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The History of Insurance Denials and Appeals
Denials and appeals have shaped American healthcare reimbursement for decades. Knowing how the rules evolved helps providers, billers, patients, and hospitals work the system more effectively today.
Written for providers and hospitals, billers, and patients.
Insurance denials and appeals have shaped American healthcare reimbursement for decades. Understanding their history helps providers, billers, patients, and hospitals navigate the system more effectively. From the early days of health insurance through modern regulatory frameworks, the rules around denials and appeals have evolved dramatically, often in response to provider and patient advocacy.
This page traces that evolution: how and why denials happen, how the appeals process developed, and the major legislative changes that define the system today.
The big picture
Major denials and appeals milestones
Nearly every appeal right you have today traces back to one of these moments. The trend is clear: as plans found new ways to deny, the law added new ways to push back.
1935 to 1960s
The origins of health insurance
Blue Cross and Blue Shield pioneered health insurance in America. Early policies had minimal denials because coverage was broader and less scrutinized. Claims processing was manual and policies were less restrictive.
1965
Medicare and Medicaid enacted
Title XVIII of the Social Security Act created Medicare; Title XIX created Medicaid. For the first time, federal healthcare programs established formal claims processing and payment rules. Denials began to increase as programs set coverage limits.
1974
ERISA enacted (Employee Retirement Income Security Act)
ERISA established the modern framework for employee health benefits. It created a federal appeals process for denied claims, allowing participants to appeal denials to their plan sponsors. This was the first formal statutory appeals right for group health plans.
1990s
Rise of managed care and prior authorization
HMOs and PPOs proliferated. Denials increased dramatically as plans used prior authorization, step therapy, and medical necessity reviews to control costs. Appeals became more complex as plans employed medical directors to defend denials.
1996
HIPAA (Health Insurance Portability and Accountability Act)
Enhanced ERISA's appeals process. Established timeframes for plan responses to appeals and required plans to provide written explanations of denials. Created rights for patients to expedited appeals in urgent situations.
2000s
Further ERISA amendments
The Departments of Labor, Treasury, and HHS published guidance strengthening external appeals rights. Plans were required to allow denials to go to independent external review organizations when internal appeals were exhausted.
2010
Affordable Care Act (ACA) enacted
The ACA required health plans to have robust internal and external appeals processes. It set minimum standards for plan transparency in denials and appeals, and created the Patient Protection and Affordable Care Act appeals procedures.
2020
No Surprises Act enacted
Part of the Consolidated Appropriations Act. Established protections for out-of-network claims and created the Independent Dispute Resolution (IDR) process. Required plans to pay out-of-network providers based on the Qualified Payment Amount (QPA) or median in-network rates.
2024 to 2026
NSA implementation and antitrust litigation
Full implementation of the No Surprises Act. Federal antitrust cases against MultiPlan and Zelis alleged systematic underpayment through repricing. Providers began winning appeals based on NSA protections. Medicare Advantage (MA) denials increased due to prior authorization and medical necessity reviews.
How we got here
How the appeals process developed
Each major law built on the last, turning a vague right to complain into a structured, multi-level process with deadlines, written decisions, and independent review.
ERISA (1974)
The foundation
ERISA created the first statutory right to appeal a denied claim to a group health plan. Employees could appeal internally and, if denied again, could pursue federal court action. This established the principle that denials must be explained and can be challenged.
HIPAA (1996)
Strengthening the process
HIPAA required plans to provide written explanations for denials and set timeframes for appeals (typically 30 to 60 days). It also established expedited appeals for urgent situations where waiting could harm health.
External appeals (2000s)
Independent review
Regulations required plans to allow denials to go to independent external review organizations. If a plan denied a claim, a patient could request an independent reviewer (not affiliated with the plan) to reconsider the decision.
ACA (2010)
Standardization and transparency
The ACA standardized appeals processes across plans. All health plans had to follow minimum standards for internal and external appeals, with clear timelines and written explanations.
No Surprises Act (2020 to 2026)
Provider and patient protections
The NSA created a new appeals process: Independent Dispute Resolution (IDR). For certain out-of-network claims, if a provider and plan cannot agree on payment, either party can request an independent arbitrator to decide. The arbitrator must choose a payment amount between the provider's billed charge and the plan's offered amount, ensuring neither party gets everything they want.
Where your denial fits
Read the source
Major legislation affecting denials and appeals
The laws below are the backbone of modern appeal rights. Each link goes to the official federal source.
Where to look
Federal resources on denials and appeals
These are the government agencies that write and enforce the rules. They are useful for confirming your rights and citing authority in an appeal.
Today
Current trends in denials and appeals (2024 to 2026)
The system keeps shifting. These four forces are driving the appeals you are most likely to face right now.
Medicare Advantage prior authorization surge
MA plans have dramatically increased prior authorization requirements and denials. Many providers now struggle to get approval for standard procedures, which has led to increased appeal volumes.
No Surprises Act implementation
The NSA's Independent Dispute Resolution (IDR) process is now widely used. Providers and plans increasingly turn to IDR for out-of-network payment disputes, with many providers winning appeals for underpaid claims.
Antitrust litigation against repricing vendors
Federal lawsuits against MultiPlan and Zelis allege systematic underpayment through repricing algorithms. Providers are increasingly challenging repricing underpayments through litigation and appeals.
Automation and AI in appeals
Some vendors now use AI and automation to identify underpayments and flag denial patterns. Providers are leveraging technology to detect and appeal denials more efficiently.
Keep reading
Related guides
Which appeal do I need?
Compare appeal types side by side and find the path that fits your denial.
ReadERISA appeals guide
The 3-level appeal process for employer-sponsored health plans.
ReadOut-of-network underpayments
Recover money when a plan reprices and underpays your claim.
ReadAppeals FAQ and tips
Common questions and practical tactics for stronger appeals.
ReadDisclaimer
This guide is for informational purposes only and does not constitute legal or medical advice. Appeal It Now provides administrative support and appeal preparation services only; we are not a law firm. Please consult a qualified professional for advice specific to your situation.
Version 2.0 · Updated June 2026