WASHINGTON—Increased demand for independent review organization services by self-funded health benefit plans likely will stimulate growth in the industry, sources familiar with the IRO market say.

Because external review volume is low, demand for internal claims reviews has sustained many IROs, said Seana Ferris, president of the National Assn. of Independent Review Organizations and director of strategic initiatives at Permedion Inc. a Westerville, Ohio-based IRO that is accredited by URAC and has been certified to operate in a dozen states.

“For the 12 states where we are an IRO, we probably only do about 600 (external reviews) a year,” Ms. Ferris said.

Some 46 states and U.S. jurisdictions already have external review requirements that apply to insured plans, according to the Kansas City, Mo.-based National Assn. of Insurance Commissioners.

In the vast majority of those states, IROs are vetted by the state insurance departments and a list of those that have been approved is provided to insurers, which contract to use one or more depending on the state law.

But the volume of external reviews is fairly low, said Christine Leyden, senior vp, general manager of client services and chief accreditation officer at Washington-based URAC.

“Based on URAC's accreditation experience, 50% of administrative denials in health care are due to lack of information,” Ms. Leyden said. When the additional information is provided by physicians as part of an internal claims review, claim denials are overturned 90% of the time, she said.

Because of the low volume of claims sent for external review, Ms. Ferris and Ms. Leyden said they were not concerned about IROs' ability to meet the needs of the self-funded employers in addition to the insurers they already serve.

Moreover, only a handful of reviewers are needed for each claim referred for external review and most IROs have upwards of 1,000 physicians and other health care providers on their panel of reviewers, Ms. Leyden said.

The turnaround time requirements should not be difficult to meet because of the size of the panels, Ms. Leyden and Ms. Ferris concurred.