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Small Business Employee Benefits and HR Blog

How to Appeal Claim Denials and Policy Cancellations by an Insurance Company

July 23, 2010
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how to appeal claim denialsEffective September 23rd, 2010, new regulations give consumers in non-grandfathered health plans the right to appeal decisions, including claims denials and rescissions, made by their health plans.

Specifically, the rules issued by the Departments of Health and Human Services, Labor, and the Treasury give consumers:
    • the right to appeal decisions made by their health plan through the plan’s internal process,
    • the right to appeal decisions made by their health plan to an outside, independent decision-maker, no matter what State they live in or what type of health coverage they have.
Internal Appeals

The internal appeals process will guarantee a venue where consumers may present information their health plan might not have been aware of, giving families a straightforward way to clear up misunderstandings. 

Under the new rules, new health plans beginning on or after September 23, 2010 must have an internal appeals process that:
    • Allows consumers to appeal when a health plan denies a claim for a covered service or rescinds coverage; 
    • Gives consumers detailed information about the grounds for the denial of claims or coverage; 
    • Requires plans to notify consumers about their right to appeal and instructs them on how to begin the appeals process;
    • Ensures a full and fair review of the denial; 
    • Provides consumers with an expedited appeals process in urgent cases.
External Appeals

If a patient’s internal appeal is denied, patients in new plans will have the right to appeal all denied claims to an independent reviewer not employed by their health plan.  These standards were established by the National Association of Insurance Commissioners (NAIC). States are encouraged to make changes in their external appeals laws to adopt these standards before July 1, 2011. 

The NAIC standards call for:
    • External review of plan decisions to deny coverage for care based on medical necessity, appropriateness, health care setting, level of care, or effectiveness of a covered benefit.
    • Clear information for consumers about their right to both internal and external appeals – both in the standard plan materials, and at the time the company denies a claim. Expedited access to external review in some cases – including emergency situations, or cases where their health plan did not follow the rules in the internal appeal. 
    • Health plans must pay the cost of the external appeal under State law, and States may not require consumers to pay more than a nominal fee.
    • Review by an independent body assigned by the State. The State must also ensure that the reviewers meet certain standards, keep written records, and are not affected by conflicts of interest.
    • Emergency processes for urgent claims, and a process for experimental or investigational treatment. 
    • Final decisions must be binding so, if the consumer wins, the health plan is expected to pay for the benefit that was previously denied.
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Photo Credit: Flickr, Joelk75
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