Employer-sponsored health care costs are forecast to increase between 6.5% and 9% this year. For those getting coverage through the ACA Marketplaces, costs are even higher. KFF said in an October 2025 report that 2026 costs are expected to rise by one quarter, on average. In states like California, which runs its own Marketplace, the average premium this year will be up 17%. For most insureds, no matter where they get their health insurance, costs are likely to be higher.
Also up are health insurance claim denials. Insurers are rejecting one-in-five in-network claims, while out-of-networks claims are being rejected at 37% – more than one-in-three. Artificial Intelligence (AI) is increasingly a part of insurers’ claims review process. But critics say claim denials without a review of patient records can lead to inflated rejected claims.
The reasons for denial are many. They include lack of medical necessity, lack of pre-authorization, and missing or incorrect information. Sometimes denials may be due to administrative errors.
What you may find surprising, though, is that less than 1% of patients appeal denied claims. That’s in spite of the fact that up to 80% of appeals can be successful.
What Makes a Health Insurance Appeal Succeed
Every insured person has the right to appeal a claim denial or other grievance. Although numbers vary across insurers and the type of appeal, appeals often result in a reversal of the original denial. Studies show that up to 80% of prior authorization appeals can succeed.
HealthCare.gov notes that there are two ways to appeal a health plan decision:
- Internal appeal: If a claim is denied or an insured’s health insurance coverage is canceled, they have the right to an internal appeal. The insured may ask the insurance company to conduct a full and fair review of its decision. If the case is urgent, the insurer must speed up its process.
- External review: The insured has the right to take the appeal to an independent third party for review. This is called an external review. External review means that the insurance company does not get the final say over whether to pay a claim.
In California, if a health plan denies an appeal or takes more than 30 days to consider and respond, the insured can ask for an Independent Medical Review (IMR).
An independent third-party/external review can have a success rate in more than half of situations.
First steps: Identify the “why?” the claim may have been denied. The insured should review the Explanation of Benefits (EOB) to understand why the claim was rejected. If the EOB is not readily available, a copy may be available online or through the insurance company or administrator’s customer service team.
Was there a possible coding error, missing information, or a determination that the care was not “medically necessary”? Ask the health plan’s/insurer’s customer service staff about what’s needed to overturn the denial. Ask about the process and timeline for filing an appeal – both an internal appeal and external appeal. This information may be available online, or the insurance company or administrator customer service team can provide it.
When appropriate, ask the treating physician or facility for a letter of medical necessity to support the appeal. Medical records and x-rays may be helpful in some situations.
Keep detailed records about any outreach to the insurance company or administrator, including dates, name(s) of representatives spoken with, correspondence sent, reference numbers, etc.
It is best to file an appeal in writing. Generally, an insured has up to 180 days to file an appeal. If an insured patient’s health is in immediate danger, a request for expedited review may be warranted. This type of review requires reconsideration and response within 72 hours.
How Brokers Can Step In — and When to Call Your GA
If your client does not receive a prompt response to a claim appeal, you may want to reach out to your general agency (GA). Your GA can help guide you and your client through the process, clarify coverage benefits, and help you understand the reason(s) for the denial.
Word & Brown has been working with insurance companies and administrators for more than 40 years. Our representatives’ calls and emails get answered, and we can put you in touch with carrier/health plan staff who can assist when it comes to a claims appeal.
There are also multiple state resources that can be helpful to you and your clients:
- Depending on the type of coverage your client has, they may be able to get help through the Department of Managed Health Care, which oversees Health Maintenance Organization (HMO) and other Managed Care plans, including Covered California – the state’s Affordable Care Act Marketplace Exchange. The DMHC Help Center contact number is 1-888-466-2219.
- The California Department of Insurance handles complaints for traditional insurance policies like Preferred Provider Organization (PPO) plans, indemnity plans, and specialized insurance like Dental or Vision insurance, Medicare Supplement plans (Medigap), Life, Disability, and Cancer-only policies.
- The Nevada Division of Insurance (DOI), part of the Department of Business and Industry, is the primary regulator of health insurance in Nevada. The main phone number is (775) 687-0700.
- Self-insured plans are generally regulated by federal law (ERISA) and the U.S. Department of Labor – not any state’s DOI. For these types of plans, the appeal must be filed with the sponsoring employer and/or its third-party administrator (TPA). Your client’s plan documents – like the Summary Plan Description (SPD) – should outline the formal appeal process.
As mentioned earlier, the percentage of patients/insureds who file an appeal is low, but the odds of having a denial reversed are often favorable. Your clients (and their employers) will appreciate your efforts to assist, especially if they are experiencing higher costs for health coverage.
