States Take Action Against Unfair Health Insurance Claim Denials

Health insurance claim denials are a growing concern, with many consumers facing unexpected rejections for essential medical treatments. To address this, several states are enforcing stronger regulations and offering more support to help individuals challenge unfair denials. These efforts aim to create a system that is transparent, efficient, and accessible for policyholders.

State-Led Initiatives to Address Claim Denials

Many states are working to ensure policyholders have the resources needed to contest wrongful claim denials. By establishing independent review boards and consumer assistance programs, state governments are closing gaps in federal regulations and making the appeals process more straightforward.

Pennsylvania’s Independent Review Board

In 2024, Pennsylvania introduced an external review board to give patients an impartial system for appealing denied claims. Unlike internal insurer reviews, this board operates independently, ensuring fair evaluations. As a result, policyholders now have an additional avenue to challenge wrongful denials and improve their chances of success.

Arizona’s Consumer Assistance Program

At the start of 2025, Arizona launched a program to guide consumers through the appeals process. This initiative simplifies complex procedures and provides dedicated support. By helping policyholders understand their options, the program empowers individuals to take the necessary steps to secure their coverage.

Freepik | rawpixel.com | States are simplifying claim denial appeals with new review boards and aid programs.

The Growing Issue of Health Insurance Denials

Studies show that a significant percentage of health insurance claims are denied each year. For example, a 2023 report revealed that insurers selling qualified health plans (QHPs) through HealthCare.gov denied around 19% of in-network claims and 37% of out-of-network claims. Common reasons for denials include:

1. Incorrect or missing documentation
2. Lack of prior authorization
3. Services deemed not medically necessary
4. Policy exclusions

Despite the high number of denials, few consumers appeal. The same 2023 study found that fewer than 1% of denied claims were challenged. Insurers upheld their decisions 56% of the time. Many consumers may be unaware of their rights or find the appeals process overwhelming.

Legislative Actions to Strengthen Consumer Protections

Beyond Pennsylvania and Arizona, other states are introducing stricter regulations to hold insurers accountable.

California’s Proposed Senate Bill 363

California has proposed legislation to penalize insurers that repeatedly and unfairly deny claims. If approved, the bill would require detailed reporting on claim denials and impose fines of up to $1 million per violation when insurers wrongfully reject claims. This measure aims to promote transparency and accountability in the industry.

Technology and the Role of Automation in Claim Denials

Freepik | AI-driven claim processing speeds things up but can lead to unfair denials.

A rising concern in the insurance sector is the increased use of automation in claim processing. Many insurers rely on artificial intelligence (AI) and algorithms to speed up decisions. While these systems improve efficiency, they also contribute to unfair denials. Unfortunately, consumers often don’t realize that automated decisions can be appealed, leading to fewer disputes.

To counter this, new AI-powered tools are being developed to help policyholders generate automated appeals. These resources can make the appeals process more accessible and improve the chances of reversing wrongful denials.

Understanding Rights and Available Resources

As more states take action against unjust insurance claim denials, it is essential for consumers to stay informed about their rights. Knowing how to file an appeal and using state-supported programs can greatly improve the chances of overturning a denial.

Key steps for policyholders include:

1. Reviewing insurance policies to understand coverage details
2. Keeping detailed records of medical treatments and insurer communications
3. Seeking assistance from state-run consumer advocacy programs
4. Using independent review boards when applicable

A Fairer System for Consumers

The increasing involvement of state governments in health insurance disputes reflects a shift toward stronger consumer protections. With more states enacting measures to hold insurers accountable, policyholders can expect a more transparent and fair system. Legislative efforts, independent oversight, and technological advancements are shaping a future where consumers have a stronger voice in their healthcare coverage.

By staying informed and taking advantage of available resources, individuals can play a proactive role in securing the insurance benefits they deserve.