Internal appeal vs. external review: which comes when

Your health plan denied a claim or a request for care, and your appeal didn't change its mind. Now your letter mentions an external review.

This guide explains how an internal appeal and an external review fit together, and which comes when. It's part of our guide on how to appeal an insurance denial.

What's the difference between an internal appeal and an external review?

An internal appeal asks your plan to look at its own decision again. An external review sends your case to an independent review organization (IRO). The IRO isn't part of your plan, and its decision is binding on your plan.

Here's how the 2 steps compare for most private plans under federal rules.

Which comes first?

In most cases, you file the internal appeal first. Your plan gets a full chance to fix its own decision. If it still says no, its final denial letter should explain how to ask for external review.

Some employer plans have 2 levels of internal appeal. Marketplace and other individual plans have 1. Your denial letter tells you how many your plan has.

When can you skip ahead to external review?

You don't always have to wait for the internal appeal to finish. Here's when you may be able to go sooner:

• Your situation is urgent. Waiting could seriously harm your life, your health, or your ability to regain function. You can ask for an urgent external review at the same time as your urgent internal appeal.
• You're still in the facility after emergency care. After a final denial about an admission, a continued stay, or emergency care before discharge, you can ask for an urgent external review.
• Your plan didn't follow the rules. If your plan doesn't strictly follow the appeal rules, you're treated as having finished the internal appeal. You can then go to external review. Small, harmless mistakes made in good faith don't count.

What can go to external review?

External review covers denials that involve medical judgment. That includes:

• Whether the care was medically necessary
• The level of care or the setting, like inpatient vs. outpatient
• Whether a treatment is experimental or investigational
• Whether your plan applied mental health parity rules fairly

It also covers a plan cancelling your coverage after the fact, which is called a rescission.

Since 2022, it also covers disputes about the No Surprises Act. You can ask for external review if you think your plan didn't apply surprise billing protections correctly. Our guide on whether the No Surprises Act applies explains those protections.

Denials about whether you were eligible for the plan, like your job status, don't qualify for the federal process.

Who runs your external review: your state or the federal government?

A fully insured plan buys coverage from an insurer, so state insurance laws apply. A self-funded plan pays claims with the employer's own money. The Employee Retirement Income Security Act (ERISA), a federal law, sets the rules for most of these plans. Our guide to self-funded vs. fully insured plans explains how to tell which you have.

Either way, your plan can't pick a friendly reviewer. IROs must be accredited, and cases are assigned by rotation, at random, or by the state.

Older grandfathered plans generally don't have to offer external review. The exception is No Surprises Act disputes, which they must send to external review.

Medicare and Medicaid work differently

Original Medicare has 5 levels of appeal. At level 2, an independent contractor that wasn't part of the first decision reviews your case.

In Medicare Advantage, you ask your plan for a reconsideration within 65 days. If your plan still says no, even in part, it must send your case to an independent review entity on its own. Our guide to a Medicare Advantage denial appeal covers each level.

If a Medicaid managed care plan keeps its denial, you can ask for a state fair hearing. Some states also offer an outside medical review. It must be free and optional, and it can't delay your fair hearing. See our guide to a Medicaid fair hearing.

What to do after a final denial

1. Find your deadline. Look at the date you got the final denial. Count 4 months forward. Our appeal deadline calculator can help.
2. Find your process. Your final denial letter or explanation of benefits (EOB) should say how to ask, and whether it's a state or federal process.
3. Ask in writing. Follow the instructions in the letter. Our external review request letter gives you the words.
4. Add new evidence. Include your doctor's letter, records, and anything your plan didn't see.
5. Ask for urgent review if you need it. Say so clearly, and have your doctor explain why waiting could cause harm.
6. Ask the provider to hold your bill. Tell the billing office you've asked for external review, and keep a record of the call.

In the federal process, if your plan finds your request incomplete, it must tell you what's missing. You then have the rest of your 4 months, or 48 hours, whichever is later, to fix it.

Say Andre has a self-funded plan through work. He had outpatient surgery at an in-network center, and the $6,800 claim was denied as experimental. His internal appeal failed. Here's how his external review could unfold.

Date	What happened	The rule behind it
June 8, 2026	His plan's final denial arrived.	His 4 months to ask began. His deadline was October 8.
June 10	He asked for external review with a new letter from his surgeon.	He followed the steps in his final denial letter.
June 17	His plan finished its first check of his request.	It had 5 business days to confirm he was eligible.
June 19	An IRO received his case.	The IRO had 45 days to decide, until August 3.
July 24	The IRO reversed the denial.	His plan had to pay the claim right away.

While he waited, the center billed Andre the full $6,800. He had already met his deductible, and his coinsurance is 20%. Here's how the bill changed.

	Before the review	After the review
Allowed amount	$6,800	$6,800
Plan pays	$0	$5,440
Andre owes	$6,800	$1,360

His 20% share of $6,800 is $1,360, and his plan pays the other $5,440.

When to get help

You can ask for external review on your own, and many people do. It's worth getting help when:

• The denial is for costly or ongoing care, and you need an urgent answer.
• Your plan says your case isn't eligible for external review, and you disagree.
• You're not sure whether your plan is self-funded or fully insured.
• You lost the external review and want to know your other legal options.

Your state insurance department or consumer assistance program can explain your state's process. For employer plans, the Department of Labor's Employee Benefits Security Administration answers questions at 1-866-444-3272. For a surprise bill, call the No Surprises Help Desk at 1-800-985-3059.

If you have Medicare, call 1-800-MEDICARE (1-800-633-4227), or get free counseling from your State Health Insurance Assistance Program. A medical bill advocate can also take on the calls and letters. For a lawsuit over an employer plan, talk with an attorney.

If your denial started with a request for care you haven't gotten, see what to do when prior authorization is denied.