Fact Sheet: The Affordable Care Act: 

Protecting Consumers and Putting Patients Back in Charge of Their Care

July 22, 2010 

The Affordable Care Act will help support and protect consumers and end some of the worst 

insurance company abuses. For too long, consumers have been forced to fend for themselves in 

a health care system that did not provide them with the support and assistance they needed and 

deserved. Today, the Obama Administration is announcing new regulations that will allow 

consumers to appeal decisions made by their health plans and the availability of resources that 

will be used to help give consumers more control of their health care decisions. Today’s 

announcements include: 

• New regulations that give consumers in new health plans in every State the right to 

appeal decisions, including claims denials and rescissions, made by their health plans.1

 

The rules issued by the Departments of Health and Human Services, Labor, and the Treasury

give consumers:

o The right to appeal decisions made by their health plan through the plan’s internal 

process,

o For the first time, the right to appeal decisions made by their health plan to an outside, 

independent decision-maker, no matter what State they live in or what type of health 

coverage they have. States will work to establish or update their external appeals 

process to meet new standards, and consumers who are not protected by a State law 

will have access to a Federal external review program. 

Next year, an estimated 31 million people in new employer plans and 10 million people in 

new individual plans will benefit from the new appeals rights announced today. The number 

of individuals in employer plans who will benefit is expected to rise to 78 million by 2013, 

for a total potential of 88 million Americans who will be guaranteed the right to appeal 

decisions made by their health plan. 

• A $30 million grant program to establish and strengthen consumer assistance offices in 

States and Territories. The new Consumer Assistance Grants Program will help States 

establish consumer assistance offices or strengthen existing ones. The new funds will be 

used to provide consumers with the information they need to pick from a range of coverage 

options that best meets their needs. 

 

1 To help individuals who like the coverage they have keep it, some plans that were in effect on March 23, 2010, and 

that were not significantly modified thereafter will be “grandfathered.” Grandfathered health plans are not subject to 

these regulations. For more information about the definition of a grandfathered plan, see 

http://www.healthreform.gov/newsroom/keeping_the_health_plan_you_have.html.
New Regulations To Help Consumers Appeal Decisions By Their Health Plans

The new rules issued by the Departments of Health and Human Services, Labor, and the 

Treasury will standardize both an internal process and an external process that patients can use to 

appeal decisions made by their health plan. 

Today, if your health plan tells you it won’t cover a treatment your doctor recommends, or it 

refuses to pay the bill for your child’s last trip to the emergency room, you may not know where 

to turn. Most health plans have a process that lets you appeal the decision within the plan 

through an “internal appeal” – but depending on your State’s laws and your type of coverage, 

there’s no guarantee that the process will be swift and objective. Moreover, if you lose your 

internal appeal, you may not be able to ask for an “external appeal” to an independent reviewer. 

The rules issued today will end the patchwork of protections that apply to only some plans in 

some States, and simplify the system for consumers. And they will ensure that all consumers in 

new health plans have access to internal and external appeals processes that are clearly defined, 

impartial, and designed to ensure that, when health care is needed and covered, consumers get it. 

Internal Appeals

The internal appeals process will guarantee a venue where consumers may present information 

their health plan might not have been aware of, giving families a straightforward way to clear up 

misunderstandings. Under the new rules, new health plans beginning on or after September 23, 

2010 must have an internal appeals process that:

• Allows consumers to appeal when a health plan denies a claim for a covered service or 

rescinds coverage; 

• Gives consumers detailed information about the grounds for the denial of claims or coverage; 

• Requires plans to notify consumers about their right to appeal and instructs them on how to 

begin the appeals process; 

• Ensures a full and fair review of the denial; and 

• Provides consumers with an expedited appeals process in urgent cases. 

External Appeals

If a patient’s internal appeal is denied, patients in new plans will have the right to appeal to an 

independent reviewer. External appeals have helped consumers get the care they deserve: one 

study found that – in States that had external appeals – consumers won their external appeal

against the insurance company 45% of the time.2 

While 44 States provide for some form of external appeal, the laws governing these processes

vary greatly and fail to cover millions of Americans. The new rules will ensure that consumers 

 

2 Kaiser Family Foundation, Assessing State External Review Programs and the Effects of Pending Federal Patients' 

Rights Legislation, 2002. http://www.kff.org/insurance/externalreviewpart2rev.pdf.
with new health coverage in all States have access to a standard external appeals process that 

meets high standards for full and fair review. 

These standards were established by the National Association of Insurance Commissioners 

(NAIC). States are encouraged to make changes in their external appeals laws to adopt these 

standards before July 1, 2011. The NAIC standards call for: 

• External review of plan decisions to deny coverage for care based on medical necessity, 

appropriateness, health care setting, level of care, or effectiveness of a covered benefit.

• Clear information for consumers about their right to both internal and external appeals – 

both in the standard plan materials, and at the time the company denies a claim.

• Expedited access to external review in some cases – including emergency situations, or 

cases where their health plan did not follow the rules in the internal appeal. 

• Health plans must pay the cost of the external appeal under State law, and States may not 

require consumers to pay more than a nominal fee. 

• Review by an independent body assigned by the State. The State must also ensure that the 

reviewers meet certain standards, keep written records, and are not affected by conflicts of 

interest.

• Emergency processes for urgent claims, and a process for experimental or investigational 

treatment.

• Final decisions must be binding so, if the consumer wins, the health plan is expected to pay 

for the benefit that was previously denied. 

If State laws don’t meet these standards, consumers in those States will be protected by 

comparable Federal external appeals standards. In addition, people in health plans that are not 

subject to State law – including new self-insured employer plans – will be protected by the new 

Federal standards. 

New Consumer Assistance Grants

The Affordable Care Act provides consumers with significant new protections including the 

ability to choose a health plan that best suits their needs, to appeal decisions by plans to deny 

coverage of needed services, and to select an available primary care provider of their choosing. 

The new Consumer Assistance Grants program will provide nearly $30 million in new resources 

to help States and Territories educate consumers about their health coverage options, empower 

consumers, and ensure access to accurate information. Grants will be made available to support 

States’ efforts to establish or strengthen consumer assistance programs that provide direct 

services to consumers with questions or concerns regarding their health insurance. 

All States and Territories may apply for these grants, which will help expand consumer 

assistance efforts on the State level, including: 

• Helping consumers enroll in health coverage; 

• Helping consumers file complaints and appeals against health plans; 

• Educating consumers about their rights and empowering them to take action; and

• Tracking consumer complaints to help identify problems and strengthen enforcement. 
Eligible applicants include State insurance departments, State attorneys general offices, 

independent State consumer assistance agencies, and other State agencies. States and Territories 

may also partner with non-profit organizations that have a track record of working with 

consumers. Applications are available now by visiting www.Grants.gov and searching for 

CFDA number 93.519. 

What Will This Mean for You?

• Under these rules, if your health plan denies coverage of a test – for example an MRI – you 

and your doctor can appeal that decision to the plan and, if the plan still refuses to cover the 

test, to an external reviewer. If the external reviewer agrees with you, your plan must pay for 

the test. 

• If your plan decides to rescind your coverage altogether based on the fact that information on 

your application for coverage was not accurate, you can appeal that decision. If your appeal

is successful, the plan must reinstate your coverage. 

• If you go to the emergency room and your plan won’t pay the bill, you’ll have the chance to 

provide information to the plan about why you needed emergency care – and take your 

request to an external reviewer if your appeal to the plan is denied. 

Consumer Assistance Grants have the potential to benefit millions of Americans. These grants 

will fund programs that will support consumers both now as we transition to a more competitive, 

patient-centered health insurance marketplace in 2014 and once that new marketplace is 

established. 

• If you learn that your employer is cancelling coverage, and you know it will be hard to find 

coverage for your family on the individual market, you may need someone to help explain 

your options. A State consumer assistance program will provide that support, helping you 

figure out what you need, describing ways you can get coverage, and ultimately helping you 

enroll in coverage. 

• Just last year, one State’s existing consumer assistance program helped nearly 3,000 residents 

and recovered over $7 million in benefits on behalf of consumers. In another State, a similar 

program assisted about 13,000 residents and helped nearly 8,000 of them enroll in coverage. 

Builds on Other Initiatives to Protect Patients’ Rights

The rules released today build on a series of efforts under the Affordable Care Act to strengthen 

consumer and patient rights. Other actions include: 

• Prohibiting Insurance Companies from Rescinding Coverage. In the past, insurance 

companies could search for an error, or other technical mistake, on a customer’s application 

and use this error to deny coverage when he or she got sick. The new law makes this practice

illegal.
• Extending Coverage for Young Adults. Under the new law, starting next year, young 

adults will be allowed to stay on their parent’s plan until they turn 26 years old. (In the case 

of grandfathered group health plans, this right does not apply if the young adult has available 

health coverage at work.) Some plans have begun implementing this policy early. Check 

with your insurance company or employer to see if you qualify. 

• Eliminating Lifetime Limits on Coverage. Under the new law, health plans will be 

prohibited from imposing lifetime dollar limits on essential benefits, like hospital stays.

• Regulating Annual Dollar Limits on Insurance Coverage. Under the new law, health 

plans’ use of annual dollar limits on the amount of insurance coverage a patient may receive 

will be restricted for new plans in the individual market and all group plans. In 2014, the use 

of annual dollar limits on essential benefits like hospital stays will be banned for new plans in 

the individual market and all group plans.

• Prohibiting Denying Coverage of Children Based on Pre-Existing Conditions. The law 

prohibits insurance companies from denying coverage to children under the age of 19 due to 

a pre-existing condition.