have received insurance denials can understand.

Do Policyholders Simply Forego Care When Their Insurance Company Denies a Request for Treatment?

What happens when a person’s doctor orders a medical test, treatment, drug, or surgery and it is denied by the insurance company? More often than not, the person simply does not get the treatment they need. As an example, attorney Glovsky represented a young baby who had an illness called spinal muscular atrophy. Thankfully, there was a new medication that could essentially cure the disease. Of course, as a new medication often is, the drug was expensive.

The insurance company developed guidelines that allowed it to minimize when it would have to provide that specific medication. The insurer looked at FDA studies that referenced children who were over the age of two. So, arbitrarily, the insurer denied the drug for the baby because he was younger than their arbitrary guidelines stated. Despite the fact that FDA studies found that the medication could, in fact, work for children under the age of two, the mother of this baby had to fight her insurer to get her baby the treatment he needed.

Eventually, he did get the drug, but the delay caused damage that could not be undone. Another client of Scott’s was a young woman diagnosed with cancer. She had a young baby to care for and had to deal with chemotherapy and radiation. Ultimately, she needed surgery to get rid of the cancer. Her insurer ignored requests for authorization, dodging her calls and the call of her doctor for months.

By the time she finally got her insurer to respond, so much time had elapsed that she had to have another biopsy done, only to find that her cancer had grown so much in the interim that it was inoperable. A young woman ended up with terminal cancer for no reason other than saving the insurance company money. Many patients will end up like the baby or the young woman – not getting the treatment they desperately need for their health and their future.

What Happens When an Insurer Chooses to Delay Approving a Treatment or Prior Authorization?

In some cases, claims are not outright denied – at least not initially. Claims are not acted upon in a timely manner or flat-out ignored. Yes, there are laws that require timely responses by insurance companies, but over and over, we see insurance companies failing to respond to claims that really matter to the people who are sick and need treatment.

Many requests are delayed, and delayed, and…delayed some more. When the policyholder calls the insurer, the company is supposed to treat the call as a grievance or appeal, stepping in and fixing it. Yet this fails to happen time and time again. Insurance companies often fail to treat frantic phone calls from policyholders as they legally should.

When a phone call is not treated as a grievance or an appeal, then the insurer is not legally required to act. So, nothing gets done, and the claim continues to be delayed. Insurance companies have perfected the art of delaying medical claims. They know that at least a certain percentage of those whose claim is denied will eventually just give up.

Regardless of how important the medical treatment is for their health, after weeks or months of attempting to get an answer from their insurer, many people just give up.  This is what your insurance company is counting on – that you will give up. While it is perfectly understandable that you might give up, the better choice is to have a strong legal advocate who will not give up and who will advocate for you until you get what you need. Attorney Scott Glovsky does this day in and day out for his clients.

Is There Recourse for the Policyholder Who is Denied Medically Necessary Care?

First and foremost, if you are denied medically necessary care, make sure you get the denial in writing.  You should receive a denial letter that details why your medical treatment or prescription drug was denied. In some cases, a denial only needs you to provide additional information or correct an error. If that is the case, resubmit your claim, and it may be approved. If, however, your claim is denied because your insurer thinks the treatment is not medically necessary, is experimental, or investigational, this often translates into “It costs too much.”

Get a letter from your doctor that details why the treatment is medically necessary. If the letter can cite medical literature that supports the medical necessity of the treatment, this is even better. Information should be included regarding what will happen to you if you do not get the treatment. Filing an internal appeal, armed with this letter, is your first step. An internal appeal sends the claim back to your insurer and asks that the claim be reconsidered in light of the information from your doctor.

If the claim is still denied, you can file an external appeal with a neutral third party. This is the point when most people give up. Do not give up! External appeals are often successful when internal appeals are not. The process for fighting an insurance denial will depend partially on whether you get your insurance through your employer, purchase it through the healthcare.gov marketplace, or have Medicaid (AKA Medi-Cal in California), or Medicare. Each insurer has a specific process for appealing a claim denial.

For example, if you have Medicare, you must go through the specific Medicare appeals process, while in other situations, this is not a requirement. If you are facing an insurance denial, you have to be your own advocate. Unfortunately, those who tend to get taken advantage of the most are those who are less able to fight for their rights. The elderly, those with mental health issues, and those with severe illnesses need claim approvals more than anyone, yet are more likely to receive claim denials.

What About Step Therapy and Prior Authorizations?

If it seems like your insurance company is going to “get you” one way or another, you are likely right. If an insurer cannot claim that a drug is experimental or investigational, or deem it not medically necessary, then it may try to annoy you to the point that you give up with step therapy and prior authorizations. As mentioned above, prior authorizations often take precious time that some people with certain illnesses just do not have.

Spending time getting prior authorizations can lead to a disease or illness worsening significantly, making it more likely that the illness or disease will take a life. Step therapy is used by health insurance companies to control the cost of surgeries, treatments, prescription drugs, and other care by requiring patients to try one, two, or even three cheaper options before they approve the more expensive one.

Your doctor – who knows you and knows what you need for your illness or disease – might prescribe a drug they think could really help you. Your insurance company tells you that you must first take older, less expensive drugs for one month, two months, or even longer before it will pay for the initially prescribed drug. It is a frustrating process that takes time and requires you to take a drug that your doctor does not believe is right for you.

How Scott Glovsky Can Help You Fight Your Insurer and Get the Treatment You Need

Attorney Scott Glovsky and his legal team have impacted millions of insurance policyholders by forcing insurance companies to change their behaviors. This includes the process of reviewing requests for medically necessary treatments and medical policies. Scott has exposed dozens of large insurance companies that were not treating policyholders with respect and integrity.

While we may live in a “David vs. Goliath” world, Scott works every day to hold major corporations accountable for placing their profits ahead of people’s lives. Scott Glovsky is a skilled trial lawyer determined to make a real difference in the lives of his clients and to change the sys so others do not suffer needlessly. At the Law Offices of Scott Glovsky, we truly care about you and your healthcare issues and will always treat you with dignity and respect. Contact the Law Offices of Scott Glovsky today.