What to Do When Insurance Denies Your Hospital Stay? | Ep. 15

That letter from your insurance company saying a hospital stay was "not medically necessary" is enough to cause panic. But before you pick up the phone, take a breath. In this episode, Melody Mulaik explains exactly why you shouldn't do anything at all.

Learn why this letter is just the opening move in a negotiation between your hospital and your insurer, what the hospital is required to do next, and how your final bill is actually determined. This practical guide will help you stay calm and in control, ensuring you only pay what you truly owe.

Featured topics in this episode:

• The true purpose of an insurance denial letter (and why it's not a bill).
• Why the hospital, not you, is responsible for providing justification.
• Understanding the difference between "Inpatient" and "Observation" status and how it impacts your wallet.
• A step-by-step guide on what to do (and what not to do) while you wait for a resolution.

What You’ll Hear:

• [00:45] The Scenario: A denial letter arrives after a hospital stay.
• [01:45] Step 1: Why your first move is to do nothing.
• [02:15] The Hospital's Role: What happens behind the scenes to justify your care.
• [03:00] Your Financial Protection: Why you won't be billed for the full amount.
• [06:05] Insider Term: Understanding "Observation" vs. "Inpatient" status.
• [07:00] Final Steps: How to find out what you actually owe.

Want to Ask Melody: https://melodymulaik.com/ASK Don’t forget to subscribe so you won’t miss an episode. If you've ever faced an insurance denial, this episode is a must-listen.

Transcript

Speaker 2: 0:13

Hi everybody, and welcome back to this week's edition of Take Care. Thank you so much for subscribing and listening to the podcast. I really appreciate your feedback. And I'm excited that we're going through this journey together to make sure that we understand the healthcare system. Today's question comes to us from an individual whose mother-in-law was in the hospital, went to the emergency room. Got diagnosed with a urinary tract infection. And because of other conditions that she had, the doctor felt it was best that she be admitted so that she could get some additional medications. So, get some antibiotics, things like that over the course of a couple of days. After she got back home, she got a letter from her insurance company that stated that they did not feel that the visit or not visit, but the actual hospital admission was medically necessary. So, then, the family and the mom is looking at it and saying, what do I do? Do I need to contact the hospital? Is there something I need to do? The short answer is no. You need to hang tight for a second, because basically what's occurring here is similar like we talked about in another episode, where sometimes you get information from a physician and they're letting you see what's going on. Now, you're getting communication from an insurance company letting you see things from their perspective. So, the insurance company is telling you, we don't think this is medically necessary for an inpatient visit. And quite frankly, they have a list of diagnosis codes or reasons that you were there to let them know. And they've bumped it against that list and they're going, look, we don't think urinary tract infection justifies an inpatient stay. Now, that's not the end of the discussion. In addition to communicating with you or with your mother-in-law, they're also communicating back to the hospital a little bit different format, but they're communicating the same message and they're saying, we don't think it's medically necessary out of the gate anyway. So, what's going to happen is the hospital's going to review that information. And typically, they're going to send information from the medical record, the patient's medical record to the insurance company saying, but look, this patient also had this condition. Therefore, we felt it was in the best care. And I remember it's the doctor making that decision. We felt it was best for the patient to be admitted so that we could take the best care of them. Now, the insurance company may look at that and say, okay, we agree. And then, they pay it as an inpatient visit. Or I will add the caveat that there are some times that insurance companies will say, we still don't feel it justified inpatient. We're only going to pay it as if it was an outpatient visit. Now, there's a term called observation, which I'm not really going to dive into, but just know that observation is considered an outpatient service. So, what does that really mean? Let's say the insurance company comes back to the hospital and says, we're only going to pay it as an outpatient service. As a patient, what that means is your financial obligation is if is as if it was and was an outpatient service. So that may mean if you just owe copays for outpatient services, you're only going to owe that copay. If you look at your contract, you know you've got what you owe. If it's an inpatient service versus an outpatient service, and that's what's going to drive what you're going to ultimately owe to the hospital. You don't need to call the hospital. You don't need to do anything on their behalf. Let them work it out with the insurance company. And as always, you're going to go to that insurance company's website. You're going to look how they ultimately process that claim for you so that you can see, are you going to pay as if it was an outpatient service? Are you going to pay as if it was an inpatient service? So, it can get a little complicated sometimes, but sometimes we just have to be patient. We just have to wait and look to see how things resolve, so that we can make sure that we're paying for things correctly. So again, there's always a new challenge to tackle every week for that. If you have questions, let me hear from you on the website and appreciate you listening in. Until next time, take care.