Affordable Care Act: Working with States to Protect Consumers

The Affordable Care Act establishes common-sense consumer protections and creates a more transparent marketplace. Fair rules and transparency help create a more level playing field between consumers and insurers. The law also empowers States by putting them in the driver’s seat in implementing many of these new consumer protections.

On July 23, 2010, the Departments of Health and Human Services, Labor, and the Treasury published an interim final rule regarding standards for internal claims and appeals and external review processes for group health insurance plans and health insurance issuers offering coverage in the group and individual markets. It was finalized on November 18, 2015. The final rule works to give people in most plans better information about what their rights are and why their claims were denied or coverage rescinded or taken away. Under the rule, consumers have the:

• Right to information about why a claim or coverage has been denied. Health plans and insurance companies have to tell you why they’ve decided to deny a claim or chosen to end your coverage – and how you can appeal that decision.
• Right to appeal to the insurance company. If you’ve had a claim denied or had your coverage rescinded, you have the right to an internal appeals process, a process in which you ask your insurance company to conduct a full and fair review of its decision. If the case is urgent, your insurance company must speed up this process.
• Right to an independent review. Often, insurers and their policyholders can resolve disputes during the internal appeals process with their insurer. If you can’t work it out through the internal appeals process, you now have the right to take your appeal to an independent third-party for review of the insurer’s decision. This is called “external review.” This way, the insurance company no longer gets the final say regarding your benefits, and patients and doctors get a greater measure of control over health care.

These protections and standards are an important step forward in reforming the health care system to make sure it works for consumers, not just insurance companies.

State Flexibility and Transition to 2018

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

• A State may be considered “NAIC-parallel” by meeting all 16 minimum consumer protections set forth in the July 2010 rules. These standards (sometimes known as “strict” standards) are based on the Uniform Health Carrier External Review Model Act written by the National Association of Insurance Commissioners (NAIC);
• A State may be considered “NAIC-similar” by operating an external review process under standards similar to those outlined in the July 2010 interim final rule. These similar standards apply until January 1, 2018. or;
• If a State is not considered “NAIC-parallel” or “NAIC-similar,” issuers offering non-grandfathered plans and policies in the State must provide external review by choosing to utilize either the HHS-administered federal external review process or to contract with accredited independent review organizations to review external appeals on their behalf.

This approach maintains the unprecedented 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 regulations.

State External Appeals Review Processes

The list below indicates which of the three options described above applies to the external appeals review process in each State.

Updated July 9, 2024