External Review

External review is the appeal step that comes after a health plan's internal appeals process has been exhausted — an independent third-party reviewer (an Independent Review Organization, or IRO) examines the denial and issues a binding decision that the plan must follow. The right to external review is federally guaranteed for most group health plans under ACA regulations and for individual coverage under state law.

External review applies to denials involving medical judgment: prior-authorization denials, coverage-of-treatment denials, medical-necessity determinations, and experimental/investigational classifications. Purely administrative denials (missing information, eligibility questions) generally go through internal appeals only, though the line isn't always clean. The IRO is randomly assigned from a state-approved (or, for self-funded ERISA plans, federally-approved) list of accredited review organizations — the plan doesn't get to choose the reviewer. The IRO reviews the same clinical documentation the plan reviewed and issues an independent determination based on the applicable clinical standards. Approximately 40 to 50 percent of external reviews overturn the plan's denial, which is a significantly higher overturn rate than internal appeals — reflecting that IROs are independent of the plan's economic incentives. Members typically have 60 days after final internal denial to file for external review. Expedited external review (72 hours) is available when the standard timeline would harm the patient's health.

The takeaway: if you receive a final internal appeal denial on a medical-necessity or coverage question, do not stop there — file for external review. The overturn rate is meaningful, the process is free to the member, and the plan is legally bound by the IRO's decision.