Health Insurance Claim Denials: Internal Appeals and External Review

A denied health claim is not the end of the process. Under federal rules that apply to most group and individual plans, you get an internal appeal decided by the plan, and then an external review decided by an independent organization whose ruling the plan must follow. Urgent situations run on a compressed schedule and can sometimes skip ahead. The deadlines are real on both sides: you have a limited period to file, and the plan has a limited period to answer. This guide covers what the denial letter must tell you, how to build the file, and which rulebook applies to your coverage.

Start with the denial notice itself

A compliant adverse benefit determination is not a one-line rejection. It has to identify the claim, state the specific reason for denial, cite the plan provision or clinical standard relied on, and explain how to appeal and by when.

The reason category matters more than anything else, because it decides what evidence wins:

• Not medically necessary — the fight is clinical, and the treating clinician's letter and records are the case.
• Experimental or investigational — published evidence and treatment guidelines matter, and these denials are prime candidates for external review.
• Out of network — check network adequacy, referral records, and whether the service was an emergency.
• No prior authorization — often fixable with documentation of what was requested and when.
• Coding or eligibility error — frequently resolved by the provider's billing office in days without a formal appeal.

Practical step: Ask the plan in writing for all documents, records, and criteria relevant to the claim, including any internal clinical guideline applied. Federal claims rules entitle you to these free of charge, and a denial based on a guideline you have never seen is hard to answer.

The internal appeal and its clock

The internal appeal is a full review by someone at the plan who was not involved in the original decision, and for clinical questions it must involve an appropriate medical professional.

1. Generally 180 days from the denial

   The federal standard for group and individual coverage gives you roughly six months to file the internal appeal. Your notice states the actual deadline; treat that as controlling.

2. Urgent care claims

   Decisions on urgent claims and urgent appeals run on a compressed timeline measured in hours rather than weeks, and you can ask for expedited handling in writing.

3. Before service is provided

   Pre-service appeals carry a shorter decision deadline than claims for care already received.

4. After service

   Post-service appeals get the longest decision window, commonly measured in weeks.

5. On a final internal denial

   The plan must tell you that external review is available and how to request it. If that paragraph is missing, ask for it.

The current federal timelines and the notice requirements are maintained by the Department of Labor for employer plans at EBSA and summarized for individual coverage on HealthCare.gov. Because the periods differ by claim type, verify yours against the notice instead of a general number.

External review is the part with teeth

External review sends the dispute to an independent review organization with no financial relationship to the plan. Reviewers are clinicians in the relevant specialty, and the decision binds the plan — if the reviewer overturns the denial, the plan must provide coverage.

Three practical points. The request window after a final internal denial is limited, commonly around four months, and it is stated in your final denial letter. Standard external review decisions come within a defined number of days, and an expedited review for urgent care is decided in a matter of days or less. For genuinely urgent care, an expedited external review can sometimes run at the same time as the internal appeal rather than after it.

Not every denial qualifies. External review generally covers medical judgment questions — medical necessity, appropriateness, level of care, experimental status — and rescissions of coverage. A purely contractual exclusion may not qualify, though whether a denial is "medical judgment" is itself often arguable.

Which system covers your plan

Self-funded plans, where the employer pays claims and an insurer only administers them, are governed by federal ERISA rules rather than state insurance law, which is why a state insurance complaint sometimes goes nowhere. The plan document or summary plan description will say which it is. Medicare and Medicaid run entirely separate appeal ladders described by CMS, and state insurance departments are reachable through the directories on USA.gov.

Watch out: Some products that look like insurance are not covered by these rules at all. Short-term limited-duration policies and health care sharing arrangements sit outside the ACA appeal framework, so read what you actually bought before assuming external review exists.

Building an appeal that gets read

• The denial letter and every explanation of benefits for the claim.
• A letter of medical necessity from the treating clinician, addressing the plan's stated reason directly.
• Chart notes, imaging reports, and test results that support the request.
• Any published clinical guideline or specialty society statement supporting the treatment.
• A record of alternatives already tried and why they failed, if the denial cites step therapy.
• A short cover letter listing the enclosures, the claim numbers, and the outcome you want.

Keep the cover letter to one page. The reviewer is looking for the connection between the plan's stated reason and your evidence, and burying it in twenty pages of narrative does not help. Send everything by a method that produces a delivery record, and keep a complete copy.

Common questions

My doctor says the treatment is urgent. Can I skip ahead?

Ask in writing for expedited handling and have the clinician state why delay would seriously jeopardize your health or ability to regain function. Urgent claims are decided on a compressed schedule, and for genuinely urgent care an expedited external review can sometimes proceed at the same time as the internal appeal rather than waiting for it to finish. Put the urgency request in the first sentence.

The insurer says the plan is self-funded. Why does that matter?

Because self-funded employer plans are governed by federal ERISA rules rather than state insurance law. Your state insurance department generally cannot order a self-funded plan to pay, and complaints filed there may be redirected. The Department of Labor's benefits agency is the right federal contact, and the plan must still offer internal appeal and an external review process meeting federal standards.

Can I sue instead of appealing?

For an employer plan, courts generally require you to exhaust the plan's internal appeal process first, and a claim filed without doing so is often dismissed. Exhaustion also builds the administrative record, which in many ERISA cases is the only evidence a court will consider later. Missing the internal appeal deadline can therefore end the case before it starts.

The provider billed me while the appeal is pending. What do I do?

Tell the billing office in writing that the claim is under appeal and ask them to hold collection activity. Ask the plan for written confirmation that the appeal is open, and send a copy. Separately, check whether federal surprise-billing protections apply to the service, since some out-of-network emergency and facility-based charges are limited regardless of how the appeal turns out.

The order that works

1. Call the provider's billing office first. A coding or eligibility error is fixed there in days, with no appeal needed.
2. Request the file. Ask the plan in writing for the criteria and documents used, and note the appeal deadline from the notice.
3. Get the clinician's letter aimed squarely at the stated denial reason.
4. File the internal appeal in time, marking it expedited if the care is urgent.
5. Request external review promptly after a final internal denial, within the window the letter gives.
6. Escalate in parallel to your state insurance department or the federal benefits agency if the plan misses its own deadlines.

Coverage disputes rarely arrive alone. If the coverage came through a job that ended, the continuation rules in our guide to COBRA coverage may decide whether the claim was covered at all. Where a court order controls a child's insurance, our piece on enrollment after separation covers who must carry it. A workplace injury may belong in the system described in our guide to workers' compensation claims, and denials of long-term facility care raise the separate discharge-appeal rights set out in our guide to nursing home admission agreements.