Key Takeaways
- If your claim is rejected, ask for a written explanation from your insurer.
- Always check your policy for its inclusions, exclusions and waiting periods before challenging a decision.
- You can escalate unresolved disputes to the Commonwealth Ombudsman (for free).
If your private health insurance claim has been rejected, you’re not alone.
Thousands of Australians have recently faced the same frustration – including customers of one of the nation’s biggest health insurers.
All about health insurance claim rejections and denials
Between May 2018 and August 2023, Bupa incorrectly rejected claims from customers who had multiple hospital procedures. In many of those cases, at least one of the procedures was eligible for cover. Rather than partially honouring the claim, Bupa’s systems wrongly declined the whole thing.
Following an investigation by the ACCC, Bupa admitted it had engaged in misleading or deceptive conduct and is now repaying customers who were affected. They’ve already paid back more than $14.3 million for more than 4,100 claims and could also be stung with a $35 million penalty.
It’s a big reminder that even with private health insurance, things can go wrong if you’re not with the right provider for you. So what can you do if your claim is rejected – and you believe the decision isn’t right?
Why would my claim be rejected?
Before jumping into the appeals process, let’s familiarise ourselves with some of the more common reasons why claims are declined. Some rejections are legitimate. Others, as we’ve seen, are the result of system errors or confusing eligibility rules.
According to The Conversation and recent ACCC investigations, a few causes of health insurance claim rejections include:
- Your policy excluded or restricted the treatment category.
- You hadn’t served the required waiting period.
- Incorrect billing (e.g. a hospital or doctor used the wrong Medicare item number).
- The claim involved ‘mixed cover’ (some procedures were covered, some weren’t, but the entire claim was declined).
The Bupa case involved this last issue. Even when part of a hospital claim was valid, Bupa’s systems incorrectly rejected the full amount. The ACCC found that misleading guidance, flawed training and poor systems allowed this to happen for years.
It’s also worth knowing that while the average payout ratio for private health insurers sits between 84% and 86%, that’s across the entire industry. It doesn’t mean that any one claim will be paid at that level – or at all.
Below, we will lay out 5 steps to help you handle a claim that has been rejected or denied.
Step 1: Check your policy details
When a claim is declined, your first step should always be to refer to your health insurance policy. Look at:
- The clinical category that the treatment falls under (e.g. gastrointestinal endoscopy, joint replacements, pregnancy).
- Whether that category is covered/restricted/excluded in your tier (Basic, Bronze, Silver or Gold).
- The waiting periods for new or upgraded cover, especially for pre-existing conditions.
Even if a treatment is listed, a ‘restricted’ category can mean limited cover – usually only as a public patient in a public hospital, which might still leave you with rather large out-of-pocket costs.
Also check the dates of your policy and the treatment, and any correspondence you got at the time of joining or upgrading. Sometimes claims are rejected simply because of administrative issues.
Step 2: Ask for a written explanation
If your claim is rejected and you don’t understand why, you’re entitled to ask your health fund for an explanation in writing. They need to clearly outline:
- Which part of your policy didn’t cover the claim.
- Whether any waiting periods or exclusions applied.
- What item numbers or documents were involved in their final decision.
You will need this explanation later if you escalate the complaint. It’s also worth contacting your healthcare provider (i.e. doctor, hospital or specialist) to confirm that the correct item numbers and documentation were submitted. In some cases, a simple administrative fix is enough to get the claim reprocessed.
Step 3: Gather supporting documentation
Before challenging the outcome, gather as much supporting evidence as possible. This should include:
- A copy of your full policy document and product disclosure statement (PDS).
- Hospital admission or discharge summaries.
- Medical reports or referrals.
- Invoices showing the procedure performed.
- Correct Medicare Benefits Schedule (MBS) item numbers.
For mixed claims (where some items were covered and others weren’t), make sure to highlight which parts should have been paid.
If you were told by your insurer or provider that a treatment was covered and then it wasn’t, look for any written communication or recorded calls (if available), as they will be very useful in a dispute.
Portability
Don’t re-serve waiting periods when you switch to a new health fund or policy
“John was immediately covered for a hip replacement in private hospital because he had already served his waiting periods for joint replacements on his old policy”
Step 4: Make a formal complaint
If you really do believe your insurer has made a mistake, you can lodge a formal complaint.
All private health insurers in Australia have an internal complaints process, and they’re required to respond within a reasonable time frame – typically 30 days.
Submit your complaint in writing via email or an online form, and include all the documents and correspondence mentioned above. Be clear about what outcome you’re seeking, whether that’s a reassessment of the claim or a full reimbursement.
Keep a copy of your complaint and note the date it was submitted. This will be important if you later escalate the issue.
Step 5: Contact the Commonwealth Ombudsman
If you’re not satisfied with the health insurer’s response – or you don’t hear back within a reasonable time – you can escalate the complaint to the Commonwealth Ombudsman.
The Ombudsman has a free and independent dispute-resolution service for private health insurance complaints. Call them up (or email) and they’ll request evidence from both sides and work to resolve the issue fairly. You can contact the Ombudsman by:
- Calling 1300 362 072.
- Visiting ombudsman.gov.au.
- Completing an online complaint form.
The Ombudsman handled more than 3,000 health insurance complaints last year alone, and mixed-cover confusion is one of the biggest problems.
What to do if you paid out-of-pocket for treatment
In the Bupa case, lots of their members ended up paying thousands of dollars out of pocket for treatments they should have been at least partially covered for. Others cancelled or delayed necessary care.
If you’ve already paid and later discover your claim was rejected in error, you can still take the same steps outlined above. Request a written explanation, submit a formal complaint and – most importantly – escalate it straight to the Ombudsman.
You can also ask your insurer whether you’re eligible for any compensation or reimbursement – especially if your provider has admitted fault, as Bupa did.
What does this mean for the broader industry?
Bupa is Australia’s second-largest private health insurer with over 4 million members. The fact that its systems incorrectly rejected claims for more than five years shows that consumers need to stay informed and be very proactive when it comes to their cover.
Health Minister Mark Butler called Bupa’s conduct unacceptable, while the ACCC emphasised the harm caused – both financial and emotional – when people miss out on necessary care because of insurer errors.
Our advice? Be your own advocate
If your claim is rejected and something doesn’t feel right, don’t accept the first answer. Take the time to ask the right questions and escalate if needed. You deserve total transparency and support from your health insurer.
And if you’d like help understanding your current cover or comparing your options with Fair Health Care Alliance, our expert team will walk you through it step by step – so you don’t get caught off-guard when it matters most.
