What is a health insurance denial?
A health insurance denial is a decision by your insurer to refuse payment for a medical service, treatment, medication, or procedure. Denials come in two main forms: prior authorization denials (the insurer refuses to pre-approve a service before it happens) and claim denials (the service was already performed but the insurer refuses to pay). Both types can be appealed using the same basic process. According to KFF, ACA marketplace insurers denied 17% of in-network claims in 2021 — translating to tens of millions of denied claims annually.
Types of insurance denials
Prior authorization denials occur before treatment — the insurer says the proposed service doesn't meet their medical necessity criteria. Claim denials occur after treatment — common reasons include coding errors, out-of-network care, missing documentation, or the insurer determining the care wasn't medically necessary. Coverage exclusion denials mean the plan simply doesn't cover the service at all, though these can sometimes still be appealed if the exclusion is improperly applied.
Why you should always appeal a denial
The most important thing to understand about insurance denials is that they are not final decisions — they are opening positions. Insurance companies bank on most patients not appealing. The ACA's own data shows that when patients file internal appeals, approximately 40% of denials are overturned at that stage. When patients pursue external independent review after a failed internal appeal, another 40-60% of cases are decided in the patient's favor. Combined, that means properly filed appeals succeed in roughly 82% of cases that are fully pursued. You have nothing to lose by appealing.
Step 1: Read the denial letter carefully
Your denial letter is legally required to state the specific reason your claim was denied and cite the specific clinical criteria used. Read it word for word. The exact denial reason determines your entire appeal strategy. Common reasons include "not medically necessary," "step therapy required," "prior authorization not obtained," "service not covered," or "experimental/investigational." Write down the denial date, claim number, deadline to appeal (listed in the letter), and the insurer's appeals mailing address. Request the insurer's clinical review criteria in writing — they are legally required to provide them.
Step 2: Gather your clinical documentation
Build an evidence package that directly counters the denial reason. For a "not medically necessary" denial, you need: (1) a letter of medical necessity from your treating physician that addresses the insurer's specific criteria, (2) recent chart notes documenting your symptoms, diagnosis, and treatment history, (3) lab results, imaging, or other diagnostic tests supporting your condition, (4) documentation of any treatments you've already tried that failed, and (5) clinical guideline citations from specialty societies supporting your treatment. For prior authorization denials, also include the original PA request and any prior authorization number.
What makes a strong letter of medical necessity
A letter of medical necessity (LMN) from your doctor is the cornerstone of a successful appeal. The letter should: address the denial reason directly by name, explain your diagnosis and why the specific treatment is medically necessary, document any alternatives tried and why they failed, cite relevant clinical practice guidelines (ADA for diabetes, NCCN for cancer, ACR for rheumatology, etc.), and request expedited review if your condition is urgent. Generic LMN letters are less effective than letters that specifically rebut the insurer's stated denial reason.
Step 3: File your internal appeal in writing
Write an appeal letter that opens by identifying the denial (claim number, service, date of denial), states clearly that you are requesting an internal appeal, summarizes the denial reason and why it was incorrect, and lists the attached evidence. Submit everything in one organized package to the appeals address on your denial letter. Send via certified mail with return receipt so you have proof of submission and the date. Standard internal appeals must be decided within 30 days (or 72 hours for urgent/expedited appeals). Keep copies of everything you send.
Step 4: The external appeal and Independent Medical Review
If your internal appeal is denied, you have the right to an external review by an independent organization. Under the ACA, all non-grandfathered plans must offer external review through a federally-approved independent review organization (IRO). External reviewers are clinicians — not insurer employees — and their decisions are typically binding on the insurer. To request external review, contact your state insurance commissioner or the federal external review process at 1-888-393-2789 for plans not subject to state regulation. File for external review within 60 days of your internal appeal denial.
State insurance commissioners
Every state has an insurance commissioner who oversees insurer conduct and handles consumer complaints. Filing a complaint with your state insurance commissioner — separate from your appeal — puts your denial on record and can prompt regulatory scrutiny. Some states, like California and New York, have insurance commissioners that actively intervene in egregious denial cases. In California, the Department of Managed Health Care (DMHC) offers free Independent Medical Reviews that must be completed in 30 days.
Appeal timelines and deadlines by plan type
For most ACA marketplace and employer plans: file internal appeal within 180 days of denial; insurer must decide within 30 days (standard) or 72 hours (urgent). File for external review within 60 days of internal appeal denial; external reviewer must decide within 45 days. For Medicare: file internal appeal (redetermination) within 120 days; decision within 60 days. For Medicaid: timelines vary by state, typically 90 days to appeal with decisions within 90 days. Always use the deadline listed in your specific denial letter over any general guideline.
Common mistakes that cause appeals to fail
The most common appeal mistakes are: missing the filing deadline (check your specific letter, not general rules), submitting a generic appeal letter that doesn't address the specific denial reason, failing to include a letter of medical necessity, not citing clinical guidelines, and giving up after the first internal appeal fails without pursuing external review. One more critical mistake: not requesting the insurer's clinical review criteria, which are the exact standards your appeal needs to address.