Then the provider must decide if taking the case is too risky from the reimbursement point of view. Frequently the decision must be made instantly, because the patient is very ill and desperately needs treatment. When the insurance company decides that it will not pay, the consequences are that the patient must pay, if able. Most patients cannot pay for expensive treatment, and the provider is stuck with the bill. Many providers cannot survive an illness that requires expensive treatment.
Hospitals survive because many can go to their constituency in fund raising charity drives.
But the provider as well as the patient is hurt, and hurt badly. But the most difficult part of this situation is that providers tend to give great credibility to an insurance company or a Medicare denial. Thus, if an insurance company denies a claim, as not being covered by the policy, then the provider takes the insurance company's word as gospel, and simply tries to collect from the patient. That is not fair to the patient, and is also not fair to the health care provider. Hospitals especially fail to challenge the insurance company's decision.