Nearly every physician has claims denied from time to time. Medicare, as a government program, has its own way of doing things. As you know, the process is different from insurance companies, which also have their own way of handling claims. 

Medicare have five levels of appeals. They are:

  • Redetermination,
  • Reconsideration,
  • Administrative Law Judge,
  • Departmental Appeals Board Review, and
  • Federal Court Review.


The first level must be filed within 120 days of the initial denial. There is no limit to the dollar amount involved in claims at this level. Typically you need to get the appropriate form from your Medicare contractor. For example, in California the Medicare contractor is Palmetto. Other paperwork -- of course -- is required, such as your Explanation of Benefits (EOB), date of service, the beneficiary and any supporting documentation of why you feel your appeal should be recognized and the initial determination overturned.

The single best advice for dealing with this is to focus on medical documentation that proves you were not paid appropriately. This level of review is typically based on procedural issues. For example, were the dates correct? Or were the names and identifiers appropriate?


Most denials at this level occur because the physician's office didn't read the EOB or the information provided with the previous denial. Typically, Reconsideration involves review by an independent contractor who has an agreement with the Centers for Medicare and Medicaid Services (CMS). That, naturally, means the contractor is not completely independent -- since there is a contractual relationship with the federal government. Reconsideration must be submitted within six months of the Redetermination conclusions.

Include a copy of the explanation of why the original appeal was not accepted or was overturned. There is no dollar limit to this level of appeal. Again, include all supporting documentation. Clearly provide your rationale for disagreeing with the Redetermination and why you think it should be overturned.

It's important to really think about the results of Redetermination, the first level. Don't appeal on unrelated issues. In other words, don't get emotional and appeal without evaluating why it was rejected. The primary reasons for rejections at this level are inappropriate documentation and not appealing the right problem.

Administrative Law Judge

The Administrative Law Judge (ALJ) is not held to the carrier's Local Coverage Determinations (LCD), and is created by a carrier when there is a problem. This designated individual provides guidance on the specific rules problems that are causing the rejection of a Medicare bill. Because the ALJ is not bound to the LCD, he or she can turn to Medicare national policy to decide if the carrier is too restrictive or isn't following the National Coverage Determinations. The ALJ can also perform literature searches to evaluate the definitions of medical necessity.

This is a high enough and technical enough of a level that the services of a health care adviser or attorney should be considered. The ALJ is an independent entity that may or may not be connected with CMS and will try to be objective about the information. It's important that all of your documentation is included prior to this, because the ALJ will not evaluate additional information.

An appeal to the ALJ must be filed within 60 days of the Reconsideration decision. There needs to be at least $120 at stake. The independent contractor that turns down Reconsideration should indicate which ALJ to file an appeal with.

Departmental Appeals Board Review

There are no dollar limits on this review, which must be filed within 60 days of the ALJ decision. The Departmental Appeals Board is part of CMS. It is made up of Board Members appointed by the Secretary of Health and Human Services (HHS), as well as its larger staff organization. There are four distinct DAB Divisions:

  1. The Alternative Dispute Resolution Division provides alternative dispute resolution services for appeals filed with the Board's other three divisions. This usually involves mediation or ombudsman services.
  2. The Appellate Division provides support for the Board Members. They are expected to provide an independent and impartial review of disputes for a variety of HHS programs, including some ALJ decisions.
  3. The Civil Remedies Division provides staff support for the ALJs assigned to the Departmental Appeals Board.
  4. The Medicare Operations Division gives staff support to the Administrative Appeals Judges and Appeals Officers on the Medicare Appeals Council. This Council offers the final administrative review of claims related to Medicare entitlements, as well as individual Medicare coverage claims filed by beneficiaries or health care providers.

Federal Court Review

The highest and final level of appeal is to the federal court system. Physicians rarely go to this level, and if they do, it's only because the amount of the bill is high enough to make it worthwhile. The Amount Remaining in Controversy (AIC) must be at least $1,400, although that figure is recalculated every year. The Federal Court Review must be requested within 60 days of the Medicare Appeals Council's decision.

This is a very expensive level, because it almost always requires an attorney and a great deal of time.

Appeals Best Practices

Typically, most claims are denied because of clerical errors -- a typo, a wrong modifier, an incorrect date. They can often be fixed with a phone call to Medicare or through the private insurer. After clerical issues, the most common reason for denials is related to definitions of medical necessity. In this case, documentation is the most important solution. Increasingly, utilizing electronic health records (EHR) and other forms of health information technology forces you to provide critical documentation and appropriate coding. Learning the best way to do this will minimize the need for appeals.

Learn from your mistakes, as well. Why were other claims denied? Make sure you and your staffers are aware of trends and mistakes. Create corrective actions, which will decrease the likelihood of future denials and appeals. For more information, consult with your medical practice management adviser.