Right to Health Insurance Appeals in ACA

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Right to Health Insurance Appeals Process


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February 2011; Updated March 2013

The 2010 Affordable Care Act (ACA) provides consumers with the right to appeal decisions made by their health carrier to an outside, independent decision panel, no matter which state they live in or what type of health insurance they have. When consumers or employees enroll in private market health insurance, they must rely on a contract that defines the medical services covered and reimbursed and services not covered. Because medical needs vary widely for patients and services vary significantly among providers, patients may face a denial or limitation on a particular treatment or receive what may be perceived as insufficient care. While many states already have “patient rights” laws, millions of insurance enrollees—especially those in self-insured and federally regulated plans—had no guarantee of an independent or “external” appeal process to address denial of coverage.

This section of the act, modeled on numerous existing state laws, establishes a uniform, inclusive process to appeal denials.

Key Federal Provisions
The act specifically requires (in section 1001) that group health plans and health insurance issuers in both the group and individual markets “implement an effective appeals process for coverage determinations and claims.”1 Plans must comply with either a state external review process or the federal external review process.2

The appeals process had to be in place by six months after enactment—Sept. 23, 2010.
The process must at a minimum:

  • have in effect an internal claims appeals process;
  • provide notice to enrollees of available internal and external appeals processes and the availability of any applicable assistance; and
  • allow enrollees to review their files, present evidence and testimony and receive continued coverage pending the outcome.

To comply with the requirements in 2010 and 2011, group plans were expected initially to incorporate the claims and appeals procedures specified in federal regulation (29 CFR §2560.530-1) and to update their processes in accordance with any standards established by the secretary of labor.3  Similar procedures exist for individual health coverage.

Group health plans and health insurance issuers must comply with the applicable state external review process that, at a minimum, “includes the consumer protections set forth in the Uniform External Review Model Act promulgated by the National Association of Insurance Commissioners (NAIC).”

If a state has not established standards that meet the NAIC model requirements or if the plan is issued by a selfinsured large employer and therefore is not subject to state insurance regulation, it must implement an effective external review process that meets the minimum standards established by the secretary. Separate but similar appeals rights apply to Medicaid, Medicare and other government sponsored programs.

Limited coverage insurance plans—for example, to cover a single medical condition or temporary insurance coverage—are exempt from these external appeals requirements.

Legislative and State Roles
Laws or regulations in 47 states already require that state regulated insurance health policies include an independent patient appeals process. States that do not provide an external appeals process by law are Alabama, Mississippi and Nebraska. These states do provide internal appeals processes, however. The 2010 federal law specifies that insurers “must comply with the applicable state external review process” that meets the minimum state NAIC model. It permits more extensive state-specific requirements (including those already in place before 2010). State insurance departments can expand their role in administering or enforcing this provision.

For 2011 and beyond, state legislatures have some flexibility and can choose to amend their laws (often termed “managed care consumer protections”). According to the Department of Health and Human Services (DHHS),“ states are encouraged to make changes in their external appeals laws to adopt these standards before July 1, 2011.”

Large self-insured employer plans still are not state regulated but must comply with federal provisions. For all existing (2010 plan year) health policies that choose “grandfathered status,” —e.g., they will continue to offer the same or near-identical benefits in 2011—the new federal appeals  process will not apply.4

State Flexibility and Transition to 2014  (updated Nov. 2012)

Through guidance and regulations issued in July 2010 and July 2011, the federal departments have given states a number of options to implement the strong consumer protections included in the external review process.

  • A state may meet the “strict standards” included in the July 2010 rules, which set forth 16 minimum consumer protections based on the Uniform Health Carrier External Review Model Act written by the National Association of Insurance Commissioners (NAIC);

  • A state may operate an external review process under similar standards to those outlined in the July 2010 interim final rule. These similar standards apply until January 1, 2014. or;

  • If a state has neither implemented the strict standards nor the similar standards, issuers offering non-grandfathered plans and policies in the State will choose an HHS-administered process or contract with accredited independent review organizations to review external appeals on their behalf.

This approach maintains the consumer protections provided in the Affordable Care Act while reflecting comments from stakeholders and giving states the flexibility they need to implement the law. This approach also permits states to operate their external review processes and avoids unnecessary disruption while states work to adopt the consumer protections set forth in the July 2010 regulations

The list below indicates which of the three options described above applies to the external appeals review process in each state. If a state changes its external review process in the future, the State may contact CCIIO to request a new determination.

Updated 11/22/2012

Meets Strict Standards Meets Similar Standards HHS Administered Process/
Independent Review Organization Process
Arkansas Arizona Alabama
California Delaware Alaska
Colorado District of Columbia Florida
Connecticut Indiana Georgia
Hawaii Kansas Louisiana
Idaho Massachusetts Mississippi
Illinois Michigan Missouri
Iowa Minnesota Montana
Kentucky New Mexico Nebraska
Maine North Carolina North Dakota
Maryland Tennessee Pennsylvania
Nevada Wyoming Texas
New Hampshire   West Virginia
New Jersey    
New York    
Ohio   Territories & Other Entities
Oklahoma   American Samoa
Oregon   Guam
Rhode Island   Northern Marianas Islands
South Carolina   Puerto Rico
South Dakota   Virgin Islands

Expanded Consumer Assistance
Another section of the ACA allows states to designate an independent office of health insurance consumer assistance or ombudsman that will—directly or in coordination with state health insurance regulators and consumer assistance organizations—respond to inquiries and complaints concerning health insurance coverage and help file complaints and appeals.5.6

The federal requirements which became legally effective on Sept. 23, 2010, apply to all newly issued and many existing health insurance policies.

The appeals process also will apply to all private market policies offered through the American Health Benefit Exchanges beginning in January 2014.

Funding Issues
Beginning in 2010, DHHS must award grants ($30 million in 2010) to states to enable them to “establish, expand, or provide support for an Office of Health Insurance Consumer Assistance or Health Insurance Ombudsman.” These are detailed in a companion NCSL brief, Consumer Assistance Programs.

The Effect on the Public
Due to this provision, in combination with existing state laws, an estimated 100 million Americans should have a more uniform, federally ensured right to appeal individual cases of denials by insurers, phased in beginning in 2010. The process is designed to be “consumer-friendly.” The NAIC Model Act and most states specify that the costs of appeal processes are borne entirely by the insurer. Rulings resolving
appeals are due within 45 days of filing or within 72 hours if “expedited” due to medical urgency.

According to several studies, the use of external appeals in recent years led to rulings favorable to patients in about 50 percent of cases and rulings in favor of the insurer in the other 50 percent. This extensive experience was used to model the federal law.7

Additional Resources

Brief Series: "States Implement Health Reform" Main Page

Excerpt from NCSL Timeline 8

New for 2012:

A Guide to the Medicaid Appeals Process  -  This background brief by the Kaiser Commission on Medicaid and the Uninsured provides a comprehensive look at the appeals process for the Medicaid program, which differs significantly from those available through the Medicare program and private health insurance. The Medicaid appeals process provides redress for individual applicants and beneficiaries seeking eligibility for the program or coverage of prescribed services, but the process is multi-layered and can be complex to navigate. The guide describes Medicaid's appeals system, including the fair hearing process and the appeals process required for Medicaid managed care organizations. As coverage expands under health reform and efforts proceed to integrate services for dual eligibles, who are enrolled in both Medicare and Medicaid, protections through the appeals process will be increasingly important. March 2012.   Guide ( 34 pages, pdf)

1. Section 1001, as amended by §10101, of the Patient Protection and Affordable Care Act (PPACA), Pub. L. 111–148 adds Section 2719 to the Public Health Service Act.
2. Provisions are contained in interim final regulations (45 CFR §147.136) issued July 2010.
3. Section 503 of ERISA, codified as 29 CFR §2560.530-1, requires that employee benefit plans provide adequate notice in writing to any participant or beneficiary whose claim for benefits under the plan has been denied, setting forth the specific reasons for such denial, written in a manner calculated to be understood by the participant, and to afford a reasonable opportunity to any participant whose claim for benefits has been denied for a full and fair review by the appropriate named fiduciary of the decision denying the claim.
4. For the first fiscal year of the program $30 million was appropriated; “such sums as necessary in subsequent fiscal years” was authorized.
5. Congressional Research Service. Private Health Insurance Provisions in PPACA-CRS, May 2010.
6. For information about the definition of a grandfathered plan, see
7. HHS provided the following examples of consumer appeals: n 2009, “one State’s existing consumer assistance program helped early 3,000 residents and recovered over $7 million in benefits on behalf of consumers.”
8. National Conference of State Legislatures, Health Reform mplementation: Immediate Health Insurance Reforms Become Effective Washington D.C.: NCSL, September 2010).

NCSL Staff Contact: Richard Cauchi.
© 2011 by the National Conference of State Legislatures. All rights reserved.


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