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— Background —

Employers should be aware that when internal appeal in managed care regulated by the State of New Jersey denies coverage for medical services prescribed by a medical practitioner as not being medically necessary, the insured has the right to an external appeal.  Employers are not involved in the process, but it is helpful to be aware that the process exists.

The external appeal does not apply to those enrolled in self-insured employer health plans subject to regulation under federal law, nor does it apply to those enrolled in Medicaid or Medicare.  Furthermore, the right to an external appeal can only be exercised once an insurance company’s utilization review denies payment for requested treatment and the internal appeals process fails to reverse the decision.

— Eligibility Rules and Requirements —

The insured, or physician on their behalf, must meet certain requirements in order to file the external appeal.

They are as follows:

  • The insured must have a written notice from his or her health plan (or its utilization review organization) that the internal appeal process has been exhausted.
  • The insured must have been enrolled in the health plan at the time when the request for medical treatment or service was made, and the appeal must be for a treatment or service covered under the health plan.
  • The external appeal must be filed within 60 days of receipt of the written notice that the internal review process has been exhausted.
  • The decision to deny medical coverage must have been based on medical necessity.

Individuals enrolled in a federally regulated health plan are not eligible for external review.  If you are not certain whether your health benefits plan is regulated by state or federal law, ask your human resources department.

What is “Utilization Review”?

Utilization review is a process employed by health plans to evaluate the necessity of a medical treatment or service ordered by a physician.  Health plans employ physicians and nurses to conduct the review.  If the treatment or service requested is denied, it may be appealed, first within the health plan and then externally, if needed.

What is an “Internal Appeal”?

Every health plan is required to have an informal internal appeals process.  In stage one, the insured can discuss the decision in question with the medical director of the HMO or another designated physician.  These appeals must be completed within five business days of the decision and within three days (72 hours) for emergency or urgent care.  If the insured is not satisfied with the decision made during this stage, then the health plan must provide a written explanation of the member’s right to appeal to the next level.

A stage two appeal allows the insured to present the dispute to a panel of physicians and other healthcare professionals.  This step in the appeal process must be completed within 20 business days, or 72 hours for urgent or emergency care.  If the entire internal appeal process fails to reach a decision that is satisfactory to the insured, an external appeal may be filed. In an emergency, the insured or the insured’s doctor may wish to file.

— How to File for an External Review —

The insured, or the insured’s doctors, can file an external appeal.  A request for an external appeal must be filed within 60 days of the denial of an internal review, and should be accompanied by the following materials:

  • A completed copy of the New Jersey Department of Banking and Insurance “Request for External Appeal” form can be obtained through the NJ-External-Appeal-Application.pdf ( or by calling 888-393-1062.
  • Copies of all correspondence received from the health plan (or its utilization review organization) regarding the matter.
  • A copy of the notice from the health plan (or its utilization review organization) that the internal appeal process has been exhausted.
  • A non-refundable filing fee of $25 in the form of a check or money order made payable to the New Jersey Department of Banking and Insurance.

— How the External Appeal Process Works —

Upon receiving a request for an external appeal, the Department of Banking and Insurance will assign it to an independent external review organization approved by the department. The request will first be examined by the organization to determine whether it meets the eligibility criteria. Notification of whether the appeal is eligible will be made within five days.

If found eligible, the review organization will examine the appeal and send its decision to the insured, their doctor, their health plan or utilization review organization, and the Commissioner of the Department of Banking and Insurance within 30 days.  The decision is binding on the health insurance plan.

— Other Resource—

For more information regarding external appeals, call the Office of Managed Care at 609-292-5427 or visit the Department of Banking and Insurance website at

For More Information —

If you need additional information, please contact NJBIA’s Member Action Center at 1-800-499-4419, ext. 3 or


This information should not be construed as constituting specific legal advice. It is intended to provide general information about this subject and general compliance strategies. For specific legal advice, NJBIA strongly recommends members consult with their attorney.