Appeals in Medicare


An appeals system is essential for correcting coverage and payment errors. Medicare provides its beneficiaries a number of protections that may be enforced through the appeals process. In most cases beneficiaries must take action to initiate an appeal. For example, a beneficiary may appeal the denial of a claim for payment by a Medicare administrative contractor such as the Part A intermediary, Part B carrier, or MA plan.

There is evidence that Medicare contractors have denied claims for arbitrary reasons, either as the result of incentives created under their contracts with the CMS, or because they have not followed proper procedures. If a claim is denied, Medicare beneficiaries may request a second look, or “redetermination,” by the contractor that made the initial decision. An adverse finding is sent to a review organization known as a “qualified independent contractor.” If this contractor also denies the claim, the decision may be appealed to an administrative law judge (ALJ), then to the HHS Departmental Appeals Board, and finally to federal court, depending on the disputed amount. The results of an appeal apply only to the individual beneficiary’s claim.

The right to challenge broad coverage decisions is distinct from the appeals right for individual claims that are denied on the grounds of lack of medical necessity. A beneficiary may challenge coverage decisions about items and services that the beneficiary and their physician deem medically necessary but that the contractor or CMS says Medicare does not cover at all. The right to challenge coverage decisions involves looking over the entire coverage policy, which may lead to changes that affect other beneficiaries. An adverse decision on a Medicare coverage issue may be taken to the Medicare Appeals Council and then to federal court.

Decisions by Medicare contractors and the Medicare Appeals Council favor the government, in part because they follow CMS statements of Medicare policy. Decisions by ALJs and federal courts, which are not bound by CMS policy and thus may overrule it, tend to be more balanced because they provide independent interpretations of Medicare rules.

A Medicare beneficiary also may file a complaint about service quality with a quality-improvement organization. The claim may be further appealed to the HHS Departmental Appeals Board. If a beneficiary has been harmed by the care in question, he or she may file a civil suit for malpractice against the provider or physician in state or federal court.

The Medicare appeals process is complicated and lengthy, in particular at the later stages. Many beneficiaries find the process confusing. They sometimes do not receive or understand information about the reason for a coverage or claim denial or about their appeal rights.

Regulations relating to appeals, including rules pertaining to the Part D drug benefit, were issued in 2005 but they do not provide adequate beneficiary protections. Drug plans, for example, are not required to automatically forward adverse decisions for independent review.

Formerly employed by the Social Security Administration, ALJs who hear Medicare cases now work for HHS. The agency has made a number of changes in the status of ALJs and the rules under which they decide cases, limiting their independence and potentially their impartiality. In another change, HHS adopted the use of videoconferencing instead of in-person hearings for most ALJ cases.

The ACA requires commercial insurers and managed care plans to have an effective internal appeals process for claims and coverage determinations. It also requires an external review process under state law or under federal standards.

Appeals in Medicare: Policy


In this policy: Federal

Appeals procedures should be as simple as possible without compromising beneficiary protections. They should ensure basic fairness for the beneficiary, such as an opportunity for an informal in-person hearing by the Medicare administrative contractor.

Beneficiaries and their representatives should have access to all information and documents in their case that are related to coverage, payment, and quality of care.

Medicare contractors should have incentives to make the correct decision on a claim at the first level of review.

All decisions that could result in a beneficiary not receiving the care in question should be made and communicated as rapidly as the beneficiary’s medical situation warrants.

Medicare beneficiaries and others directly affected by coverage or claim denials should receive a timely written explanation of the decision and of their appeal rights. This information should be understandable to a layperson and include citations to the legal authority for denial.

Statutory timelines for resolution of grievances and appeals (usually 60–90 days) should be adhered to and enforced at each level of appeal.

HHS should publish the number and disposition of appeals by hospitals, physicians, and other providers for payment of claims, beneficiary complaints, and coverage denials at each level, from initial hearing to final disposition.

Part D

In this policy: Federal

The grievance and appeals process for the Medicare Part D drug benefit should be streamlined to include faster dispute resolution and access to temporary drug supplies that last through the resolution of the pending appeal.

To avoid delay, Medicare beneficiaries’ appeals should be sent automatically to the first level of independent review without action by the beneficiary.

Administrative Law Judges (ALJs)

In this policy: Federal

ALJs should not be influenced by HHS. They should be allowed to make impartial decisions in hearings.

ALJs should be required to assist beneficiaries without representation in developing the record of the hearing.

Medicare beneficiaries who appeal their cases to an ALJ should have an in-person hearing upon request.

Access to federal court

In this policy: Federal

The appeals process should be streamlined by eliminating Medicare Appeals Council reviews and allowing ALJ decisions to be appealed to an impartial forum such as federal court.