The Appeal Gap: Why Fewer Than 1% of Patients Appeal Insurance Denials — and Why Up to 75% Win When They Do
The Appeal Gap: Why Fewer Than 1% of Patients Appeal Insurance Denials — and Why Up to 75% Win When They Do
Abstract
Insurance companies deny millions of claims each year, yet fewer than one percent of patients with denied claims file a formal appeal.¹ Among those who do appeal, federal data and independent analyses show that appeal success rates range from 40 percent to 75 percent depending on plan type and appeal pathway.² ³ This gap between appeal rates and success rates represents one of the most consequential and least understood disparities in the American healthcare system. The evidence suggests that the barrier to appeal is not clinical; it is informational, procedural, and structural. This brief examines the data behind the appeal gap, the reasons patients do not appeal, and the documented pathways through which appeals succeed.
Background
When an insurer denies a claim for a medication, procedure, or service, that denial is not a final determination. It is a starting point in a legal process that patients have the right to challenge. Federal law under the Affordable Care Act guarantees the right to internal appeal and, for most plans, independent external review.⁴ Medicare Advantage beneficiaries have formal appeal rights under federal regulations administered by CMS.⁵ Medicaid recipients have state fair hearing rights.⁶
Despite these protections, the overwhelming majority of patients accept their denial without ever filing an appeal. The most comprehensive federal data on this phenomenon comes from the Department of Health and Human Services Office of Inspector General, the Kaiser Family Foundation, and CMS's own marketplace and Medicare Advantage reporting.
The size of the appeal gap is not a minor policy footnote. In 2021, health insurers participating in the ACA marketplace denied approximately 17 percent of in-network claims.¹ The volume of denials runs into the tens of millions of claims annually. If even a fraction of those patients appealed, and a fraction of those appeals succeeded, the cumulative effect on patient access to care would be significant.
The appeal gap is, in this sense, an information problem masquerading as a clinical one.
What the Evidence Shows
How Few Patients Appeal
The Kaiser Family Foundation's analysis of ACA marketplace data from 2021 found that insurers denied approximately 17 percent of in-network claims, a figure that represents hundreds of millions of dollars in medical care.¹ Of the patients who received those denials, only 0.1 percent filed an internal appeal with their insurer.¹
That is not one percent. It is one-tenth of one percent.
The KFF analysis does not speculate on causation, but the scale of the gap is striking on its face. A process that patients theoretically have access to is, in practice, being used by almost no one.
The picture is similar in Medicare Advantage. A 2022 report from the Department of Health and Human Services Office of Inspector General examined prior authorization denials in Medicare Advantage plans and found that 18 percent of payment denials met Medicare coverage criteria and should have been approved.⁷ The OIG found that beneficiaries and providers rarely appealed denied requests. When they did, they prevailed in approximately 75 percent of cases at the internal and external review stages combined.⁷
The OIG's characterization of the situation was direct: "Beneficiaries may not be getting access to care they are entitled to."⁷
How Many Win When They Do Appeal
The appeal success rate data is among the most important in the prior authorization literature, and it is not widely known outside of health policy circles.
In the ACA marketplace context, the KFF analysis found that among the small fraction of patients who appealed internal denials, approximately 59 percent had their denial overturned in 2021.¹ For plans that offered external review, external reviewers overturned insurer decisions in a meaningful proportion of cases as well.
The OIG's 2022 Medicare Advantage report found that when Medicare Advantage beneficiaries appealed denied prior authorization requests, they prevailed at a rate of approximately 75 percent across internal appeal and Independent Review Entity review combined.⁷
A 2023 analysis by the Government Accountability Office of external review programs across commercial health plans found that external reviewers, who are independent of the insurer, overturned insurer decisions in approximately 40 percent of reviewed cases.⁸
These numbers are not anomalies. Across plan types and review mechanisms, the available federal data consistently shows that patients who appeal win a substantial portion of the time. The variation is in the rate of participation, not the rate of success.
Why Patients Do Not Appeal
The research on why patients do not appeal is less extensive than the data on success rates, but the available evidence points to several converging factors.
Denial letters are poorly designed. A 2021 analysis by the Commonwealth Fund found that denial letters frequently failed to explain the specific clinical criteria used to make the denial decision, omitted information about the patient's appeal rights, or described appeal processes in language that was difficult for non-specialists to follow.⁹ Patients who cannot parse the reason for their denial cannot construct a response to it.
The process is designed for persistence. Internal appeal forms often require specific documentation in specific formats within specific timeframes. For a patient who is also managing a health condition, the cognitive and logistical demands of a formal appeal can be prohibitive. The AMA has documented that even physicians find the prior authorization and appeal process burdensome, spending an average of 34 hours per week on related administrative tasks.¹⁰
Patients do not know they can win. The 75 percent success rate in Medicare Advantage external review is not publicized by insurers. There is no public-facing communication from the healthcare system explaining that the majority of people who appeal prior authorization denials prevail. The information asymmetry is structural.
Time pressure creates abandonment. Denial appeals have deadlines, and missing them forfeits appeal rights. For a patient who receives a denial letter during a health crisis, the 60-day or 180-day window for appeal may expire before the patient has the bandwidth to navigate the process.
Many patients believe the decision is final. Research on health insurance literacy consistently finds that large portions of the insured population do not know they have the right to appeal, do not know what external review is, and do not understand that an insurer's denial can be overturned by an independent reviewer.¹¹
The Role of AI and Automated Denials
Recent investigative reporting has added a new dimension to the appeal gap: a growing share of initial denials are issued not by medical professionals reviewing individual cases, but by algorithmic systems processing claims at scale.
A 2023 ProPublica and CBS News investigation found that a UnitedHealth subsidiary used an AI model called nH Predict to deny post-acute care claims at a 90 percent rate, with human reviewers spending an average of approximately 1.2 seconds per case.¹² The investigation documented that the algorithm was generating denials that did not reflect the individual clinical circumstances of the patients involved.¹²
A 2023 report by the Senate Finance Committee on AI in healthcare coverage decisions documented that several major insurers were using automated systems to generate coverage denials without adequate individual clinical review.¹³ The committee found that these systems were associated with higher denial rates and recommended federal regulatory action.¹³
The implication for the appeal gap is significant. If the initial denial was algorithmically generated, it may be more susceptible to reversal on appeal precisely because it was not based on individual clinical review. When a human reviewer or independent external reviewer actually examines the specific facts of a case, they frequently reach a different conclusion than the algorithm did. This is one explanation for the high appeal success rates: the appeals are not overturning sound clinical decisions; they are correcting algorithmic errors.
The Financial Stakes
The appeal gap has direct financial consequences for patients. When a claim is denied and not appealed, the patient either goes without care, pays out of pocket, or incurs debt. The cumulative effect of millions of unappealed denials on patient financial health is substantial.
KFF data from 2022 found that medical debt was the most common type of debt in collections in the United States, affecting approximately 100 million Americans.¹⁴ Not all of that debt traces to unappealed insurance denials, but coverage denials are a documented contributor to out-of-pocket medical costs that lead to financial hardship.
What This Means for Patients
If you have received a denial, you are likely in the majority of people who will never appeal it. Understanding the data may change how you think about that decision.
The evidence does not say that everyone who appeals will win. It says that a large proportion of the people who do appeal, win. That is a different claim, and it is a meaningful one. It means that appealing is not a long shot. In many contexts, it is closer to even odds, and in some it is better than that.
The denial letter is the beginning of a process, not the end of one. You have legal rights to challenge it, a timeframe within which to do so, and a documented track record showing that challenges succeed at rates that would be considered favorable in any other adversarial process.
The main things standing between you and an appeal are information and logistics. Both are addressable.
What You Can Do
Ellen can help you draft your appeal using the same evidence base cited here. Start here
Frequently Asked Questions
How do I know if I still have time to appeal?
Your denial letter must include information about your appeal rights and the deadline. For ACA marketplace plans, internal appeal deadlines are typically 180 days from the denial date. For Medicare Advantage, the internal appeal deadline is 60 days. If you are unsure whether your deadline has passed, contact your insurer and ask. Some deadlines can be extended for good cause.
What is external review and how is it different from an internal appeal?
An internal appeal is reviewed by your insurer. An external review is conducted by an Independent Review Organization (IRO) that has no financial relationship with your insurer. External reviewers make binding determinations that the insurer must follow. Under the ACA, most people with non-grandfathered individual or group health plans have the right to external review. Medicare Advantage beneficiaries have access to review by an Independent Review Entity (IRE) designated by CMS.
What if I cannot afford to pay the denied claim while I wait for the appeal to be decided?
First, check whether your insurer will continue coverage during the appeal process. For ongoing treatments, you may be entitled to a "continuity of care" or "concurrent care" protection that maintains coverage while the appeal is pending. Second, ask your physician whether samples, patient assistance programs, or clinical trials might provide access to the medication in the interim. Third, some state insurance commissioners have authority to order emergency relief in cases where a denial poses an immediate health risk.