Navigating health insurance coverage is a monumental task. Consumers generally have no say in which services are rendered, which services are covered, and how much they will ultimately be responsible for paying. It is not an uncommon scenario that a doctor requests a service, the patient follows the doctor's orders, insurance pays only a portion or none at all, and the patient is left holding the bag—and the bill.

Other common scenarios: A patient calls the doctor to ask for the price of a particular test or treatment, only to be told the price is unknown. Or a plan participant calls their health insurer to ask for the customary fee for a service—to determine how much of it will be covered—only to be told "it depends." No one would go into the local electronics store and buy a TV without being told the price, but in medical care, this is basically what patients are expected to do.

To be fair, health insurance companies, traditionally known as the gatekeepers to healthcare, have recognized this and in recent years have tried to improve price transparency. Despite these efforts, there are many pitfalls associated with health insurance coverage. Learning how to navigate around these should make for a more educated healthcare consumer. Here are the services that most insurers decline and a look at how you can get things covered that may initially be denied.

Key Takeaways

  • Health insurance typically covers most doctor and hospital visits, prescription drugs, wellness care, and medical devices.
  • Most health insurance will not cover elective or cosmetic procedures, beauty treatments, off-label drug use, or brand-new technologies.
  • If health coverage is denied, policyholders can appeal for exceptions or allowances based on an individual's situation and prognosis.

Medicare: The Roadmap

Medicare provides the most insight into covered benefits for consumers. The Medicare system is a federally run health insurance system granted primarily to U.S. citizens age 65 and older. In general, the basis for all health insurance benefit design is the Medicare system. Many commercial health insurance plans model basic benefits after those benefits granted to Medicare recipients.

The focus is on health and wellness rather than sickness; annual physical exams are not fully covered by Medicare and treatment for severe ailments also usually require a co-pay or coinsurance payment. After the basic plan design is set for commercial health insurance, other benefits are added depending on the requirements of the plan's sponsor—for example, an employer.

To understand the basics of what is covered under the Medicare plan, you can visit its website. Medicare is not an "early adopter" system; therefore, most new technologies are typically not covered at all—or not covered as robustly as other, more time-tested technologies. An example is drug-eluting stents vs. bare-metal stents in cardiac procedures or ceramic hip replacements versus traditional metal ones. It is much easier to obtain coverage for proven procedures rather than those that could potentially be deemed as "test procedures." Similarly, covered lab tests are often lagging the newest technology; an example is the ThinPrep pap test.

Services Usually Not Covered

Although each benefit plan is different, depending on the sponsor's needs, and depending on state regulations (each state has its own insurance commissioner), there are services that are typically not covered by most health insurance plans.

Cosmetic procedures

Many services that improve someone's exterior appearance, such as plastic surgery and some dermatological procedures, are often not covered by typical plans. Interestingly, because consumers elect to have these procedures, there is great price transparency for them. A consumer who wants laser hair removal can call any number of providers and each one will be able to immediately quote a price.

Fertility treatments

These costs usually aren't covered by health insurance, although health insurers are required to pay for all the testing required to make an infertility diagnosis. However, this is one of the treatment areas that differ among states.

Off-label prescriptions

Prescription drugs are tested and approved for specific disorders, such as autoimmune diseases. At times, these drugs can be prescribed for disorders not listed on the "label." In some cases, the insurance company may reject paying for these off-label uses.

New technology in products or services

Covering these costs often happens slowly, particularly if the technology does not demonstrate added benefit for the increased costs. Medical companies are tasked with proving that a new drug, product, or test provides a measurable benefit to the consumer such that the cost will improve mortality or morbidity rates (basically, save lives or reduce ill health). Since Medicare is not an early adopter of new technology, other insurance plans generally follow suit and wait for more data before including it in the covered benefits.

What's Your Recourse?

Although there are services not typically covered, there are "special cases" in which insurance companies do make exceptions and cover these services. However, in many instances where services are not covered, there are several other courses of action that consumers can take.

Get coverage for new technology

In cases where a new technology provides additional benefits vs. the older technology, consumers try several things to get the insurance company to pay. Many insurance companies require doctors to "prove" why the costlier procedure or product is more beneficial. Additionally, an insurance company may pay a specific amount for a procedure and the patient can pay the difference to get the new technology—in other words, partial coverage is available. The first step in this process is to discuss the coverage with the insurance company, determine what will be covered, and have an agreement with the physician for the total cost and what will be required to be paid by you.

Get coverage for new drugs

Many new drugs or services introduced in the market undergo trials to test additional benefits or uses. Consumers can try to get into one of the trials and get the service or product as part of the trial. However, although each trial is designed differently, many have a group of participants who receive a "placebo," a fake treatment, so you are not guaranteed the drug or service. Your physician should be able to help you learn of any trials available as the Food and Drug Administration (FDA) requires the listing of drug trials.

Purchase an insurance plan rider

Health insurance companies provide the option of insured persons to purchase a rider, an added policy feature, for a specific covered benefit. However, these riders can be costly and may not available for purchase for all treatments.

Appeal a denial

Covered persons can contest a denial by an insurance company. Each insurance company is required to provide an insured person with the procedure required to appeal. In addition, if the appeals process results in another denial, the insured consumer can appeal to the state insurance commissioner for a review of the case. The process can be somewhat lengthy but is often without cost to the insured person.

Managed care plans have rules regarding the use of in-network vs. out-of-network care that must be followed in order to ensure that services are covered.

Other Insurance Pitfalls

Some doctors' offices will help consumers navigate through the insurance maze to determine coverage. However, as the consumer, it's always wise to speak directly with the insurance company to validate that a procedure is covered. Frustratingly, insurance companies will sometimes decline to speak with an insured member and speak only with a physician's office. But persistence generally pays off.

There are many other pitfalls of insurance coverage consumers need to be aware of. Some of the most common are:

  • Pre-approval: Many insurance plans require pre-approval or prior authorization for certain healthcare services, such as surgeries or hospital stays. You or your doctor must contact the insurer before you receive care to get authorization; if you don't, the service may not be covered by your insurance.
  • In-network vs. out-of-network: Many insurance plans, such as health maintenance organizations (HMOs), are designed with in-network doctors and facilities. These in-network providers often have a contract negotiated with the insurance company to pay an agreed-upon price for various services. It's also important to ensure that all components for a procedure are covered. Check, for example, that not only a surgeon and the hospital are in-network, but also the anesthesiologist. And make sure tests are sent to an in-network or preferred lab.
  • Prescription drug costs: The cost and coverage of prescription drugs vary, depending on a plan's formulary. The formulary, typically found on a health insurer's website, details cheaper drugs via their tier status (prices go up from tier 1 to tier 3—and sometimes tier 4), substitutes, or generic versions of the drugs. Also, some specialty drugs, such as injectable drugs, may require additional pre-approval before an insurance company will pay for them.

The Bottom Line

Understanding and working within the guidelines of health insurance is complex. Many companies provide members with access to a vast amount of information on secure websites. This information can help members select a doctor or facility, review the drug formulary, and learn other key information. But to understand what is a covered benefit, having a live discussion with an insurance representative is the best course of action. As higher percentages of healthcare costs are being pushed to insurance plan members, more and more of the "shopping" decision should also be made by members.