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Insurance Reimbursement

Insurance companies are not always up-to-date on the latest FDA-approved treatments for diseases like alopecia areata. There are now two approved treatments, both oral JAK-inhibitors:  Olumiant® (baricitinib) and LITFULO® (ritlecitinib).

It will, however, take some time for insurance companies to add Olumiant to their list of covered prescription drugs. This means it will likely take multiple steps for coverage, including seeking prior authorization and potentially appealing any insurance denials. 

Off-label drugs are medications that are FDA-approved for other uses, but doctors found that the drugs also help treat other conditions. Insurance companies often first decline off-label drugs for alopecia areata so this can also lead to multiple steps to get insurance coverage.  

To help manage insurance claims for your prescriptions and cranial prosthetics or wigs, work with your doctor’s office or clinic to determine what steps you must take for coverage from your insurance plan. Some clinics and doctors’ offices have a staff member whose only role is to work with insurance companies.  

Health insurance reimbursement may cover various treatments for alopecia areata

Resources to Help Manage Insurance Claims  

Tips on Applying for Insurance Reimbursement 

Insurance claims can be confusing – don’t let that stop you from getting what you need. Here are some tips for you that may help you make those claims.

Know your insurance policy and what it covers.

  • An alopecia areata diagnosis is billed using the International Classification of Diseases (ICD) coding system. The latest version (ICD-10) diagnostic codes for the disease are from L63.0 to L63.9, depending on the type of alopecia areata: 
  • L63.0 – Alopecia totalis 
  • L63.1 – Alopecia universalis 
  • L63.2 – Ophiasis 
  • L63.8 – Other alopecia areata 
  • L63.9 – Alopecia areata, unspecified 

 Previously, there was only one code of 704.01 for all types of alopecia areata. 

  • For wig reimbursement, the Healthcare Common Procedure Coding System (HCPCS), administered by the Centers for Medicare and Medicaid Services (CMS) in cooperation with other third party payers, is used to report supplies, equipment, and devices provided to patients. The HCPCS billing code for wigs is A9282. 
  • Verify with your insurance company how your policy handles a specific treatment for alopecia areata and whether prior authorization is needed for therapy.
  • Identify any copays and how much you will be expected to contribute to the cost of therapy. Be sure to check about annual limits. 
  • Know whether your insurance company requires “step therapy,” which means you must try and fail one therapy before the next level of therapy can be covered.

Do your homework before submitting a claim.

  • Some treatments require preauthorization. Check to see if this is the case with your therapy.

Make sure your medical records are accurate.

  • Keep copies of your medical records and make sure they are up to date. You have the right to receive copies of all of your medical records. Note that you can be charged a copy fee. 

Include a Letter of Medical Necessity. 

Always appeal denials!

  • Denials for people with alopecia areata are most often are related to the insurance company designating a treatment or therapy as:
    • Cosmetic and not medically necessary 
    • Experimental or investigational in alopecia areata and prescribed as off-label use. 
  • Statistically, about 40% of appeals are successful, so NAAF urges you to always appeal a denial at every level.
  • Prepare for denial of your claim.
  • Involve your doctor in helping you respond to a denial.
  • Documentation is crucial. In addition to having necessary documents that show your case meets the insurance provider’s guidelines and demonstrates medical need, be sure to:
  • Maintain records of all communication with the insurance company.  
  • Document every time you speak or hear from a company representative. 
  • Record each person’s name and the date and time of the conversation. 
  • Note the key messages from the conversation and anything the representative said would be done or looked into.
  • Familiarize yourself with your insurance company’s guidelines and deadlines for appeal. This information is usually included in the denial letter.
  • If you don’t understand why you were denied, ask so you can address the insurance company’s reason(s) directly.
  • If your communications with the insurance company’s Customer Service office is not satisfactory, ask for a nurse case manager or a supervisor who might be more understanding of your situation.
  • If you did not previously provide a Letter of Medical Necessity, be sure to include one for the appeals process.
  • When possible – to justify the cost – demonstrate that the treatment results in clinically meaningful improvement in quality of life.
  • If you are still denied following the final round of appeals, contact the advocacy or patient assistance program for the company that produces the treatment. Most companies have divisions that take applications for financial assistance for their therapies.
  • If you are unsuccessful with the appeal process, consider contacting your state insurance commission. You can find them here: 

How to Draft an Appeal Letter

Appeal letters should be factual and to the point. Include the following information and documentation:  

  1. Your policy and claim numbers, employer name if your policy is through an employer, and the full name of the insured 
  2. The therapy or procedure for which you were denied and why the denial letter stated you were denied 
  3. Medical records that back up your diagnosis and medical problem that relates to the therapy in question 
  4. Letter of Medical Necessity 
  5. If the Letter of Medical Necessity is not signed by your physician, have your physician provide a letter of support that includes the reason for recommending or prescribing your therapy. 
  6. Two or more articles from respected medical journals backing your claim of medical necessity 
  7. Refer to the NAAF website as an authoritative source of medical information on alopecia areata.