How to Appeal a Claim Denial

When a health insurer denies a claim, federal and state law guarantee policyholders a structured right to challenge that decision. This page explains how the appeal process works, what timelines apply, which scenarios most commonly trigger denials, and how plan type affects the path a policyholder must take. Understanding these mechanics directly affects whether a denied claim is ultimately paid.

Definition and scope

A health insurance claim denial is an insurer's written refusal to pay for a covered service, either before care is rendered (prior authorization denial) or after a claim has been submitted (post-service denial). The right to appeal those denials is codified in federal law: the Affordable Care Act (ACA), through 45 CFR Part 147, requires non-grandfathered group and individual health plans to maintain both internal and external appeal processes (HHS, ACA Appeals Requirements).

The Employee Retirement Income Security Act (ERISA) independently governs appeals for employer-sponsored self-funded plans, requiring specific timelines and written explanation standards under 29 CFR Part 2560. Medicare and Medicaid carry their own parallel appeal frameworks administered by the Centers for Medicare & Medicaid Services (CMS).

The scope of appeal rights varies by plan type. An HMO plan typically requires a referral chain before an appeal, and the gatekeeper model shapes which denials are most common — HMO Authority covers how HMO authorization structures and in-network restrictions generate the denial categories that HMO enrollees appeal most frequently. EPO plans present a distinct challenge because out-of-network care is categorically excluded; EPO Authority explains how EPO plan rules define network exclusions and what narrow circumstances allow an out-of-network claim to survive appeal. For high-deductible health plans (HDHPs), denial disputes often center on whether a service qualifies as preventive — a classification with direct HSA tax implications — and HDHP Authority details how HDHP cost-sharing structures interact with coverage determinations.

How it works

Federal rules establish a two-stage appeal process with mandatory timelines insurers must meet.

Stage 1: Internal appeal

A policyholder files an internal appeal directly with the health plan. The plan must review the decision using personnel not involved in the original denial. ACA regulations at 45 CFR § 147.136 set the following mandatory response windows:

  1. Urgent care (expedited) appeals — Decision within 72 hours.
  2. Pre-service (non-urgent) appeals — Decision within 30 days.
  3. Post-service appeals — Decision within 60 days.

The insurer must provide a written explanation that includes the specific clinical or contractual reason for denial, the relevant plan provision, and any internal guideline or clinical criteria applied.

Stage 2: External review

If the internal appeal is denied, the policyholder is entitled to external review by an independent review organization (IRO) accredited under standards set by the National Association of Insurance Commissioners (NAIC) or CMS. The IRO's decision is binding on the insurer. Federal rules require external review decisions within 45 days for standard reviews and 72 hours for expedited reviews (45 CFR § 147.138).

A policyholder's appeal package should include:

  1. The denial notice (Explanation of Benefits or Adverse Benefit Determination letter).
  2. Physician statements or letters of medical necessity.
  3. Relevant medical records supporting the service.
  4. The applicable plan summary of benefits (available under how to read a Summary of Benefits and Coverage).
  5. Any clinical guidelines or peer-reviewed literature supporting the treatment.

Common scenarios

Four denial categories account for the majority of appeal cases filed under employer and marketplace plans.

Medical necessity denials — The insurer determines the service is not medically necessary under its internal clinical criteria. These are the most frequently appealed denials; physician attestations and peer-reviewed literature carry significant weight at both internal and external review stages.

Out-of-network denials — A claim is rejected because the provider is outside the plan's network. EPO and HMO enrollees face near-absolute network exclusions, while PPO enrollees may receive partial payment rather than an outright denial. The overview of health insurance plan types on this site provides the structural comparison needed to understand how network rules differ across plan architectures.

Prior authorization denials — A service was rendered without required pre-approval, or a pre-approval request was denied. Expedited internal appeals apply when delay would seriously jeopardize health or the ability to regain maximum function.

Experimental or investigational denials — The insurer classifies a treatment as not proven effective. External IRO review is particularly important here because independent reviewers assess the clinical evidence without the insurer's proprietary criteria controlling the outcome.

Decision boundaries

Not every denial is appealable under the same rules. ERISA-governed self-funded employer plans fall under federal ERISA appeal standards, not state insurance law — meaning state external review mandates may not apply. Fully insured plans in states with external review laws follow state standards where those standards meet or exceed the federal floor.

The external review process for denied claims page examines the boundary between federal and state external review jurisdiction in detail. Policyholders covered under grandfathered plans — those in continuous existence since March 23, 2010, without major benefit reductions — are exempt from several ACA appeal requirements, including mandatory external review.

Medicare Advantage appeal rights follow a distinct CMS pathway with different IRO contractors and timelines than commercial plans. Medicaid managed care appeals are governed by 42 CFR Part 438, including state fair hearing rights. These government-program boundaries mean that the applicable appeal mechanism depends entirely on which coverage category applies, a foundational distinction addressed in how health insurance works in the United States and indexed across the national health insurance resource hub.

The No Surprises Act, effective January 1, 2022, created an independent dispute resolution process specifically for surprise billing situations — a parallel mechanism separate from standard claim appeals that applies when balance billing prohibitions are violated (the No Surprises Act explained).

References

The law belongs to the people. Georgia v. Public.Resource.Org, 590 U.S. (2020)