So far, 41 states and the District of Columbia have passed the "external review" laws, according to the report, which was written by researchers at Georgetown University in Washington, D.C.
Patients who want to dispute a health plan's decision not to reimburse them for a particular procedure must first exhaust the insurer's internal appeals process before taking their case to an external review panel.
On average, the outside reviewers decide in favor of the patient half of the time, the report found, but even with those odds, only about 4,000 cases are filed nationwide each year. This occurs despite the fact each health plan makes thousands of denials during a one-year period, said Karen Pollitz, a study author.
"We have 85,000 initial denials reported in Connecticut and Rhode Island alone, and those two states combined had a total of 80 external reviews," she said. "There is clear `telescoping' at every level, and I can't tell you why that is."
Some denials are obviously legitimate on the plan's part, but the hassle factors involved also must figure into why these cases do not go to external review, Pollitz said.
"To tell sick people, 'Now you have to do this, and then go to this level,' it's reasonable to guess that that's something that's screening a lot of people out," she said. "There are also other 'locks' that get put on the door of external review, such as states requiring patients to appeal in a certain number of days or requiring them to pay a fee."
Susan Pisano, spokeswoman for the American Association of Health Plans in Washington, said while managed care plans agree with the idea of having external reviewers, no one really knows what the "right" number of external reviews should be.
"Plans are very focused on customer service and dispute resolution, and they're working hard to get disagreements resolved on the front lines if possible," she said.
Regardless of whether there should be more cases going to external review, the very existence of the external review process is helpful to plans, Pisano noted.
"If a plan sends two similar cases to external review and they're overturned in both instances, the plan begins to look at its internal policies. There's a feedback loop there," she said.
Although cases brought to external review lost about half the time in all states combined, the percentage of plan decisions overturned varied greatly by state, according to the report.
Arizona and Minnesota were lowest, with a 21 percent rate of overturning plan decisions, while Connecticut was highest at 72 percent rate.
Kaiser Family Foundation, which sponsored the report, is an independent organization not affiliated with the Kaiser Permanente Health Plan.