Short answer: An internal appeal is when you ask your own insurance company to reconsider a denial and give you a full and fair review. An external review takes the dispute to an independent third party whose decision the insurer must follow, so the company no longer has the final say.
When a health plan denies a claim or ends your coverage, you have two levels of appeal. The first is the internal appeal: you ask the insurer to look again, and it must conduct a full and fair review. The plan has to tell you why it denied the claim and how to challenge the decision.
If the internal appeal fails, you can request an external review by an independent organization. External review means that the insurance company no longer gets the final say over whether to pay a claim; the outside reviewer can uphold or overturn the denial, and the insurer is bound by the result. You generally must finish the internal appeal first, except in urgent cases.