The right to appeal health insurers’ adverse decisions is critically important for all consumers, in part because denied claims are common. Since 2010, the Affordable Care Act has allowed all consumers (except those in grandfathered health plans) the right to appeal denied claims.
The first appeal goes to internal reviewers at the consumer’s health plan, according to this KFF report. If the health plan upholds its own denial (which is common), the appeal goes to an independent outside reviewer, sometimes called an independent review organization (IRO) where it’s considered an external review.
Before the ACA went into effect, consumers had the right to external appeals in most states, but that right did not extend to those enrolled in self-insured group health plans, such as from an employer. The federal Employee Retirement Income Security Act (ERISA) of 1974 pre-empts states from enacting laws that govern privately insured health plans, as we explained here.
The reason external appeals are important is that health plans may not put much effort into internal appeals. Also, many consumers do not know they have the right to an external appeal.