The appeals process in healthcare exists to give you a formal way to challenge a health insurance company’s decision to deny coverage for a test, treatment, or service. It serves as a check on insurer power, ensuring that when care is medically needed and covered under your plan, you actually receive it. The process has two layers: an internal review by your insurance company and, if that fails, an external review by an independent third party whose decision is legally binding.
Why the Process Exists
Health insurers deny claims for many reasons, and not all of those denials are correct. The appeals process exists because a first-pass decision by an insurance company is just that: a first pass. It can be based on incomplete information, rigid internal policies, or criteria that don’t account for your specific medical situation. Without a structured way to push back, you’d have no recourse when a legitimate claim gets rejected.
The Affordable Care Act standardized these protections in 2010, replacing a patchwork of rules that varied by state and plan type. Before that, some plans in some states offered appeal rights while others didn’t. Now, all health plans created after March 23, 2010 must offer both internal and external appeals, regardless of where you live or what type of insurance you have. The core purpose is straightforward: prevent insurers from being the sole and final judge of whether your care gets paid for.
Common Reasons Claims Get Denied
Understanding why claims are denied helps explain why the appeals process matters so much. The most common denial reasons include:
- Not medically necessary: The insurer’s internal guidelines don’t support the treatment for your condition, even if your doctor recommends it.
- Experimental or investigational treatment: The insurer considers the treatment unproven, which is common with newer therapies.
- Out-of-network provider: You received care from a provider outside your plan’s network.
- Dispute over care setting: The insurer believes you could have received care in a less costly setting, such as at home instead of in a hospital.
- Mental health and substance abuse services: These claims face denial at higher rates despite legal parity requirements.
- Gender-affirming care: Though insurers generally cannot deny medically necessary gender-affirming treatment, denials still occur.
Many of these denials hinge on medical judgment, which is exactly the type of decision the appeals process is designed to revisit with fresh eyes.
How Internal Appeals Work
The first step after a denial is an internal appeal, where your insurance company reviews its own decision. You have 180 days (six months) from the date you receive a denial notice to file. You’ll need to complete the insurer’s required forms or write a letter with your name, claim number, and insurance ID. This is also where you submit any supporting documentation: a letter from your doctor explaining why the treatment is necessary, relevant medical records, or anything else that strengthens your case.
Timelines for the insurer’s response depend on the situation. If you’re appealing for a service you haven’t received yet, the insurer must complete its review within 30 days. For services you’ve already received, the deadline extends to 60 days. For urgent situations where a delay could seriously harm your health, the insurer must respond within 72 hours. At the end of the process, the insurer must give you a written decision explaining the outcome.
One critical detail: your insurer must notify you in writing when it denies a claim in the first place. That notification has its own deadlines. You should receive it within 15 days for prior authorization requests, within 30 days for services already provided, and within 72 hours for urgent care.
External Review: The Independent Safety Net
If your internal appeal is denied, you can escalate to an external review. This is where the process shifts from the insurer reviewing its own work to an independent, outside decision-maker evaluating your case. The external reviewer has no financial relationship with your insurance company, and their decision is final. Your insurer is required by law to accept it.
You must request external review in writing within four months of receiving the final internal appeal denial. Not every denial qualifies. External review is available for denials involving medical judgment (where you or your doctor disagree with the plan’s assessment), denials claiming a treatment is experimental, and situations where your insurer cancels your coverage alleging you provided false information on your application. If you’re charged a fee for external review, it cannot exceed $25.
The external review process is the real teeth of the appeals system. It prevents insurance companies from being both the entity that denies your claim and the entity that makes the final call on whether that denial stands.
Appeals Succeed More Often Than You’d Expect
Perhaps the most important thing to know about appeals is that they work. According to data reported by the American Medical Association, 83.2% of prior authorization appeals in 2022 resulted in the insurance company partially or fully overturning its original denial. That figure has been consistent since 2019.
Think about what that means: more than four out of five denied claims that were appealed should not have been denied in the first place. This is precisely why the appeals process exists. Initial denials are often automated or based on narrow criteria, and a closer look at your actual medical circumstances frequently changes the outcome. Yet most people never appeal, either because they don’t know they can or because the process feels intimidating. The high success rate suggests that filing an appeal is almost always worth the effort.
Employer Plans Follow Different Rules
If you get insurance through your employer, your plan is likely governed by a federal law called ERISA (the Employee Retirement Income Security Act). ERISA plans follow the same basic internal and external appeal structure, but the legal landscape changes significantly if you ever need to take your case to court.
ERISA plans don’t allow jury trials. Lawsuit deadlines can be shorter than what state law would normally permit. Plans may also require you to file suit in a specific jurisdiction that isn’t convenient for you. Most importantly, ERISA plans can include provisions that make it harder for courts to meaningfully second-guess the plan administrator’s decisions. If you have an employer-sponsored plan, completing every step of the internal appeals process before considering legal action is essential, because courts can bar your case entirely if you skip the required steps.
Individual and marketplace plans, by contrast, are regulated under state insurance laws, which generally offer broader legal remedies if an appeal fails and you need to go further.
Building a Strong Appeal
The appeals process works best when you treat it as a chance to present new or more detailed evidence, not simply repeat your original claim. A letter from your doctor explaining why the denied treatment is medically necessary for your specific condition carries significant weight. If the denial is for a treatment the insurer considers experimental, peer-reviewed research or clinical guidelines supporting its use can shift the outcome.
Keep detailed records throughout the process: copies of every denial letter, every form you submit, bills from your provider, and any medical documentation related to your case. Your state’s Consumer Assistance Program can also help you navigate the process and even file an appeal on your behalf at no cost. These programs were funded specifically to help people who feel overwhelmed by the system, and they exist in most states.
The strongest appeals combine a clear explanation from your treating physician with organized documentation that directly addresses the reason for the denial. If your claim was denied as “not medically necessary,” your doctor’s letter should explain exactly why, in your case, it is.