ACA Internal and External Appeals for Health Plan Decisions

One of the many consumer protections built into the Affordable Care Act is the right to internal and external appeals. You may want to appeal if your health plan rejects a prior authorization request, denies a claim, or rescinds your coverage altogether. This article will explain what appeal rights you have, and how internal and external appeals work.

Most health insurers already had their own appeals protocols in place prior to the ACA. State insurance departments would also step in when a consumer filed a complaint regarding a state-regulated health plan. But the level of consumer protection varied from insurer to insurer and from state to state.

And it's important to note that self-insured health plans are not subject to state rules, and the majority of people with employer-sponsored health coverage have self-insured plans. So federal rules were necessary in order to provide consistent appeal rights to people with self-insured health coverage.

The ACA implemented rules requiring health plans to provide access to both an internal and external review process for all non-grandfathered health plans. The details are specified in the Code of Federal Regulations, at 45 CFR §147.136.

The ACA was enacted in March 2010, although many of its provisions didn’t take effect until 2014. But the internal and external review requirements were among the first aspects of the law to take effect; they were required for plan years starting after August 23, 2010.

Internal Reviews

If an insurer makes what’s called an “adverse benefit determination,” they must provide notification to the member. Examples include denying a prior authorization or claim, or notifying a member that coverage is being rescinded.

The notification must include an explanation for why the adverse benefit determination was made. It must clarify that the member has the right to an internal (and if necessary, external) review.

If the member requests an internal review, it will be conducted by the insurer or health plan. It may or may not change the initial benefit determination.

Internal reviews must generally be requested in writing, within 180 days of the date the consumer receives the adverse benefit determination. If the medical care is urgent, an oral request is sufficient. The member can also request an external review at the same time, rather than waiting to request it if the internal review results in another denial.

Internal reviews can be requested for a variety of adverse benefit determinations, including:

• The health plan says the service isn’t covered under the member’s plan.
• The member went outside the plan’s network to receive medical care (and the service is either being denied altogether or paid at a lower rate, depending on the type of managed care plan and the plan’s specific rules).
• The health plan has determined that the service isn’t medically necessary.
• The health plan considers the service to be experimental.
• The consumer isn’t enrolled in the health plan or is no longer eligible to be enrolled (for example, a recently divorced spouse).
• The health plan notifies the member that their coverage is being rescinded (i.e., as if it was never in force) because of fraud or intentional misrepresentation.

After a consumer requests an internal review, the health plan has 30 days to issue a decision for prior authorization reviews, and 60 days to issue a decision for post-care (claims) reviews. For urgent medical issues, the window is much shorter, with a maximum of 72 hours.

These are the federal standards. States can set shorter timeframes for the duration of the review process.

If the member is mid-treatment during the review process, the health plan is required to provide ongoing coverage while the appeal is pending.

External Reviews

If there is still an adverse benefit determination after the internal review is complete, the member can request an external review. This is conducted either by a state entity, the federal government, or a private Independent Review Organization (IRO) accredited by a nationally recognized accrediting organization.

Once the external review process is complete, the decision is final and binding. State insurance departments or health departments can conduct external reviews for state-regulated health plans, which is how it works in most states.

The federal government also offers a Federal IRO, run by the Department of Health and Human Services. The federal external review process is used by self-insured health plans, since these plans are not subject to oversight by state insurance departments. It can also be used by health plans in states that don’t have external review processes that meet federal requirements.

If your health plan uses the federal external review process, you can ask the plan for instructions on how to request an external review or follow the instructions provided at Healthcare.gov.

Although most states have their own external review process, it’s important to keep in mind that nationwide, most people with employer-sponsored health insurance are enrolled in self-insured health plans that are subject to federal oversight rather than state oversight.

For state-regulated plans (i.e., fully insured health plans purchased from an insurance company as opposed to self-insured plans), only a handful of states don’t have adequate external review processes via their insurance department or health department.

Insurers in those states have the option to use the federal IRO or to contract with at least three accredited private IROs that will handle their external appeals.

For insurers that use private IROs, external appeals must be assigned to IROs on an impartial basis, either randomly or using a method that ensures the assignments are unbiased. Additionally, health plans cannot financially incentivize private IROs to uphold adverse benefit determinations.

Regardless of who conducts the external review, the consumer is not responsible for the cost of the review, if applicable.

Consumers must be given at least four months to request an external review. Once the external review entity receives the request, the review determination must be completed within 45 days. Health plans are required to comply with the decision issued by the IRO.

Getting Claims Approved

Before you need medical care, you’ll want to brush up on how to get a prior authorization request approved, some common reasons for claim denials, and tips for when your health insurance won’t pay for your care.

Be sure you understand your health plan’s rules for out-of-network care, as many plans won’t cover out-of-network services at all, unless it’s an emergency or you receive care from an out-of-network provider at an in-network hospital and are protected by the federal No Surprises Act.

If you’re needing to see a specialist or obtain a new prescription, make sure you follow your plan’s rules for referrals, prior authorizations, and step therapy, as you might find that a claim that would otherwise be covered is rejected simply because you didn’t follow the necessary protocol.

If you’ve followed all of your plan’s rules, claim denials are much less likely than they’d otherwise be. But you might still run into a rejected prior authorization. Your doctor will likely be well versed in the appeals process in that case, but it’s useful to understand how it all works, including the internal and external review.

Summary

If you’ve had prior authorization for a healthcare claim denied or been notified that your coverage is rescinded, you have options for both internal and external appeals. Both of these processes have timelines for filing and receiving a determination. Following this process may result in a reversal of the health plan's decision.

A Word From Verywell

If you're facing an adverse decision from your health plan, an appeal might help. You may find that your doctor or medical facility can help you with the appeal process. But if you need to write your own letter of appeal, the National Association of Insurance Commissioners has an appeal request template letter with instructions for how to modify it to fit your needs.